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How to tackle the challenges of startup business in 2018

How to tackle the challenges of startup business in 2018

Friday January 12, 2018,

8 min Read

Research of worldwide proves between 60 percent and 90 percent startup ventures worldwide fail within the first two to three years of inception. Reasons for failure differ in each country. Launching a startup can be fairly easy nowadays, especially in India where licensing procedures now stand simplified. Additionally, support systems such as startup incubators and startup accelerators have sprung up across this country. Further, entrepreneurship has become a new way of getting rich for most Indians, regardless of their educational qualifications and work experience.


Current startup scenario

According to a report released late 2017 by National Association of Software and Services Commission, the number of startup ventures in India grew by some 1,000 new enterprises during the financial year 2016-2017. India is home to estimated 5,500 startups according to figures available from various sources. While most startups sprung from Mumbai, Bangalore, and New Delhi, over 20 percent such ventures were reported from Tier-II and Tier-III cities, the report adds.

Limited startup Sectors

Though India has the world’s third-largest startup ecosystem most ventures focus on advanced technology including Artificial Intelligence, Virtual Reality, Augmented Reality and analytics. Healthcare and financial technology enterprises also constitute a bulk of Indian startups. The diversity of startups in India appears limited, considering NASSCOM statistics.

One of the main reasons for the limited growth of Indian startups is the innumerable challenges they encounter. Fortunately, none of these issues are insurmountable. With little planning and tact, your startup can also overcome every challenge.

Tackling Challenges of Indian Startups


Unlike certain other countries, finding venture capital and crowdfunding for startups in India can prove difficult. The reason: Most Indian startups are copycats. Meaning, they either adopt business and revenue models that have succeeded abroad, especially in the US. Originality is pathetically lacking. As a result, venture capitalists from India and abroad are reluctant to pump in funds into Indian startups unless they are innovative and unique.

There are two ways to overcome funding problems. The first is by launching a unique startup. Meaning, a startup based on business models that have no precedent worldwide. A great example of unique Indian start-up is RedBus. Other ventures like OYO Rooms and Flipkart were based on America’s Airbnb and Amazon respectively.

The second way to overcome funding problems is by availing loans from Micro Units Development and Refinance Bank (MUDRA Bank), a scheme launched by the Indian government. The scheme works through participating Public Sector Undertaking (PSU), private and cooperative banks as well as designated financial institutions. MUDRA bank loans are available for startups on soft terms, provided you meet specified criteria. To counter the funding challenge in 2018, approach MUDRA bank for capital.

Staffing Issues

Traditionally, Indians prefer to work with Central and state government ministries, departments and enterprises, for job security these jobs offer. The second preference remains Multinational Companies (MNCs) and major Indian business corporations, in the private sector. A major consideration is also the high remuneration paid by Central and state governments as well as MNCs and giant Indian corporate houses.

Very few graduates from any discipline are willing to work for startups. Indians, crazed by job security concerns believe that startups offer no long-term job guarantees. Startups working on limited budgets are unable to bridge the divide in salary and perks paid by MNCs and large companies. Hence, only fresher candidates or those incapable of getting jobs elsewhere apply for working at startups. Consequently, every startup owner is saddled with unskilled staff and spends vital resources on training.

Tackle this challenge by hiring fresher candidates on the internship basis. However, you need to have at least one professional that can train all fresher and monitor their progress. This also helps to trim your payroll since you can pay a stipend rather than salaries to match industry standards. The year 2018 will see several fresh graduates who would be willing to work for a startup, at least for training and some experience.

Digital Marketing

A major cause of concern for every startup is the inadequate popularity of brand, products, and services. Understandably, advertising in print, radio, and TV costs a fortune that is beyond the reach of startups. The encouraging news however is, 2018 will usher in several new trends in digital marketing.

