“Something is not always better than nothing. Some loss is not better than no loss.”
After studying a lot of start-up business models and being an entrepreneur for most of my professional life, I can say without an iota of doubt that all entrepreneurs start with great intent. Most of the entrepreneurs are industrious individuals who leave a secure job to pursue a dream.
On the one hand, we keep hearing success stories of start-ups that got funding and acquired or witnessed double-digit growth rates, on the other, the death of a start-up is rarely announced – especially if it was funded since it reflects that those who invested the money did not do their due diligence.
In my previous article, I talked about the ecosystem we must create in a country to ensure that success or the survival rate of start-ups is significantly higher than the currently prevailing rate. I realised that entrepreneurs in India are so busy working IN the business that they fail to work ON the business. There are no guaranteed success formulae in this world, but if you are open to learning you may figure out the patterns that maximise your probability of success.
1. Spot the megatrends
As an entrepreneur, are you aware of the megatrends that can affect your business? You must also know when is the best time to act on those megatrends? It is like surfing a wave, it should neither be too soon and nor too late. An average idea at the right time is better than the right idea at the wrong time. Nokia missed the smartphone wave while Apple and Samsung caught it head-on. Microsoft missed the Internet wave and Google made the most of it. Facebook got the social media wave right, while Orkut could never capitalise on its early start.
2. Regularly check numbers
Cash flow is the real oxygen your business needs. Make sure you keep an eye on what returns your business investments are getting you. Do not be driven by a gambler’s instincts and bet your survival on your growth. Capital budgeting and resource allocation should be closely monitored by the founding team and investors. The e-commerce business model in India is going through a rough patch since most of the players used investor’s money to offer huge discounts to lure the customers. Customers earned only through discounts are not the most loyal breed and if your competitors have deeper pockets than yours, then they can easily win them.
3. Avoid fame unless you have earned it
Just because you got funded does not mean that you are successful. Investor funding is a huge responsibility. Make sure you do not let the media attention distract you. Measure your success by the fundamentals and not by the free or paid media stories your business is getting. Every time you claim to be someone who you are not, you are setting a wrong example. It is shocking to see the arrogance and flamboyance of some of the under-30 entrepreneurs in India. I remember reading something about Warren Buffett on simple living. His own children were not aware that their father is a multi-billionaire till the story of his net-worth got out in the media.
What else is making news
4. Go after the first million before you go for the first billion
Every entrepreneur knows that sometimes a good idea fails to take off because the runway ends. Make sure your business starts churning cash quickly so that you can fuel its survival plan till the time it reaches the auto-pilot mode.
5. Build a sustainable and operationally excellent model
Get your operations right as soon as possible. Operations are the spine of a business. Make sure your house is in order before you go on a war to conquer the market place. How many customers, orders and suppliers your business can manage effortlessly? How efficient is your overall supply chain? How well-managed are your receivables and payables?
6. Disrupt your own model
If you are not good at finding fault with your business model, your competition will and it might just cost you the entire business. Look at the disruption that Amazon brought to brick and mortar retail industry, Airbnb brought to hospitality, Uber brought to taxi transportation, and the list goes on and on. If you think your business is too big to fail, then you have not fathomed the power of technology.
7. Get the execution skills
To succeed in any business, you need to master four to five core skills that determine your success. Product innovation, business development, stakeholder agreement, partnership brand development, operational excellence and people management are some of the crucial skills. Your team should be competent enough to execute the growth and profitability agenda.
8. Stay detached to the product and your business model
If you do not change your business plan when you must change it, then there will be no business left to plan around. The very first plan with which most of the businesses start is not the plan that makes them successful. More often than not it is altogether a new plan or an immensely modified version of the first plan.
9. Study your competition
Only the faster, better and the strongest businesses survive. No matter if you are a one-man army or a global company, be watchful. Keep an eye on your successful competitor’s business strategy. You cannot beat the best without studying the best.
10. Study your consumers
Every global business model may not be successful in your country too. Learn to study the target market demographics. Consumers in every country act differently depending upon the economic cycle they are growing through. Consumer research should not just be one of the agenda’s, it must form the core of the business strategy. Invest time and resources in knowing what your customers want presently and what they may need in future even if they are not yet aware of it. The ability to understand the psychology of your customer segments will give you the much needed competitive edge. Amaze them with the quality of your product and service.
You can fail and then learn or you can be proactive with your lessons so that you can avoid failure. No entrepreneur has the time to make all the mistakes by himself or herself.