Global Entrepreneurship Center (GEC), a US-based research institute, states that approximately 300 million people endeavour to start a business, out of which nearly one-third are launched every year. The GEC covers 40 countries with approximately 2.5 billion total population among which about 12% or 297 million are active in trying to get 192 million businesses past the initial launch and through the initial three years of operation. The data varies substantially from country to country and according to an estimate 107 million people in India trying to establish 85 million businesses. This is a mix of both opportunity entrepreneurs (those who take advantage of unique business opportunities) and necessity entrepreneurs (those who start a business to survive).
 
In the complex world of entrepreneurship, it is difficult to avoid operational and strategic missteps. But the real reason a large number of entrepreneurs feel dispirited is the feeling that their enterprise has gone the wrong way. Whether it is the product/market fitment, scalability, or other managerial issues, one should not give up before all the key elements have been tried and tested.

Ways of conducting a business is a check-radar for failure or speed of success. Though, it would be specific to the industry or geography but needs to be uniformly followed by everyone in the company. And, any changes due to internal or external factors should be communicated explicitly to all. It is pertinent to note that apart from the product the customers also buy the vision behind a company’s product/services. Clarity on the vision is the most important aspect to edge past the competitors. Marketing and branding around the vision is a great success tool for young companies. It is also important to improvise or consistently scale the business while revisiting the organisational strengths, thereby minimising the weaknesses.

It is noteworthy to look at the following key things, which can help build a successful start-up:

• Founding and management team:
Many experts believe that two people in the founding team are considered ideal as with increasing number of founders, the company’s value is shared accordingly. However, what is really important to be mentioned is that more than the number, it is critical for the founder of the company to carefully choose the right mix of co- founders with him/her who bring in the right expertise and culture to the table. Founders need to realise their strengths and weaknesses. Additionally, this point can also be extrapolated to the management team. A well-informed management team is considered good on strategising and would be able to minimise the risks in various aspects of business. It not only starts with putting together a right product but also validating its usability at several instances (before and during development) for necessary checks and balances and thereafter right planning to enter the market. The management also owns the responsibility for scheduling the above aspect for rightful gains. Last but not the least, a good management team would build a strong team down the line leading to success as the company grows.

• Valuation and funding:
Companies progress and fail at various stages of funding, reflecting on their valuations. Though it varies from one industry to another, increase in valuation is an important milestone to be worthy for next round of funding. However, it is also required to mention the risks of blowing up the valuation too much, which leads to a potential investor/VC shying away at times and making it difficult to go for the future round of funding/s. Market inroads through successful acceptance by the customers, a strong team to handle the business risks and scale up the operations are the elements of a successful business model. Proven ways to lower the cost of operations and customer acquisition speaks volumes about a profitable business. Such a business is scalable and needs further funding to speed up its growth or expand. Though it is possible many times to raise money at lower valuations too, running out of cash does not emit signs of a progressive company. Conserving and spending money judiciously is the art that is learnt on the go.

• Choosing right investors/advisors:
The right investors would provide advice, inputs and guidance based on their experience with various companies they work with. Or they could be because they were successful entrepreneurs themselves. In addition to money, proper hand-holding and guidance should be something that every entrepreneur should look for. It is important to differentiate between the ones who seem to know enough about the project/industry to form an opinion but not substantial to help manage a situation. Additionally, it is important to have prominent people from the industry in the advisory board to gain from their wisdom. It is equally important to consider if the advisors could bring in some introductions, clients and even investment for the company. Many times these advisory engagements are in lieu of sweat equity.

• Customer acquisition:
The cost of acquiring a customer should be less than the lifetime value of the customer. Judging the market right in terms of the need for a particular product, its usefulness, timing, market size and pricing leads to consistent and successful customer acquisition, because these are all cohesive factors. Rather than various marketing gimmicks – a well-defined process that leads to scalable ways to acquire the customers and thereafter monetise them at a higher level than the cost of acquisition is the solution. PR also plays an important role in the same. Press coverage is about positioning from the company’s point of view and perception from the reader’s point of view. However, it is important to see how much coverage says about the progress made in a business. Start-ups need to judiciously manage and mention the press coverage while fundraising, evangelising etc.

Roughly the same numbers of firms start and close each year. Firms that manage to constantly innovate survive the growth chart. Others do not make an impact nor benefit from venture capital. The entrepreneurship spirit is not about holding back but starting as soon as possible – to fail sooner, to learn and start again.
 
 
About the author: Utkarsh Joshi, Principal, The HR Fund manages both the business and operational activities of the company. Utkarsh started his career with a leading global major, Accenture, as Senior Software Engineer, where he  worked in the areas of business intelligence and data warehousing. Work aside, his favorite hobby is biking and he is the proud owner of a Royal Enfield motorcycle on which he takes regular road trips, across the country, with Ladakh being his favorite destination.
 
Disclaimer: The views expressed in this article are solely those of the author. MYB takes no responsibility for, and will not be liable for, the information provided by the author.