Entrepreneurship is not a cakewalk. It requires burning passion and risk taking ability to startup something but it is difficult to maintain the same passion throughout. There are times when things go bleak and situations may not remain in control but if the initial thought process and research is done properly then any startup can succeed and turn out to be a successful venture in future. There are certain steps that should be kept in mind before starting up.
1) Before stating up, focus on solving core problem
The key to success for any start-up is the problem it is solving. The problem can be a very simple one or a complex one but it should be a core problem which everyone relates to. If the start-up focuses on a core problem and comes out with the solution, it will strike the right cord with the end users and will be accepted by the masses. In this case, Ola and Uber are perfect examples. Before their launch, people were using taxis for daily commute. There were options of booking cabs on phone etc. but the process was a tedious one. Making this complete process a much simpler task was the need at that moment. Both companies worked on this core problem of how taxi booking can be made simpler and thus, they were bang on with the solution. Making this entire process a one click task was the need which they identified clearly and thus, solved the core problem.
2) Don’t get distracted with the noise of funding
Lately, we saw a mob of people leaving their cushy jobs for starting up. This mainly happened when funds started pouring into our country. Adding to this, people got into herd mentality for starting up in the sectors where cash flow was happening. Food Tech is one of the examples in this case. Many start-ups opened in this sector after seeing the huge influx of foreign funds without doing proper study leading to a big bubble. Funding and valuations work in the same way as share market. As the investors pour in money the valuation rises. Seeing this other investors pour in more money leading to an artificial increase in valuation and thus the bubble which is very risky. Thus, instead of focusing on sectors where funds are distributed start-ups should focus on core problem and come up with the correct solution for the same.
3) Start with simple MVP (minimum viable product)
A very important but still a neglected area by lot of start-ups. MVP is an important component for any start-up to grow. A simple MVP helps in understanding the needs and demands of our customers and thus, ensuring that changes made on MVP for the final version are as per their requirements. A perfect example in this case is news in shorts that started with a simple Facebook Page where news was posted in short format. Once the page became popular and huge demand was seen for such thing, a mobile app was launched. Many people are running their startups from a simple Facebook page. The mobile app, website and all other components are secondary and needs a lot of customization as per the requirements of our target segment. Thus, starting with simple MVP is very important.
4) Right set of mentors
A start-up’s success is generally measured by the amount of funding. It is assumed that higher the funding, more are the chances of success. Funding is an important component but not the only one. Right mentoring is a very necessary and important component for any startup to grow. The right set of mentors can guide you in the right direction, have a long term approach and foresee many things which we cannot. Thus, having mentors and that too right ones becomes an altogether important and a must require part for a start-up.
5) Never burn cash unnecessarily
Many start-ups fail because of unnecessary cash burn. Cash burning is important but only at right places. Eg: Uber puts a lot of cash in technology and making UI smoother and user friendly. Operations are highly smooth and automated. This is important because the core product of Uber is the app and technology. But on the other hand, Housing.com ventured into many new products and spent a lot of money on hiring operational sales people/photographers. All this when core focus should have been the original product. Putting hands in many things wastes money as well as your precious time. Another example is Grabhouse which I personally like a lot because of the way they grew. All the possible “Growth Hacks” that you can possibly think of, they did it and with very less initial funds. I personally believe a lot of cash at hand kills innovation. Thus, start-ups should always maintain an optimum balance between cash burn vs cash conservation.