Problems faced by Start ups

Contributed by Sashank
Milagrow, Hyderabad

Start-ups face many problems from starting up to gaining birth weight and catapult into bigger leagues.

The woes of a start up begin at validating the Idea and understanding its potential. Many start-ups, being driven by young and aspirant minds, are wedded to their ideas and tend to justify the chinks rather than re-design. These start-ups do not have the resources to conduct primary research to validate their ideas. So it is very important for them to get third person perspectives from experienced corners to validate and get reassured of their ideas.

A successful start-up has a dedicated, passionate yet level headed, core entrepreneurial team that leads from the front. These teams, despite being high potential teams, tend to be a bunch of ‘everyone does everything’ type wanderers due to lack of proper delegation of responsibility and a strong organizational design. When these bunch of people come together and set out with big dreams, they need mentoring and hand holding to channelize their energies better and achieve more with less.

Business plan development has been as area where start-ups often falter. Some reading on the internet will not guide a start-up enough to develop a business plan. Start-ups are usually lost, not knowing what are the areas that require planning right at the start, and how forward they should look. They need strong experienced hands to guide them with planning to execute an idea that has immense potential.

Funding has been an area of concern for most start-ups. Cribbing about getting funds consumes more time than actual work for many start-ups. Many a time it is not the eco-system to be blamed, but the start-ups themselves. The start-ups don’t know whom to approach, with what and how. They are wedded to their ideas so much, that they feel complacent that the universe is waiting to buy their idea and all those who have rejected them are missing out on opportunities. In a way they may be right about it, with the given potential of their ideas. What usually lacks is content in the pitch these start-ups make to their investors. Many start-ups need guidance in making the right pitch to their investors, by incorporating the right elements about return and exit.

Start-ups get overwhelmed by the fact of doing business and tend to neglect aspects of infrastructure planning. They tend to overspend on unnecessary luxuries and undermine certain important items, purely because of lack of experience and poor planning. Start-ups do not think through sufficiently about this important aspect, but it can make or break.

Dealing with the government is not an easy job. Mere idea and its potential do not ensure a market entry. There are usually a slew of regulatory compliances to be obtained before the start itself. Mere complying with some laws at start is not enough, but they need to carefully monitor the effect of these compliances. Start-ups need support to understand and comply with least damage to business. There are many schemes that govt. announces for the benefit of start-ups, which they are unaware of.

Many start-ups feel that defining policies at the start curbs their business and it is an unnecessary exercise. But it is very important for start-ups to make the organization as people independent as possible. Start-ups are highly people dependent, and loss of small resource can lead to major vacuum in Start-ups. As far as possible some important policies must be laid down to free the business of individuals and protect them against their first clients. Sticking to certain pre-defined policies can protect small companies from being overrun or cheated by their first few big clients.

Branding the services or products and defining a go to market strategy is a big challenge for start-ups. Defining the 4Ps for a start-up is a major task. Defining a target group, where and when to launch, what price to quote, and how to market the product is an uphill, stammering task for start-ups. Many start-ups lack managerial expertise and experience to be confident about the definition of the 4Ps.

Today technology is such an enabler for businesses! In the context of start-ups, implementing the right technology as part of the journey to build flesh in the business can enhance the organization’s growth. Investing in the right technology is a critical decision many start-ups will have to take.

Plans are made with certain factors in mind. Direction is chosen initially with certain focus, and these plans are implemented diligently and passionately. But many start-ups fail to audit their performance as diligently as implementation. Start-ups begin to justify their failure rather than taking corrective action. This at times can lead to the fall of the organization.

The standout of the success of a start-up is to wage through the problems effectively and capture market.

Ten Essentials for a Startup

--Contributed by Ankit
Gurgaon, NCR

Opening a business in India has never been a more attractive option. With domestic and foreign investors inundating Indian soil with investments, more and more people are taking the entrepreneurial plunge. But most of these start ups lose the plot midway due to inability to gauge the needs and requirements for their start up. Here is a list of 10 essentials for a start up which act as the foundation stone for future success.

1. Business Idea: This is the starting point of all successful ventures. Gauging the potential of the idea is very important and subsequently following it up with right actions is the first step towards building your own company.

2. Core Team: People are the most valuable asset for any startup. With no fully developed product and service, people are the only assets startups have. It is extremely important for startups to manage and retain their people in a right way.

3. Business Plan: Business Plan helps in transforming an idea into a executionable plan. Without a sound business plan, organization loses focus and direction.

4. Funding: An organisation requires funding at various stages of its life cycle. The initial launch funding for a start up is as important for it as the idea itself. Linking up with VCs and investors is one of the many ways of getting that initial launch funding.

5. Initial Infrastructure: Each organisation has its own set of infrastructural requirements. From office space to web space, all requirements must be fulfilled in order to ensure smooth functioning.

