Starting a company in a nascent and emerging business like the business correspondent industry is fraught with high risk. Not only is the industry heavily regulated, but the profit margins are poor too. Even regular established players have to tread with caution.
Startups that choose to be self-reliant and avoid raising funds early on in emerging industries is a risky proposition, given the nature of the industry and the volatility of the business. Tight cash flows, notwithstanding, companies have to count their pennies, especially if they’re bootstrapped. In such a scenario, what can startups do? What guidelines, if any, do they follow? Is there a standard one-size-fits-all formula or is there something customisable for every startup?
We offer some startup hacks that we think could be useful.
This is a no-brainer for startups that choose to be self-reliant. Limited funds mean that critical and necessary needs are prioritised over the good-to-have while trying to grow revenues. This means startups need to review and change their focus.
Let’s take an example. A startup with a one-region, one-large-client strategy took an all-India coverage in 14 months with clients of all sizes. This strategy paid off in the long run, as they were able to hedge risks with a diverse mix of clients. More importantly, the startup could scale by foraying into the deep interiors of the country. The result? They were able to tap into a huge unexplored market opportunity. The company managed to remain profitable since its inception, with no external funding in an industry notorious for its long break-evens. Viability, scalability and profitability are essential for startups, and to ensure this, organisations should have a guiding philosophy.
In the excitement of setting up something new and remain profitable, organisations could get chaotic, quickly, sometimes within a year. Startups can bring some method to the madness and communicate it to the team by defining a theme for each year.
Once the themes are laid out for each year and the details drilled down, execution gets simple, as the organisation focuses on just one theme for each year. This also fits in with the first tenet of being self-reliant as multiple themes in a year could escalate costs.
Moreover, this sort of a brainstorming exercise can prove to be critical for clarity of vision to the core employees. It can guide their decision-making process and act as a strong branding tool.
As organisations grow, it is essential to lay the foundations of a strong culture and leadership that define the organisation.
With growth and an increase in the number of employees, it is important to craft and formalise the culture and guiding philosophy of the organisation. There are numerous complex designs for competency models that companies can choose from.
However, given the diverse mix of education levels, experience and backgrounds of employees in today’s workplaces, it helps to keep the foundation of the philosophy simply because a complex philosophy runs the risk of employees not embracing it. In a high-tech, high touch process, the key to proper execution is in managing people, which brings us to the fourth guiding principle.
As our company gained visibility in the marketplace and grew rapidly, we realised that responsibilities in critical functions were outpacing existing employee skill sets. As we embarked on filling this gap, the easiest option would have been to hire external talent. However, a single bad hire could ruin us. So, we decided instead to groom leaders from within the organisation. The culture that had evolved by then was that of high ownership and independent thought leadership with high levels of intrinsic motivation. Employees worked independently and with limited guidance.
We started out by mapping the roles on a half-yearly basis and working with existing employees to identify gaps in their skills. We encouraged younger employees to take up leadership positions and gave them the freedom to grow into their roles. Decisions were taken with consensus and we backed them with an enabling structure – a rigorous goal flow down and review process with functional and general training to fill the skill-gap. Since we were not a startup with traditional funding that demanded a short-term exit strategy, we could afford to be patient and watch the leaders of tomorrow blossom.
As companies gain visibility in the marketplace and grow rapidly, they might realise that responsibilities in critical functions are outpacing the existing employee skill sets. The easiest way out for companies is to hire external talent. But a single bad hire could ruin the company. Companies should, instead, groom leaders from within the organisation.
In conclusion, even though startups may follow these or other guidelines, there will always be failures, trials and learnings along the journey. The moot question really for entrepreneurs and startups is “are you ready to dive in?”
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)