Starting up a company works better if you learn from the mistakes of others
Starting up a company is no picnic. Veterans go by the adage, if anything can go wrong, it will. Even if you have a world-beating product, people may just not take you very seriously or partner you.
“One of the biggest liabilities for a startup is just the newness,” says Professor Suresh Bhagavatula of the N S Raghavan Center for Entrepreneurial Learning at IIM Bangalore. Bhagavatula, who deals extensively with young companies as part of his role at the centre, believes that a startup, besides all the folly of its founders, is beset by ‘natural forces’ that go against such. “Nobody really believes you will survive and hence are unlikely to deal with you even if your products are good. This is similar to gravity and friction, natural forces that dampen success.”
Yet, aren’t there factors within the control of the entrepreneurs that can be fixed to increase the chances of success? Entrepreneurs point to three kinds of mistakes that a young entrepreneur is more likely to make that impact his chances of success. They relate to wrong expectations from self, from the others in the company and from the market itself.
| Vijay Rayapati |
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| I did not quit my job because maybe I was scared of failure. This attitude led to my failure and made me bankrupt. Before you plan a startup company ask yourself a thousand more times whether you are really prepared or not? Even if you have a small doubt, don’t start. |
Self
No. 1 on the list is to do a self-analysis. This is also perhaps the easiest step, since the main requirement here is some honest introspection.
“If you have a passion, then you will build something first, then start a company,” suggests 24-year-old Vijay Rayapati, who lost his savings of around Rs 6 lakhs this year after his online food-ordering-software firm collapsed.
Vijay points out that like many wannabe entrepreneurs, his primary motivation was to ‘be an entrepreneur’, which was not enough, he states. “I used to think - ‘Larry and Sergey did it, Dell did it, Ellision did it; why can’t I?” he says.
“It is good to get inspired from great people’s lives but what we are missing here is that whether you are doing it with a passion or a desire. If you have a passion then you will build something first then start a company. I had only a desire to be an entrepreneur lacking a real passion to drive me ahead,” he looks back at his venture.
So, how do you know whether you are ready to take the plunge or not? Vijay, who split his time between his ‘regular’ job and his startup, suggests the ‘all or nothing’ test. “I didn’t quit my job because maybe I was scared of failure. This attitude led to my failure and made me bankrupt. Before you plan a startup company ask yourself a thousand more times whether you are really prepared or not? Even if you have a small doubt, don’t start.”
“Otherwise, during difficult times, your mind will think ‘why should I take so much pain when I have such a paying job. I am earning Rs 70,000 per month from my job, why should I walk one km for saving Rs 15 for the company?” he points out.
Team
It’s not enough for you to be crystal clear and be possessed by an idea. The team plays an important role and many enterprises fail because of the differing expectations of the partners.
Abhishek Singla graduated from IIT Kanpur in 2004 and worked at a software company for one and a half years. Like many with the ‘entrepreneurial itch’ he was constantly on the look-out for partners he could team up with to start a company.
“I used to discuss many ideas with friends. How can we resolve the ideas and make a business model out of it?” he says. “We discussed different products, but I couldn’t form a team. I soon realized that good people don’t just come out of a well paying job and join a startup. Nobody was sure,” he remembers.
| Vinayak Hegde | Amit Gupta UbiQTech |
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| We underestimated the challenge of being able to sell an extremely new technology. We first had to educate the customers. We didn’t know how big the market was, how to target our product. If we had, we could have targeted the solution in a better way and the results may have been different. | Many VCs confirmed immediate investments, if we take over and run the OEM operations, which we were capable of. Having tasted solid success, our OEM customer was in no mood to do this. That shook us, as we felt that we had built the business in partnership and spirit, beyond the written agreement we had with our OEM customer. The resource crunch resulted in loss of steam and we had to sell out to another company. |
Things came to a head when Singla was offered a more lucrative job by a big firm. “Just as I was about to take up the offer, a senior who was working with me at the first company suggested that I join him and his friend to start a company to make software for educational institutions. I had to make a quick decision, so I said yes.”
The venture went well, landing a five-year deal with an educational institution that paid Rs 6-7 lakh per year. The ‘beginner’s luck’ however soon ran out. “We could not close other deals after that and the other partners started reconsidering their options. They had expected four or five deals in the first year.
“My working partner was under a lot of financial strain. So he said ‘let me try out a job for some time’ and I was to take care of the company. However, his involvement dropped significantly after that. I started asking him ‘are you in or not?’ Since the product was meeting the burn-rate, we even got some VCs willing to invest in us, but my partner was not sure about going in for such a long-term commitment to the company and that was the end.”
“A startup is like a love marriage,” says Vibhore Goyal, co-founder of university hiring portal Cocubes.com. “When you are in love you tend to keep your expectation low, be very adjusting and up to some extent, try to fit in. Similarly, when you know the founders as friends, you only tend to see all their good points, accept their opinion with a much more open mind and make a lot of assumptions about how they will respond in a particular situation.
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written by terrybogard, November 24, 2010
written by Sumit, November 15, 2009
The article is rightly on the pin pointed pains of all the start-ups. But I would rather say that, its easy to pass the initial start-up time of any enterprise. Once we set in to the second grea, we start expecting more from the market and ourselves. There need to check at every stage, whether we are delivering the things which can keep the company for longer run as the cost of running starts growing and the bottom lines needs also rises.
The topic rightly covers the personal level targets with the team members or the partners on whom we bank blindly in the initial stages and the problems those occur if the idea dose not clicck!!
written by Abhishek Singla, October 15, 2009
written by Pawan Bhandari , September 20, 2009
a. Unless you do not close all doors behind you, one keeps looking for options (read going back to jobs).
b. The only way to survive - dig your heels and give your business a time of 2 years at least - do not let go of hope before that.
I have found both these advice very useful in our small enterprise.
written by M A J Jeyaseelan, September 17, 2009
So the real challenge is not whether you can produce a new product or service but actually whether you would be able to enable the consumers to consume the values that you would be producing.
Some times you might have to spend more on educating your consumers than actually producing the product. Some times the consumer in spite of being attracted to your product/service might not be in a position to avail of it because of factors like time pressure, travel constraints, etc.
It is also equally important to gauge the competition not only in terms of direct competitors but also from all possible substitutes. In fact the worse competition is always in form of consumer inertia. Why should the consumer adopt a new way of doing things and get away from the comfort of doing things the way s/he has been accustomed to. What is net incentive for the consumer? Is the incentive large enough to force the consumer to rethink and switch over to your new product or service.
I guess, if you are thinking of incremental innovations that add a little more value but not to an extent that would be enough to make the consumer do the switch, then such things are better left out. These are areas where established companies would score just as new formulations of soaps and detergents are dished out every three months. Start ups can hardly make it in such areas unless the objective is to sell out to an established player very early.
If we look back at the history of the start ups that have made it big, it also becomes clear that they have actually grown bigger by being at the right place at the right time. If you want to create history, you must have the patience to pursue things with perseverance till such good times come. It is no magic out there.
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Now everyone can understand how this fool has been playing with a reputed organisation for his personal benefit. He is a total failure case with timid personality.
Highly unrecommended person for any professional enviorment.