Follow these expert tips to ensure success in your startup business
By Nitasha Chawla
Running a startup business is not child’s play. Having a great business idea is not sufficient to make a go for it, as a successful venture is a mix of many elements. We bring you some expert tips to follow if you want to turn your dream business idea into reality.
Focus on one thing: It is important to find what you are particularly good at before starting a business and then put your resources to excel at it. “No startup can afford to work on a hundred things. India is a land with enormous possibilities for the same technology. Yet, a startup must focus on one thing and execute it well, over and over again, and dominate the market in that segment,” says Srikanth Jadcherla, CEO, Seer Akademi, an incubator set up to help startups in the electronics industry to grow.
Create technology as per customer’s needs: There are a lot of cool technologies that get created but not everything makes it to the product stage. Jadcherla explains it with an example—Imagine that you have created a light bulb that changes its orientation when it ‘senses’ the presence of a human being. This is a very cool technology and a good amount of engineering has gone into it, but does it solve a problem? Will customers, other than the small percentage who fancy such gizmos, pay for it? If the answer is a ‘No’ then it is not viable to start a business with such a technology.
Be capital efficient: Be a no frills startup and be proud to be ‘cheap’. This means that a startup company should spend wisely while setting up its business in order to build capital efficiency. Capital efficiency is achieved when a startup has developed a viable system, has worked out the market fluctuations, and is about to do the initial scaling.
Hire the right people: Profile employees well before you hire them, especially regarding their suitability for startup environments, says Jadcherla.
Don’t be afraid to hire people who know more than you, as long as there is a good cultural fit.
Have a good grip on finances: A startup entrepreneur must have a basic understanding of the financial aspects of running a business. It is very important to determine the share of debt and equity that a business will require before starting it. Understanding some fundamentals of finance like record keeping, cash flow management, debt collection, etc, is essential.
Go for mentoring before starting up: Mentors prepare you to face the market challenges by giving appropriate training based on their personal experience. Jadcherla elaborates, “If the entrepreneurs are young and energetic but inexperienced, they are not well grounded in product definition and development, for which a lot of technical and non-technical hands-on mentoring is required.”
Correctly valuate the business: Often it has been seen that the investor and the entrepreneur have opposing views on what the company is worth, and how much equity the investor should receive in exchange for his capital. However, placing a credible valuation on a startup is not easy. Jadcherla feels that entrepreneurs who have just started their business have unreasonable expectations on valuation. “They think their companies are worth millions because they have a small prototype ready. However, they fail to look at the whole business as a package of the market, the team, intellectual property, etc,” he adds.
Start from a small location: The costs of running a business, which includes overheads like rent, are higher in big cities as compared to small cities. Says Jadcherla, “Startup costs and runtime costs are high in bigger locations—you have to pay 10 months’ rent as advance in Bengaluru.” So, it is always better to start in a smaller location, scale up and then take it worldwide or anywhere in India.
Understand the legal system: Understanding the importance of intellectual property is vital to protect your business idea from competitors. The easiest way to do this is by consulting a lawyer who can help you to secure the patent for your product.
Major contributor to this article: Srikanth Jadcherla is CEO of Seer Akademi, which teaches, conducts researches and incubates with the aim to enable and promote electronics enterprises.
