A 2014 NASSCOM estimate put the number of new businesses by Indian entrepreneurs at 3,000 to 4,000 per year. At the same token, nine out of ten of these startups come a cropper.
So, what can and you do to avoid becoming such a statistic? Pundits say doing the crucial right things can avoid failure. Here are some points to keep in mind when you set up your startup.
1. Keep yourself informed by reading: Read the standard books about starting businesses. This will help you understand what you’re getting into.
2. Pick a pain area: Pick a vulnerable area in your business, preferably pertaining to your product or service, and try and gain insights into markets gaps and customer requirements.
3. Follow experts: Follow experts on social media. They are constantly providing updates and even tips on product development.
4. Do your homework: Check if the idea already exists in the market and study the market and competition. The more research, the better the results.
5. Describe your business idea: Write a one-line description of your idea. In business jargon, it is called an elevator pitch. You get the picture? People need to easily understand in simple language what you want to do.
6. Understand where your customers are coming from: Have a dialogue with potential customers: they will provide valuable insights into your product and proof of concept. However, not all customers are forthcoming so set up a Facebook page to collect feedback from friends and their friends.
7. Look for a mentor: Find a mentor who has the right startup experience and who is willing to do some handholding. Remember: For a B2C product idea, you need somebody who has experience in B2C.
8. You need a co-founder too: Trawl your friends or acquaintance list for anyone who can be a prospective co-founder. At least one of you has to know coding, as it is impossible to build any tech startup of value without one of the founders understanding the nuances of technology.
9. Follow the money: Carefully calculate how much investment you need to get going. But don’t wait to build your product till someone invests in it. With a technologically-sound, co-founder it should take you around two months and Rs. 2 lakh to release a basic product.
10. Speed up the process: Make a list of accelerators where you can park for a few months, and gain access to multiple resources and talent. Some may demand a stake in your company, some won’t.
11. Appearances matter: Fake it till you make it. Book a domain and get yourself an official email ID. Print a professional-looking business card. If you don’t have a mailing address, use a friend's office till you get one.
12. Get a good corporate lawyer: Talk to a legal expert to ensure your business does not violate any law.
13. Tell your friends and family you’ll be dropping out of sight: Inform your near and dear you might disappear for the next year or two, because startup means no social life. Choose your PBoD (Personal Board of Directors): they are usually those you know well but are unbiased. Hang out with them whenever you can. (Keep spouses and co-founders out of the PBoD.)
14. It’s all in the game: Be in touch with at least one successful and one failed entrepreneur before taking the plunge (or quitting your day job). It will prepare you for one of the two possible outcomes that may become reality soon.
15. Keep a milestones diary: Decide on timelines for major milestones and stick to them, come what may.
16. Count your pennies: Be frugal. Never ever splurge on fancy offices and accessories. Also, avoid extraneous loans – be it housing, personal or excessive credit card indulgences. Startups take time to become profitable and loans can slow you down.
But remember, no matter how prepared you are, only your own experience can teach you the best lessons. And at the end of it all, whether you succeed or fail, you would have added a whole new dimension to yourself.
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