Investing your time & money with a start-up? 4 Rule Methodologies to make it a smooth ride.

Are you thinking of starting a start-up or looking to be a part of business at senior position which is gearing up? Okay. Let’s face it. We know that there are hardships and we are always prepared for ups and downs as we see on this very popular artwork. But how intense?

I have been running a start-up for the past two years which is bootstrapped and sustainable with some great brands as clients on board. I left a fancy, promising and one of the most secure jobs in Dubai in pursuit of “the calling”. The fund raising of Housing.com and the Myntra success stories stirred the restlessness into me and made me realise that I am missing the true action in my motherland, which also happened to be the fastest growing economy in the world. Phew! The restlessness was further boosted by the glorified Masters in Management degree, the experience & track record of driving businesses at two different conglomerates elevated my confidence to take a leap of faith. 

Alas, I am in Bangalore, India returning against the wishes of parents and loved ones. But yes, at the age of 27, I was more worried about the guilt of not trying rather than actually failing. To my utter shock, the real business world at SME was way different from business I experienced at corporate level.

The first payment for a consulting and Social Media campaign implementation job was INR 1500, which I celebrated with a friend over a dinner that cost INR. 2000. First time ever, reality hit me hard. May be first time ever in my life I was able to understand the value of money. A month’s consulting and analysis job was paying less than my one time dinner cost. Further shocks occurred within the business practices and government policies. Personally the last two years acted as a finishing school and these experiences helped me coming of age in true business sense.

It’s a hard truth that start-up scene in Bangalore is not as bustling as it used be a year ago. When I started my firm, I was operating on the most popular co-working spaces in Bangalore. I came across hundreds of start-ups with the diversity of age, approach and thought processes. I have seen the best of the pitch decks to worst of arrogance within the start-up community. Alas, after two years very few withstand the tide and longevity in hustling.

Since my first business on service model was sustainable, now I am focusing on a new start-up which prefers a stealth mode. With my real experiences on the floor, hustling my way up to the position, I make sure that I follow the below 4 rule methodologies before investing my time or money. 

Less dependency on Human Resources:

It was a big surprise for me. The younger the generation, the lesser they want to work and more they demand for remuneration. I was tired listening to the inflation in the self-assigned positions (job role). The self claimed capabilities were always associated with their exorbitant salaries and had no connection with their deliverable capabilities. There were Black Swan events where we took a bet on a human resources decision, it back fired with loss of time and money. Also building an expensive service team which delivered high quality deliverables made no sense, since the market was not ready to accept high quality = high price funda due to competitors’ price skimming strategies.

If you are a people’s person and the founder of a start-up, it is very unlikely to make it without you being manipulated and tarnished. So, my very first rule of investing on a start-up should always be less dependent on human resources. Make this as a note. Always HR could be your best and your worst investment.

High Ticket Size / High Volume

Ensure you handle a product or service that has a high ticket size or high volume. Any day I would prefer a B2B deal over B2C business for the value of a deal that motivates me. With high ticket size deal comes a decent margin which is super important as a founder to see some sun with the winter.

If you find yourself confident enough on building a Whatsapp / Uber / Ola worthy of volume based business, please do it. Don’t find a niche and hang onto a product and service that churns out revenue which only fills hand to mouth. Getting stuck in a small enterprise tag that struggles to touch the top line of 2 crore a year is a pain for first few years and a burden in the upcoming years. With partners in business, equal shares in the bottom line at small enterprise is awkward.

Scalability Vs Time Invested

Ensure the product and services you touch is scalable. On my first business model what I understood was that business doesn’t sell and grow in my absence or it needed an expensive replacement which was a block on the finances. Again, it is important to increase both top-line and bottom line but the journey from nobody to Micro Enterprise is always challenging. At the same time, I am still not definite about the difficulties on the path of SE to ME. What I am assured on this journey is that I am not losing out key years of my life focusing on growth and scale without knowing the outcome. There is a never ending fear of this scalability, journey and invariably around the business. It is always like we have control only on our actions but not the outcome. So ensure the business has the capability to scale and in the meantime ensure your key years of life do not go in vain.

No (Heavy) Inventory Cost

Avoid the situation of sitting with dead stocks or never spend on a product to an extent of getting the perfect one out. Sell or test the market with the earliest version of your product where you have not spent much time and energy. If it is a retail product/SKUs – DON’T invest heavily (heavily = Financial tangent that you cannot bear or arrange within your own means or your own assets) on the product and then try to find a way to sell it.

Pick a sample or product description and run around to find work orders. If you don’t bring in results, you know what life disaster you are about to face and the risk will be on your time and effort. 

To conclude, the thought process you read in the above article is truly based on my personal experience. I have been extremely cautious on the risk and cash flow with the venture. My approach has always been on minimal risk and maximum impact, considering both time & money.  Even with our projects in the pipeline, we make sure we follow the aforesaid methodologies.  Hope my views on the business journey have been encouraging and I truly believe that one who applies the same, benefits as much as I did.