Startup is a craze. Youth has a new aspiration after their college days. They want to build a company that can make millions, sometimes “overnight”. The reasons are varied for doing so. Having no boss, flexibility of working hours, having a great business idea and the desire to make more money are some of them. The cold fact is that most business startups fail. The reasons could be lack of knowledge or experience of running a business on your own.
1. Focus on customer value than features of your product and/or service
Many startups make the mistake of pushing their product and/or service on to the customers. “I have built this product, it has so many features X, Y Z”. Instead of talking about how great or impressive your product/ service is try to understand the customer’s requirements and expectations. Is your product/service useful to the customer. How will it make a difference to the customer? Does it offer better value or unique features that the customer is looking at. What customer Pain you are solving? Ask yourself these questions and finetune your product/service accordingly. Remember the customer is likely to have many options in the market and you are not the sole player. BigBasket.com offers better customer value by bringing best quality everyday grocery shopping at doorstep..
2. Scalability and viability
There is no one size fits all solutions. Customer requirements are varied. Some may look at a basic product, some mid-level and others high-end. Your product/service should be flexible enough to be scaled up or down as per demand. Clarity of thinking is essential. Is the problem you are trying to solve really big or you perceive so. Nobody will pay for an outsized product/service. You need to analyze the viability of your offerings too. Will there be demand in the future? Can you sustain your offerings at the price you are offering? Startups need to ponder over these questions. Ola cab is a startup which operates in cities and towns of different sizes.
It is obvious that no startup can start off or survive without adequate finance. The startup needs to survive till it becomes profitable. For a business to be profitable takes time. It’s better to use personal savings or the money of friends and family rather than asking outside investors or financial institution for funds. The latter usually comes along with stringent terms and conditions. Usually you have a good relationship with friends and family who will be willing to accept repayment later or adjust during the startup’s tough financial times. Flipkart is an example of a startup that two individuals financed using their own money.
4. Focus on the bottom line
Startups are in business to make money as simple as that. You may not have a perfect business revenue model initially. But you will definitely learn from trial and error as well as experience. Accordingly, make corrections to your business model. Don’t keep burning money by being rigid. Quickly transit to a business model that is profitable. Jabong is a startup that changed from an inventory-led model to a marketplace model. Founded in 2005, YouTube started off as a video dating site dubbed "Tune In Hook Up". When the model failed, its founders switched to just sharing videos online.
5. Cash is always king
You may have a great business idea. But it is more important to be clear at the onset how you will generate money. A solid long term financial plan as well as budgeting is essential. Monitor carefully both the cash inflow and outflow. Liquidity in business is critical, 9 out of 10 businesses fail due to lack of liquidity in business. Your startup will not survive without adequate cash. If you focus on the monetary part the other parts of the business will take care of themselves.
Finally, Focus on the above principles and persevere. Remember business is all about sticking to the fundamentals. Don’t look at shortcuts - exits, takeovers, mergers. This is what experienced businessmen will tell you too.