Developing an excellent digital marketing strategy that lays emphasis on interesting yet relevant content and speedy delivery to your niche clients will ensure your success in overcoming challenges related to publicity. Utilize social media platforms including Facebook Business, LinkedIn, and Twitter to get rapidly get across messages related to product and services launches and innovations made by your startup. Research worldwide proves, consumers nowadays acquire maximum possible information about a product or service before buying. For existing startups, add a blog on your website. Incumbents should create a presence on the Internet with a website since these will play a key role in deciding the reach of your startup in 2018.

Additionally, picture and video sharing platforms Pinterest and YouTube are growing in popularity among digital marketers. A sound digital marketing strategy helps create brand awareness.

Presence on Mobile

Germany based statistics provider Statista says smart-phone users in India will reach near the 300 million mark by end of 2019. A study by Associated Chambers of Commerce and Industries of India reveals, some 65 percent of online shopping for goods and services in 2017 occurred through smartphones. This means the biggest growth in the number of smartphone users will occur in 2018. An increasing number of cheap but reliable mobile phones with Fourth Generation (4G) access are now flooding the market.

The biggest challenge faced by Indian startups is getting excellent, customized apps that do not consume large memory of a smart-phone and are user-friendly. The first thing to do is get your startup “mobile ready.” Meaning, your apps, and content should be available easily through smart-phones in 2018. Your app should be customer friendly and very efficient- meaning- a prospective client can place an order while on the move or during free time at office or home.

Proper Marketing Strategy

Regardless whether you already own a startup or plan to open one, a poor marketing plan is sure recipe for disaster. As mentioned earlier, between 60 percent and 90 percent startups fail for various reasons. One of these is poor marketing strategies. The year 2018 will see competition among start-ups as well as established companies and MNCs getting hotter as everyone tries to grab a lion’s share of the market pie.

Additionally, you can expect some new startups to offer copycat products and services in 2018. Price wars are imminent. Hence, only a great marketing strategy for 2018 can ensure your success. The best way to develop a marketing strategy for 2018 is by studying the market for your products and services that existed during the last two years and Key Performance Indicators. Learn about failures too since they hold vital lessons. Never engage in a price war regardless of provocation.

Astute Budgeting

India is headed for general elections in 2019. Hence, some major amendments and reforms to existing economic policies seem inevitable during 2018. Hedge your startup and finances against any financial aberrations that may occur a change in policies. Keep aside sufficient funds to counter an increase in taxations, license fees, operational costs and overheads that can buffer any sudden expenses. Additionally, Goods and Services Tax and various other new levies can make eat into profits of your startup venture. Hence, you require astute budgeting to counter any eventuality, in the unlikely circumstances they arise.

Real Estate and Office

Prices of real estate are on an upward swing and the year 2018 will see lease and sale prices of commercial premises, especially office space, soaring to newer highs. This challenge needs to be tackled immediately. Additionally, operating from unlicensed premises can attract stiff penalties and cause you to lose the license. The Central government has already declared its intentions to crack down on properties held by tax evaders.

In such scenario, it would be best to relocate your office to your home. Additionally, you can hire staff for telecommute work, since it would save them time and money. Instead, they can work from homes, wherever possible.

Foreign Direct Investment

With India presenting a huge and hitherto untapped market, the Make In India move is gaining momentum fairly rapidly. This has already caused a huge influx of foreign firms into the country. India is also receiving billions of US Dollars worth Foreign Direct Investment from companies that intend setting up a manufacturing base in India. In the mid and long-term, these major players can become your biggest competitors. They have certain inherent advantages like large budgets and capabilities to outrun rivals, as was proved by the tussle between Amazon and India’s homegrown Flipkart.

In Conclusion

Understandably, challenges are imminent and inevitable for every business, regardless of its size and nature. There are no serious threats confronting Indian startups or upcoming ventures. The above points are only meant to serve as guidelines, to help you prepare better to meet challenges posed to startups in 2018.

The good news is, the Indian government may announce some sops and benefits for new startups and existing ones in coming months, as part of its Skills India and Startup India initiatives.