The Pros and Cons of Starting Up In a Tier 2 City
Lack of trained manpower and investors haunt tier 2 city entrepreneurs
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Gaurava, who runs EduAce Services in Lucknow, pens his thoughts on what are the challenges and advantages of starting up in Lucknow, far away from the hustle of big metropolitan cities.
Early half year 2012, when I was nurturing the thought of starting up, among the key decisions one major decision on which I devoted a crucial time was where I wanted to based out from. I was in Delhi. For almost a decade until than and was fairly well versed with the Delhi start-up ecosystem through my affiliations to TiE, NEN etc.
And, finally after all calculations I arrived at basing myself out of Lucknow, given I was born and brought up in a Jhansi and was quite aware of intricacies associated with the home state Uttar Pradesh. I based my decision on three fundamental parameters.
- Economics( Manpower, Office and other residual costs)
- Core Business nuance (We wanted to work with the Tier-2 and Tier 3 cities) for which I wanted to live and breathe in their surrounding instead parachuting there once in a while.
- My business philosophy -- Being in Delhi we would have been one of the thousands of such ventures. However, in a Tier-2 city we started big from day one. And, doing business is all about a perception value. People don't like to deal with too small a player they like to deal with bigger/reliable/powerful service provider or vendor…specially holding true education space.
- Trained manpower- I meet lots of entrepreneur friends who crib about not meeting the right guy or the right fit for their profile folks in Tier-2. To which my answer is simple had it been that easy everyone would have done and more importantly this can be a tremendous opportunity in itself….to be me in Tier-2 cities you need to invest more time in your people management skills than anything…because if your core team is intact….people will come and people will go but the core team will always be more loyal and will be lifelong part of your organisation which is so hard to find these days.
- No Investors- To this I say investors are everywhere….it will be better to say that you may not find more posh and excel understanding investors in Tier-2 or Tier-3 cities. As, in cities like Lucknow, Kanpur, CHANDIGARH, people have only done business on core idea of business. Business which makes money to them is called business, They have very little understanding of terms called "VALUATIONS' and which in its own teaches or makes the start-up from day 1 one understand and to how do I make it working financially sooner than later.
Therefore, given the growth lies in Tier-2 and Tier 3 cities, startups should be ready to toil hard, get their hands dirty. If the business demands to have a model of on-ground and online model develop the on-ground piece first. As that will become your biggest strength while you go and seek investors.
Make more and more products aimed at cities beyond metros, stuff which are rudimentary yet common sense driven…you cannot ideate and churn ideas every day. There are lot of common problems still not addressed at this level, requiring a passionate entrepreneur to take it up as a mission.