6. Regulatory Compliances: Registering your company and understanding the legalities and compliances is very important.

7. Policies and Procedures: Policies and procedures of an organisation provide a definite method to the various activities being carried out in it. Keeping the standard industry practices as a benchmark, the organisation can arrive at its own set of best practices.

8. Brand Strategy: Proper positioning and brand differentiation helps in making the right kind of impact on the customers. A properly crafted brand strategy goes a long way in creating a sustainable brand equity.

9. Use of Technology: Using the right kind of technology helps in increasing the efficiency and productivity within the organisation. It is thus important to understand the technology requirements of the business.

10. Performance Audit and Course Correction: After the kick start of the operations, you need to sit back and analyse the performance of your company and you need to make the necessary corrections to ensure that you don't tread the wrong path.

Why Venture Catalysts are not Consultants

---Contributed by Sarath Srinivasan

Often people ask me, how is what we do different from what consultants do. Although I know the answer to that question, it is often difficult to put into words. But when I use the word Venture Catalyst, it just makes sense. A Catalyst is substance which is not consumed during a chemical reaction but increases the rate of the reaction. Catalysts generally change in the course of a reaction but are regenerated. We are Catalysts and each of our engagements is a Venture - A journey on a growth path.

Without a catalyst a reaction will happen, but at a very slow imperceptible rate. For a company change is inevitable and unfortunately change often happens out of necessity and crisis rather than in a planned and proactive manner.

People within an organisation intuitively know the inherent problems. Often, they even know what kind of changes and initiatives are required for the organisation to improve and grow. Typically, this knowledge does not lead to improvement. The ingredients for change are there but the change does not happen. The knowledge is stuck in a quagmire created by the lack of focus on improving the company. Each individual tries to protect his own interests and finds no reason to spend his time in trying to improve the organisation. Very often corporations fail to create the right environment for the individual to take an interest its growth. It does not encourage it. The fear is that the "altruistic" nature of the task of improving a firm will be interpreted as inefficiency. The fear is that the benefits of the effort will not accrue to the individual.

For example let us consider a small firm of about 50 people. The firm has been in existence for 4-5 years and has seen rapid growth driven by a core group of enterprising people. But during the last few years the company has suffered due to the haphazard and individualistic nature of the same people who were responsible for the growth of the company. They do not have the right processes to deal with bigger operations. Despite realising this, individuals within the company do not want to conform to a singe process since it would mean a lesser degree of freedom in their day to day work.

The role of the catalyst is to make the change happen - faster. The reaction involves taking the individual's knowledge of the firm's inherent problems, the intricate working knowledge of the way the company operates and turn it into solutions and opportunities. This strengthens the foundation and removes the barriers to growth. The catalyst turns the organisational strengths into gold – The catalyst is an alchemist.

Organisational change is successful only if it is effected by people within the organisation. Although it would be the organisation's own personnel effecting and driving the change, the catalyst ensures that the reaction happens. As catalysts, a refreshing attitude and a commitment to the growth of a company has its impact. At the end of a project the catalysts are refreshed - ready to catalyse the growth of another company.

Milagrow as Venture Catalysts:

Where an organisation sees problems, we see opportunities for improvement. In our roles as Catalysts in a Scale Up or Turnaround process for example, we keep the organisation focussed on identified problems so that solutions are developed. We help the personnel in a firm put on their organisational hats. This works because we begin by building a thorough understanding of a firm's strengths and weaknesses. We remain focussed on capitalising on the strengths and countering the weaknesses. We are not weighed down by the past baggage that people within the organisation carry. Although we are embedded as team members within the organisation, working on different projects, our point of view remains neutral and objective.

An Analogy:

A good example of a catalyst is in the disproportionation of hydrogen peroxide to give water and oxygen:

2 H2O2 --> 2 H2O + O2

This reaction is slow (hence one can buy solutions of hydrogen peroxide). Upon the addition of manganese dioxide to hydrogen peroxide, the reaction occurs rapidly as signalled by effervescence of oxygen. In demonstrations, the evolved oxygen is detectable by its effect on a glowing splint. The manganese dioxide may be recovered and re-used indefinitely, thus it is a catalyst — it is not consumed by the reaction.
Source: From Wikipedia.

Taking this analogy further, as catalysts we help generate the water and oxygen in a company. The water and oxygen help companies grow. In a scale up process we help the company gear itself up so that the effort required to manage their day to day processes diminishes. From people dependent the organisation becomes process dependent. The oxygen and water becomes easily available and after that the organisation has room to breathe and focus on the future and growth of the company

As Venture Catalysts, we venture where no one dares venture. We Catalyse change in companies. In companies where the reaction to the threats and opportunities at hand were slow, we speed up the reaction. A Venture is an investment. Venture capitalists invest money. We invest time and belief and reap rewards.