As the startup shimmer in India is beginning to wear off, the realities of the mistakes and exaggerated assumptions are surfacing. This includes misinterpreted success stories and a wrong perception of funding. In fact, for many, funding was a goal instead of a step in business building process. So now, it’s imperative to analyse the situation, and build sustainable, strong businesses.
The reasons for India being a conducive breeding ground for startups are numerous - 1991 reforms, globalisation, sharp rise in IT industry, a new entrepreneur friendly government coming to power, and startup success stories. These stories portrayed that it was fairly easy to become billionaires, while ignoring the behind-the scene struggles and hard work.
When the startup scenario picked up in India, most of the investors assumed that all ventures would give profitable returns. But slowly as this falsified assumption broke down, many startups went for an uphill increase. Due to certain external and internal factors, investors in India are now hesitating to invest in startups. Apart from generating revenues, startups need to be profitable to rope in angel investors.
Go lean - Funding your business activities through personal funds and business revenue will not only reduce the number of variables on which the survival of your company depends, but it will also increase the risk involved. It will also make you and your team more careful about which ideas to spend resources on.
Product market fit — The most important steps one has to take in the early stages of a startup are: (i) have a product that is not only innovative but also solves a problem. (ii) Analyse and research the market of your product in-depth. Have realistic growth goals and build a sustainable business model that can survive even in the absence of funding.
Frequent customer feedback is pivotal for a startup, and many startups tend to overlook it. It can help you develop a better product and improve your services.
Thus, mass expansion should never be the goal of a startup. The startup should aim at having limited number of people who will love your product.
Marketing --Many startup founders believe that revenues can be generated just by increasing their product visibility and spending on ads. Also, they hold a falsifies assumption that it will decrease their CAC in the future. Though marketing is an integral part of any business, startups need to analyse how much of their resources can they afford to expend, since they need to focus primarily on short-term money generating activities. A startup should focus more on a good product which would lead to a positive word-of-mouth, which has always been the best branding activity.
Culture and employee retention - Recruiting and retaining the right kind of people is the most important part of a business. Especially in a startup, retaining your productive and loyal employees is important for smooth functioning. It’s equally important to have a culture where employees receive satisfaction from working instead of rewarding the employees with thing you can’t afford. To achieve that, in addition to emphasising on cost cutting measures, it’s integral that your employees feel that the company is growing and that they have a say and significant contribution.
In a nutshell, “if you survive, you win”
When it comes to startups, the sure shot way to increase your probability to succeed is to increase the number of tries. But to keep trying new ideas, you need to survive. Which would require you to only focus only on money-generating ideas, minimise the variables on which your survival depends, which includes funding an aspect which in a large way is not under your control, be flexible in your ways of working and keep improvising.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)