As a wantrepreneur & love for start-ups and having interacted with several founders of start-up organisations in my sales profession . I am sharing few of my thoughts and opinions on the start -up ecosystem, challenges faced by the founders & ways to resolve them .
The thoughts presented are purely mine and not associated with any specific organisation.
There is a start-up boom which is currently being witnessed .This flurry in start –up is due to new breed of young, talented band of corporate rebels who are keen to shine the tag of “entrepreneur” supported by enthusiastic and encouraging investor community.
The start – up ecosystem is perfect in our times, However there are various challenges faced by start -ups.
Funding :
There are various options right from Bootstrapping, angel investors, VC’s, Private equity firms and crowd source funding to begin your new venture.
The best option is to bootstrap in the initial stages with your savings as this is less risky and you have complete control over your business.
As a founder you need to believe in your business & go out and build your dream company by using as much as your own money.
However as a start-up you are always faced with a dilemma of steady cash flow and this is where the VC’s come into picture .
Venture capitalists do not just invest in any start-up company. More often than not, they are looking for businesses that are unique, innovative, & a business model which is built on problem solving and that is scalable.
So if you don’t have a business proposition which is not unique, not intended to solve a problem in the ecosystem and not built on scaling up then you can kiss your new venture goodbye even before starting.
The key is to identify a problem and plug it while turning that into a scalable business.
Eg : Red Bus.in was started, as Phanindra Sama now the CEO of Redbus.in couldn’t get a bus ticket to go back to Hyderabad during the long Diwali weekend in 2005. RedBus today is one of the most successful online bus ticket booking agencies. Today, it has 700 bus operators, 10,000 buses listed on it, works in 15 states and sells around 5,000 tickets every day . Morever they have started clocking profits from December 2009.
Be a passionate “seller” :
As a founder you need to “sell ”. You need to sell yourself first and then your company.
The key is to passionately keep selling your dream, your business idea, your vision, to your team, potential investors and the people around you .
Trust me this was a tough few years back when you had to reach out to people individually . With the advent of Social Media – Facebook, Twitter, Quora, & Linkedin the landscape has changed completely.
I call it the “smart way” of selling for start-up founders .
- Own a blog. Blog weekly about yourself, your ideas, latest developments about your organisation and share it via Facebook, Twitter and Linkedin .
- Follow potential angle investors, VC’s & competitors via twitter . Participate in live chats on twitter on topics such as start–ups . Join entrepreneurship/start-up groups on Quora . Increases your visibility & an opportunity to present your business idea and your company.
- Join groups on Linkedin which matches your business interests, Add value to the group by participating in meaningful discussions. More importantly make a point that you reach out to 4 – 5 new connects on Linkedin or people who are already connected and invite them to meet once in a month personally. Opens up new networking horizons .
Apart from social media :
- Keep an “Elevator pitch” ready , Make a list of questions pertaining to your business which you feel a potential customer or investor might throw up during a quick discussion . Don’t stumble when someone asks you to introduce your business and your vision.
- Get an audience, Reach out to journalists & sites who cover start-ups. Run your contacts and connect with new journalists and sites which have recently started covering start-ups. Trust me these folks will add value more than a paid PR. Participate in industry meets and events. If possible get a speaker slot or be a part of panel discussion .
- Connect with your Alumni and share your business. You never know your next investor might be your old college friend.
- Associate yourself with an NGO or a charity organisation & participate along with your employees in their events and charity. Give back little to the society even before you earn . Trust me this is will go a long way.
Hire right talent :
One of the key challenges that a start-up’s face in a challenging environment today is hiring the right talent .
- Hire passionate people who are driven by hunger to learn & crave success, Remember these people will stick on to you for a long time and drive your organisation.
- Keep a sleek team for a few months, Don’t hire people just to show no’s or Harvard / IIM / IIT credentials to your investor or VC.
- Have a strong HR policy in place , Right from probation period to exit interview. Put up a robust ESOP’s plan and share it with the individual while hiring. Get the individual motivated and share your dream even before he joins you .
