5 Points To Remember When Starting Your Own Business

Do you have ‘it’ in you to take the leap of faith and become an entrepreneur? Of late, the start-up mania has caught up in India and entrepreneurship is passionately glamorised all over the country. Home-grown role models can be found aplenty – right from Sachin Bansal and Binny Bansal of Flipkart fame who are taking home million-dollar paycheques to Phanindra Sama, the former redBus CEO who recently made a $100-million-plus exit from his venture.

But one can’t ignore the flipside either – the numerous consolidations and shutdowns that had taken place. Only 10% of the approximately 800 start-ups that enter the Indian market each year survive to make it to the next level, experts say. The funding stream has thinned as well. In a typical scenario, only about 27% start-ups in incubators make it to angel funding and out of that set, only about 20% reach Series A stage, according to Alok Mittal of Canaan Partners.

But in case you have got business ownership on the brain and would not back out at any cost, here are five crucial points to ponder. Take a look and find out if you, your idea and your business fit the bill.

Have you got a ‘zero’ idea or ‘hero’ idea?
Have you got hold of a concept that will take the world by storm? You might be obsessed with your ‘disruptive’ idea but can it survive some of the acid tests that the market has in store for you? That’s a difficult thing to evaluate, especially when you are passionate and firmly believe in your idea. But do it right now and better still, get an expert’s view (an industry guy or an investor could be the ideal person to approach). Don’t flinch if a rejection letter is thrown your way. Just remember you can work around the initial idea and hit the jackpot in a bit. After all, even Apple was selling blue boxes (phone phreakers used them to make free calls) and PC kits before its revolutionary i-devices came to life. So stay focused, try hard and avoid launching copycat companies. It requires more brainstorming, more innovative thinking and loads of insight to establish quality entrepreneurship.

Can you entice your customers?
Do you have a market for your product/service and will it grow in time? An idea may sound great on paper but it must have real-life utility if you want to develop a sustainable business. In most cases, you will have to prove the potential in your idea through hard work and the investment of your own capital. So do a thorough market research with focus on traction and paying customers who will get your business going. The money must be there where the mouth is – so have a viable business plan in place, along with a prototype and an effective team. Otherwise, even the most wonderful ideas won’t work out.

What about a great team?
Ideas sound great when they are abstract, but it is an entrepreneur’s painful necessity to find the right kind of people who can build upon those without spending a fortune and market the same in a memorable way. This may seem deceptively simple and some first-timers actually feel that hiring is an exciting chunk of the whole deal. Unfortunately, there are too many loopholes. For one, you need some outstanding people who are experts in their own space, can think out of the box and share your long-term vision. But it requires a large amount of money to get them on board.

On the other hand, industry veterans are a bit wary about joining start-ups – not just because they pay less but because they go back on promises as soon as they strike gold. “Within a few months, they become the worst sort of dictators and getting a free hand is next to impossible,” reflects a former CTO of a start-up who was compelled to return to his old job after a ‘miserable’ start-up outing. Again, mid-level managers bitterly complain about the lack of transparency and sudden pink slip spurts that keep them on their toes all the time.

“The bad thing is funds are not always the issue,” says Arunav Massey, an HR executive. “Their policies are not that people-friendly and ego comes in the way. That’s why even co-founders part ways after some time,” he adds. So take note. Putting together a great team is crucial for your business. But it also matters how you build the team and how you play the game.

Can you bootstrap?
Going by the current trend, that’s the way ahead for start-ups. On an average, start-ups in India received 52 angel and 155 Series A investments over the past three years, according to Venture Intelligence, a research service focusing on private equity and mergers & acquisitions. Let’s also get back to Mittal’s analysis, presented at the TiE India Internet Day event earlier this year. Based on an informal survey involving more than half-a-dozen stakeholders in early-stage funding ecosystem, it has been found that about 38% of the start-ups have to survive through self-funding, at least for a year. Of course, you can try out government funding, collateral-free and interest-free loans and the latest craze – crowd funding. But overall, you must be prepared to put in some seed money of your own if you want to start up in today’s volatile economy.

Do you have the courage to fail?
Mental toughness is the key to success in any field but here you need a double dose. Don’t worry – you have home-grown role models like Just Dial and Snapdeal who failed and pivoted over and over before striking the pot of gold. However, the path ahead will not be easy. As for the born optimist, here is another disconcerting finding from the legendary land of start-ups – the US. According to a new study by the Kauffman Foundation, only 52.8% Americans are aware of Steve Jobs while 96% know who Marilyn Monroe is. If that does not deter you (knowing fully well that very few of us will ever reach his height), go, take your leap of faith, backed by well-chalked-out business plans and future-proof growth strategies.