I had spent 17 years in MNCs in various levels in India and Japan before the start up bug stuck me. It was in the summers of 2017 I had decided to take a full plunge into entrepreneurship. As I am coming from a pure working class background, I really didn’t have any leverage or the experience of business. The only thing I had was confidence in myself and truck load exposure through my rich experience working in top conglomerates at absolutely decision making levels. Some of my friends who tried their hands in start-ups gave it up in initial 12 months and decided to go back to corporate. I had this unique objective in my mind a) I will never stand in the queue for getting a job, b) to create employment opportunity for 1000 family in the first five years. This was a huge drive which kept me floating for the last 3 years. I understand that it’s a journey and to sum up the various roadblocks ….
1-Create A winning Team
No corporate journey is undertaken alone.One has to create a team which dreams and thinks similarly and can take arduous and difficult journey together. Initially a lot of people would like to join the start-up simply because it sound fashionable but they become a headache once you start with the actual journey. Lack of commitment aggravates frustration in the organization which quickly escalates into an open conflict. If the team members start making under commitments due to the fear of being responsible or blamed for failure, businesses will never achieve its goals.
What should be done?
A core team must come with a diverse skill set is for the start-ups to grow and succeed. Any team can be formed by the individuals who have different range of capabilities with shared vision. This arrangement allows the members to help each other, learn from each other, and put a concerted effort in order to achieve success. Diversity and dedication of a team drives disruption.
2-Access to easy capital
Funds flow is essential for business start-ups to survive. One of the key challenges that small businesses face today relates to finances. As income increases, the expenditures also increase and to top it all, start-ups rely heavily on angel investors who provide them strong financial support seed capital or working capital. When such situations arrive, start-ups are the first ones who lose on properly managing their finances, and eventually succumb to the pressure. While entrepreneurs have to make sure that they have enough funds to go around, in the meantime, they also have to pay their employees, contractors, mortgage, and grocery bills.
What should be done?
First and foremost is securing oneself from frauds and cheats. As a rule of thumb, start-ups should always find ways of minimizing their costs. Invoice factoring is another way of speeding up the account receivable processes in start-ups. In this digital age when invoice payments are made through mobile phones, there is no harm to request immediate payments from clients. It is also very important to secure credit before any business needs it as they can easily find out how much cash they will likely need to survive. I have seen new-age entrepreneurs in China getting funding through SBLC and rotating the money multiple times before delivering to the customer.
3-Absence of a Go-To Market Strategy
Due to lack of understanding about the market place, it is always a challenge for start-ups to find out best ways to market their products or services. The fact that small businesses need to maximize their return on investment with efficient and result oriented targeted marketing also makes them vulnerable in terms of trust they have develop with respect to customers. Without putting a comprehensive marketing strategy in place, companies’ profits take a steep downwards trend.
4-Lack of proper Business Plan
A fool proofbusiness plan with plan B and plan Cis the key for start-ups to get their businesses take off the ground. In this technological landscape, writing a formal business plan based on a vague requirement of some institution is suicidal. Due to improper planning, many businesses fail in the very first six months because they do not effectively factor in challenges and bottlenecks. Even if the start-ups have innovative ideas and ambitions, but their business plans lackslong term perspective, they are destined to fail or they have to continuously devise and change them.
5-Surviving the heat of market place
Competition is the most inevitable challenge that start-ups face. In fact, start-ups have to bear the brunt of facing two-way challenge: one coming from large conglomerates that have dominated the marketthat have the monetary muscle to replicate all the best practices and innovation one brings about and making difficult for newcomers to emerge. Second, there are countless start-ups that are launched regularly in the market having innovative ideas, so it is highly likely to get swallowed by the shadow of other start-ups.
Dr Soumyajit Patnaik
CEO , DSS Expomed