- The key challenge is not to hire talent but to “nurture talent”, Have a growth map for the individual and discuss with him once in a month or a quarter as to how he is progressing . Keep a flat structure and avoid fancy designations. You can’t have 40 managers and 5 VP’s in a team of 50 people .
- Create a “strong culture”, Individuals spend 8 – 10 hours in office and by default it becomes their second home . Share your vision , understand your employees and make them feel like that they are your extended family. Apart from birthday, anniversary & festival celebrations draw up a contest each quarter, recognize performers, award the best performing employee take the entire team out for lunch, give out movie tickets . Remember small things such as these are valued by employees and helps in fostering a strong culture.
- Create an environment for “learning” & platform for sharing knowledge . Conduct workshops , Invite trainers and motivate employees to attend industry seminars and discussions.
- Very importantly, while hiring key people get yourself personally involved. Check the individual’s credentials, ask them to undergo few assessments such as THOMAS profiling, Gallops strength finder etc. Assessments throw up few key details about an individual which we tend to miss out as we always judge people on emotions and our previous experience while interviewing. If he or she is a seasoned professional check for major accomplishments. Finally introduce him to your investor or your board and seek their opinion before you take the final call.
Mentor & Advisory board :
We all need mentors in our lives, as a start-up CEO you need to have a mentor .
A mentor should ideally be a close confidant who knows your strength & weaknesses and has been guiding you for years.
He or she should always be there for you even if you want to reach out at 3:00am in the morning. Mentors are individuals who guide, assess & bring the best out of you in the most stressful times.
An advisory board is essential and should comprise of individuals who are veterans in the industry . The trick is to carefully select individuals who are trust worthy, have a proven track record and who will vouch for you and your ideas.
They play a key role in your funding as today investors and VC’s look for a strong advisory board. Ideally advisory board should comprise of finance, technology & sales professionals with rich domain experience.
Understanding P&L of running the business.
As a start-up CEO you need to learn the P&L of running your business.
I understand this is the function of your CFO but if you hand over the complete steering of your ship in high seas without know – how then be ready for a “Titanic” in the near course of time .
Make use of your previous experience of P&L handling of business unit if you had any or try studying P&L accounts of public limited companies such as Reliance, InfoEdge, etc. The P& L accounts can be easily downloaded.
When you get VC funded, you are much more accountable for all expenses and income with internal and third party auditors scanning your accounts. The last thing you would want is a Satyam scam in your first year of operations.
Below checklist will help you be more finance prudent :
- Get involved in choosing your vendors, Yes even the taxi vendor. Many vendors will approach you to adjust your bills with lure of saving taxes. strictly avoid such vendors and never even discuss business next time.
- Hire an auditing firm with repute in the industry and keep all records intact.
- Have a monthly review of your accounts with your CFO and understand the highest generating expenses and see to it you reduce them if they are not so essential.
Balance EGO’ S & learn to say “NO”
As a founder you will need to balance EGO’s. First, Its your ego of being the CEO and ego’s of your team, advisory board, investors & VC’s .
Learn to be humble, and never snub anyone or get into an argument on a public platform or social media. It will always backfire.
Sometimes angels can become demons and VC’s can become vultures so it’s really essential to keep ego’s in check.
There will be many instances where you would not want to disappoint your co-founder, your team, VC or a client and agree on a proposition which doesn’t hold good for your business. Remember in such an instance learn to say “NO”.
One such example is of Sabeer Bhatia saying “NO” to $160 million initial offer from Microsoft, At $350 million, Hotmail’s investors agreed but Bhatia returned to the table, alone, and once more said: “No”. He finally said yes for $400 million and the deal was sealed .
To summarize, Identify a problem and plug it, Believe in your business, Sell yourself & your organisation passionately, Hire the right talent, Pick a mentor, Have an advisory board, Balance EGO’s and go all out .
This is my first humble attempt, I am open to views & criticisms from fellow Rodinhooders. I would like to sincerely thank Alok for inspiring and giving me an opportunity to share my views.