“Start-ups are as old as the word itself” as quoted by the most eminent person of our nation in the recently concluded Indo-US Start-up Konnect 2015. He went on to add that “Start-ups are close to my heart”. Our Prime Minister Mr. Narendra Modi pressurized the need of blooming of start-ups in India. Why start-ups have been the hottest trend these days? Why strategies and deep analysis are done in and out before initializing a start-up? Generation X never thought so much, why Generation Y need to? Answer being very simple – Competition. Not only from other stalwarts, not only from other start-ups but also from itself. Every established industry today was once a startup. What made them leaders is the most analyzed study in management courseware.
Start-ups cover wide diversity in themselves. Some of them include Small business start-ups which are family owned but cover maximum entrepreneurship in India. Another type is Silicon valley-type startups also known as scalable start-ups. These start-ups are expected to be big with time. Large company start-ups where child ventures are evolved from parent company with change to market demand. Google and android signifies such start-ups. Whereas in Social start-ups, more focus is laid on welfare and betterment of society and not on returns. Sustainability still remains major concern. And with such wide diversity, strategies and application of strategies varies exponentially. Strategies are nothing but art of planning and marshalling resources for most efficient and effective use to achieve set goals.
Nothing is easy and more so in India, country of 1.2 billion people with diversified geographical areas and culture with hugely varying preferences and stereotyping, setting a startup becomes much more risky. We counter hundred successful ventures emerging but 1000’s of them don’t make it to the list. Lunching isn’t easy. Lot of work needs to be put and worst part is no one can guarantee if it would end well too. One can only simulate but ‘one size fits all’ is not the way to go. So for different startups, different strategies should be adapted and executed.
Start-ups must have certain inevitable traits but what also is important is the efficiency of the innovator or owner. Owner invariably must have a unique and feasible venture idea, enough physical resources, Technical know-how of related field, personal contacts critical to business are some of them.
Without going too deep into the analysis section, a 4P Model framework must be in the base of every mind – Plan, Process, Place and People. Every P is applied to every other and even lag in one P will severely impede the progress of startup. Plan of a startup implies to the idea or the base on which further proceedings are to be carried out. Google started as a research project by two Stanford Undergraduates who theorized of a better way to evaluate relationship between websites turned into small company that eventually dominated search page.
Process is the part where most precise execution is required. Process of setting up of start-up should be such conducted that start-up must be sustainable even after bearing initial hiccups. Way back in 1955, when Ray Kroc opened a small burger joint, the punch lied on the process that made that joint McDonald’s today. He made sure to create an universal system that provide fast service, franchised the restaurant and ultimately franchises paid rent, royalty and fees to the corporation making that small burger joint to one of world’s biggest food chain.
Place holds importance. Sometimes a sustainable plan and a greatly executed process implemented in an inappropriate location can bubble the startup. An apt example would be the case of Walmart where neglected regions were selected by Sam Walton ahead of big municipals to start the venture and the rest is history.
Last of 4P model is People. Most times it becomes very improbable to study the behavior of customers, even more so for vastly populated and diverse nations like India. Putting it in simple words, one cannot simply sell “Dhokla” in south or “Idli” in north India. Chance of success isn’t null but not great either. Once all the above criteria are ticked off, real task begins. Setting up is easy, sustaining it isn’t. To sustain the venture for considerable time, some of the golden laws need to be followed. As stressed earlier also, a sound business model amalgamated with a sound revenue model as the cash flow is important. A successful startup is successful not because of a great idea but because you are giving people what they want and most importantly have willingness to pay for it.
At most times, Setting up of price is the crucial difference between a bubbled startup and a sustained startup. It is never true that charging less would in turn make sales go high which would lead to the establishment of the startup. Apple charged quality products at a relatively higher price compare to other competitors but still established its own market and became huge brand in no time. Also ironically, some ventures charged too high in the initial days which lead to shutting up of the company. Hence pricing holds key importance.
“The more you show, the more you sell”. Marketing budget should be included in the capital cost of the venture. Use of social media should be optimized. E-commerce is of rising slope and hence it can be used as ladder by startups to climb the mountain of success. Nothing can be sustainable until it is managed properly. And it is managed by human resources, the most crucial resource a venture can have. Though startups initially have limited human resources, it can’t afford to lose those valued ones they have to competitors or any other factor. Startups should ensure that enough benefits are provided for the job performance and company culture is rightly blended with them.
Policies and practices are vital cogs of the wheel of success of start-ups. Some benefits that start-up inventors get include “Termsheet.io.”. Termsheet.io actually accelerates deal making once Angel investors are found for the startup. It actually employs every possible tool, tactic and strategy to remove hurdles in the conduct of deal. It is an online registered form which can be downloaded, filled and filed. It focuses on three angles of deal making – initially qualifying investors and founders, orchestrating, syndicating funds and ultimately closing deals stressing on locking in commits, managing payments, preparing paperwork etc.
In recently concluded Indo-US startup Konnect, Mr. Narendra Modi met with industry stalwarts and 7 MoU’s were signed between different entities which would boost startup setup in India. Some of the eminent ones were between NASSCOM and Indus entrepreneurs which focused on rise of entrepreneurship in India and Silicon Valley. Another was between Institute of Bioscience and Center for Cellular and Molecular Platforms which would enhance scientific based entrepreneurship, research, academics by leveraging each other’s ecosystem. Many more such deals were finalized which gives a positive feeling about future of startups in near future.
PM also announced about Bharat fund, a $150 million impact fund dedicated to health, agriculture and renewable energy sector which would hugely boost startups in respective sectors. Bureaucrats accompanying Mr. Modi also made several key proposals which included launch of startup mission by early December and reduce compliance for new business till they reach a certain threshold. Mentioned policies and practices encourage potential entrepreneurship ideology in the minds of innovators.
Start-ups are the way to go. With digitalization being rapidly growing, even rural India became potential market for start-ups. Need of the hour is to violently promote start-ups with more convenient policies. Focus on more detailed analysis of basic framework (4P) along with fixation of various aspects regarding business such as business model, revenue model, price fixation and importance of human resources in the success of start-ups. Every cloud has a silver lining. Having described various strategies for success, following them blindly doesn’t guarantee returns. For guaranteed success, every start-up needs to be considered as an individual type with basic framework remaining more or less unaltered.
The article has been written by Rajeshwar Mallick & Abhishek Sarangi. They are presently pursuing their MBA from XIMB.