All you Need to Know Before Stepping into the Start-up World! Find a burning problem as it will help any start-up get paid customer on board in a shorter period than anticipated
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The Indian start-up ecosystem has really taken off in recent years driven by massive funding, consolidation activities, evolving technology and a burgeoning domestic market.
However, the bleak reality is 90% of start-ups that are brought into existence end up failing. Even according to the world's most powerful tech-start-up incubator, Y Combinator, globally 93% of Y Combinator start-ups fail eventually. In spite of this harsh reality of the ecosystem, entrepreneurs aren't stopping from treading on this path.
In fact, failure makes fledgling entrepreneurs stronger and wiser. Every optimistic entrepreneur — be it a college pass-out, a professional with some work experience or a serial entrepreneur — needs a dose of reality now and then. It is not intended to discourage them, but to encourage them to work smarter and harder, because, even though it is essential to learn from your mistakes, it is even better to learn from others' mistakes.
A start-up enthusiast must do thorough ground work and strategically undergo a self-testing process to determine as soon as possible whether he/she is eligible for launching a start-up. They should be able to see the unseen, should be able to hear the unheard.
Self-evaluation must be performed in the following ways to decide whether an entrepreneur should initiate a start-up or not:
How An Ideal Sart-up Mindset Should be
Start-ups are associated with innovation or establishing something that did not exist so far. They are poised to revolutionize a particular segment or create a new segment altogether. There are few elements associated with a start-up like innovation, how committed it is in helping people solve a problem, how different it is in the existing market, what percentage of the industry is getting affected by it and whether it is a disruptor or just another player in the industry. Potential entrepreneurs have numerous valid reasons to launch a start-up.
Unfortunately, there are many college students giving their heads up to initiating start-ups for all the wrong reasons. For them, "start-ups' is a fancy word, whether it is to become popular in their college or desired placements. Very often, professionals also turn towards opening start-ups as soon as they are bored of their jobs. They are under the impression of either earning a lot of money or getting into their choice of MBA College if they fail. An entrepreneur foreseeing a sustainable business must not consider these vague reasons to set a start-up in motion.
2. Observing One's Financial Conditions
Evaluate your financial condition before venturing into a start-up. Students willing to get into this space must realize that there are chances that their parents would be financially dependent on them once they start working.
Even family members of many professionals are financially dependent on the incoming salaries. Such people must not give in to the temptation of involving themselves in start-ups. All this can wait till they are economically stable. You must decide to initiate a start-up when you have enough money to capitalize it. You should have a financial backup of at least two years without bothering about the profits. Also, be prepared for losses and risks in the initial years.
3. Find a Burning Problem
Find a problem which is an intense problem for customers. Finding a burning problem will help any start-up get paid customer on board in a shorter period than anticipated.
Make a list of all the problems you intend to solve through your start-up. Understand every problem by reaching out to as many people as possible. For instance, in the cab-aggregation industry, ask people about what problems they are facing — is booking a cab or getting it on time or paying money at the end of the trip a problem?
Find every existing problem of the industry. Make a list of these, understand the core ones and find the root cause by speaking to the industry experts and as many customers as you can. Just go out and talk to as many people as you can. Create a list of must-to-have features and good-to-have features and always focus on must-haves only, at least initially. Due diligence is a must for a better problem solving, so do it honestly.
4. Building a Team
Always work full time for your start-up and try not to be a single founder of your start-up. Always opt for co-founders and full-time co-founders.
Ideally, there should be three co-founders in a start-up business, wherein one will create, the other will market and the third will collect the money.
Finding the right combination is always recommended in creating a perfect team. Getting a right team composition matters a lot for a start-up. Start-ups are mostly about execution and a very less about the idea. So, I request start-ups to come out of the fear of their idea getting stolen and discuss their idea with as many people as they can.
Getting feedback from multiple people will always help one to understand the problem better. Do remember unless you talk about your idea you are not going to get co-founder either, trust plays a major role. Any founding team will have to go through a roller coaster ride of the start-up journey, so avoid blame game and try to be as co-operate as one can. Make sure your founding team is full of passion, keen interest in entrepreneurship and start-ups.
Avoid people who are in a double mind of joining the founding team or taking a day job. Ideally, those sort of teams will gradually run into founding team problems. Always founder should be passionate about solving the problem and they should drink and breathe the idea. Convincing someone to become your co-founder and see the same vision you have is not an easy task.
5. How Big is the Industry
Once you realize the problem you are trying to solve, observe the size of the particular market. The bigger the size of the market, the higher will be the impact. Always try to find a big market. However, if the solution is powerful and can cater to even a smaller market size comparatively, the true meaning of start-up entrepreneurship will come into the picture as well.
6. Imbibing the Right Experience
In most of the start-up scenarios, experience matters a lot! You might have understood the pain points of the customers and found a solution to it. But a lot of times, the solution is given by an entrepreneur does not fit the market right. The product market fit will be known properly only if the entrepreneur has understood the customer pain points and the industry thoroughly. To understand these, experience comes into the picture, be it industry-related or in terms of technical knowledge. Knowledge about the industry is always good to have for creating a better product - market fit. Do not look at only successful start-ups, learn from the failed start-ups and you will be able to understand the real picture of the industry.
7. Finding a Mentor
Look out for industry experts or people who can guide you in the right direction. In most of the successful start-ups, mentors have played a major role. As a majority of start-ups are being initiated by young people, they need to be directed in a proper way by experienced people and in the right industry. Unfortunately, it is very difficult to find the right mentor. Mentor can either an industry expert or a serial entrepreneur who has been involved in a few start-ups already or a combination of both. Mentor matters a lot.
8. Identifying Your Competitors
You may have an ample amount of financial backup, know the size of the industry, have the required experience and some industry veterans to mentor you, but it is crucial to know who your competitors are. It is literally impossible that your start-up idea has no competition.
So find your competitors and see what they are doing and how. Do a thorough research on the competitors, evaluate how your idea is unique from others in the industry and then capitalize on the opportunity. Not analyzing one's competitors thoroughly is like getting into a war zone without any strategy.
9. Let your Solution be the Best the Industry has to Offer
Most of the start-ups will start thinking about the solution at first but I would say it's at this stage you should think after doing all the above-said analysis. When you are solving a problem, ensure that it should be difficult from your competitors to bring a better solution than that. By considering all the above 7 points, you will actually be able to build a much better solution than your competitors.
Always make sure you build a product 10 times better than your competitors, not 10% more effective than your competitors. Moreover, make sure you are not the 15th or 20th player in the industry solving the same problem.
Even if you are, make sure your solution is a disruptor in the industry so that everyone else should close their shops. Make sure you create a Minimum Viable Product (MVP) rather than the entire product. By creating an MVP and by constantly evaluating the feedback given by the customers one is bound to create an excellent product that fits the market. Try to get the MVP into the market at the earliest because more than building a product, selling it is tough.
10. Start-up Accelerators
The Indian ecosystem has completely changed. For a start-up to actually sustain, apart from solutions, they must focus on a lot of other aspects like raising funds, scaling to the next level, making the right moves and getting into the market at the right time and so on.
All these things may not be known to the mentors or the founders. Here, start-ups should look into good start-up accelerator programs to acquire a pool of talent to help out in every aspect of the business. Try to have a tested MVP by the time you get into any accelerator program to make the most out of the accelerator.
The above characteristics may not lead aspiring entrepreneurs towards success in a particular industry but they will definitely help them to overcome the pitfalls and the hard-knock start-up days. So if you have ticked all the above-mentioned criteria, you're indeed heading towards something big that 90% of new businesses couldn't imagine.