Ways of Life for a Successful Entrepreneurial Journey
Date: Tuesday , January 26, 2016
As the business dynamics have been rapidly changing, especially since last 15 years, the risks, challenges and the mitigations have also taken a new shape & form. The world today has become flat & thus, a local business can suddenly face the heat of competition from thousands of miles away. The digitization has enabled the businesses to expand with a click of button and this has also given rise to the challenge of entering wrong markets. I can broadly list 10 major challenges which the startups are facing in the current business ecosystem.
• Identifying the real problem statement to start a business and not the symptoms alone.
• Building the right team.
• Building a scalable model
• Raising just the right money against right valuation by right investors
• Following innovative model or adoptive model
• Developing robust business model
• Cash Flow Management
• Fast moving business ecosystem
• Timing to accelerate
It is a real catch as often the entrepreneurs might have a business idea which is not addressing the real problem, but is vacillating between symptoms. This is one ongoing challenge which startups must face. A proper HR & recruitment policy should be there right from the start. Remember, even if you are small, you must behave like a large company. Make sure that even your first employee goes through a rigorous & targeted interview process even if you are desperate to hire that one person. Anything that comes easy loses the importance; so your employees must earn each position. Build a long term association model by opening stock options for the right talent.
You can\'t build a business if it can\'t be adopted by multiple customers. Look at the larger picture and be flexible in your business model. Raising the money is one big challenge but raising it through the right people is even bigger. The biggest challenge is however getting a balanced valuation. Respect the fact that investors are no philanthropists. They are into business and thus they should try to grab a large portion of your company against the money they infuse. However, you as the entrepreneur should always believe in your idea and the business plan & thus should make sure to keep enough of the company\'s equity with yourself so that once the business hits bull\'s eye, you accumulate wealth. That is your right & you must assert it. Be open and cogent in your discussions with the investors & settle on a balanced deal always.
Today, the investors in India are often looking at the business models which are already proven somewhere else. Noticing that trend, the entrepreneurs also sometimes opt for a similar adoptive model even if they actually didn\'t believe in that. This tendency might not work with everybody. I suggest that always follow your passion and areas of interest where even if you don\'t get the investors, your passion still takes you ahead. Remember, the investor sentiment is capricious, but your business model can\'t be.
Have a clear picture of your costing. Once you have worked on your fixed cost, keep a strong focus of your variable cost and the revenues. Calculate your cost of acquiring each customer and the lifetime value of the customer (the potential revenue you would generate from that customer). If the difference between these 2 values is good enough and you feel that the fixed cost can be recovered within a maximum of 3 years, it seems to be an attractive proposition. Remember that once your fixed cost is recovered, the leverage would give you massive profits.
Remember that the idea is only 20 percent. It\'s the execution which carries the business to the rest of 80 percent. Proper execution needs a perfect planning. Each minute spent into the planning is worth it. Don\'t rush to the things and at the same time, don\'t hold the decisions for too long. If you face a real dilemma, then take an action. If it turns out to be successful, bang on; if it doesn\'t, you have understood the right way. Remember that cash is king, always. Keep your payment cycle under check. Don\'t use your money raised through short term debt in building an asset that gives the return only in long term. Watch your cash flow & target to become cash flow positive at the earliest.
The world is moving fast. Keep yourself apprised of the ecosystem & be on your toes. Keep on learning & move fast. The current business ecosystem is no space for the laggards. Be extremely analytical in your assumptions and watch the trends closely. These trends will give you the foresight on the timing for pressing the accelerator.
Most of the startup entrepreneurs neglect or are unaware of the way the investors think. So it is pertinent to understand the financials of the business. So one should avoid relying too much on the idea and not validating it.
Thus in the coming days, we expect pattern matching being used almost everywhere from an online clothing retail to medical examination. Mobile technology combined with the intelligence of pattern matching will give rise to the most disruptive technology which will be used almost everywhere. Another trend will be Big Data especially in the area of hyper-local networks. The analytical capability of big data will give a straight insight into the consumer behaviour and thus will fuel the future innovations.