Lessons from failure: 5 things that make or break startups

TomorrowMakers ™

Lessons from failure: 5 things that make or break startups

17 November 2016
Startups are on the rise in the country. But the start-up formula is not easy to master. So read on to find out an expert's take on the dos and don'ts of owning a startup.
 
 

We started work on an online platform for writers some years ago. The idea came up when companies complained of not having a consistent stream of quality written material to make movies and television shows. Publishers told us that they receive junk from writers as manuscripts.

The venture never saw the light of the day despite aiming to solve an important problem in the creative content space. 

Here are 5 things that potentially make or break startups:

1. A good idea is not enough

The idea of starting up was itself very exciting.

However, as we gave shape to it, we realised that a mere idea was not enough. Our venture needed a team. It required a nourishment of varied thoughts. We started with a great idea but faced numerous execution risks that cropped up later. The point is we did not anticipate them well. It is usually the day-to-day struggle of executing ideas that lead to the failure of most start-ups, up to 90% of them, by some estimates. Hence, your preparation must involve making an assessment of all risks to your business.

2. Focus is critical

When you start up, you are giving a shape to your dream. There are times when you feel you can do so much more.

When we formed our start-up group, we had so many ideas to grow the business. However, we failed to identify a core focus of the output. Are we a content company for all or only a few genres of content? Are we catering to everyone around the world or only the Indian market? We spent a lot of time figuring things out. The lesson at the hindsight was that it is always better to be the best at something rather than marginally or forgettably good at everything. It matters that you start small and grow big.

3. Know your market

Your idea is brilliant and you think your product or service is transformational. Yet, as you navigate through the first year, people are not lapping it up. Your customers are concerned about the value your product or service brings to them. We worked hard in our first venture to build a prototype that solved some core problems we knew. We made assumptions on the market appetite. As we spoke to our customers, things began to unravel. The idea of an online market place for writers without the guarantee of copyright protection was not acceptable to some leading potential customers. This blow turned out to be a fatal one for our plans. Hence, it is important to know the market for any product or service you plan to launch.

You need to understand who your customers are, what motivates them, what makes them happy and what does not.

4.  Your team

A business is much more than an individual.

A start-up core team has to be a good one and there is no room for any loose ends. It is a good idea to have people who are equipped with diverse skills to work with you in the core team. In our failed venture, we went a bit far. We got 10 people. It is a good idea to start up with two or three co-founders. Each of them should come with a core strength that is different from yours. 

5. Revenue is your capital

If you are trying to sell your idea to potential investors, you know, by now, that nobody funds a business plan or just an idea.  No bank will offer any loan unless you have some revenue. Even if you have some revenue, banking rules forbid lending unless you are applying small and medium enterprises category for loans. Seed funding, crowdfunding, venture capital and all such engagements occupy your mind as a start up. You tend to get a seed investor to pay for your and your employees’ salaries and equity.

The real money is the money you get from your customers when you sell your product or a service. A lesson to be learnt for long-term sustainability is that the revenue is the best venture capital. Having customers who have faith in your product or service helps you survive and thrive.  

Here's hoping that you bounce back the same way I did!

About the author:

Rajas Kelkar is a founder and publisher at Simplus Information Services Pvt Ltd. He spent 18 years as a journalist across media companies working for The Economic Times, Business Standard, Mergermarket, Firstpost and NDTV Profit. In 2013, he founded Simplus to help businesses create content for customer engagement. He says that all businesses will sooner than later express themselves through videos, podcasts, blogs and thought-articles. He was also awarded the Chevening Scholarship for print journalists in 2004. He was invited by the US government under the prestigious 'International Visitors Leadership Programme' in 2002.

 

 
Market Quotes by TradingView

Do you know how much industries contribute to the Indian GDP

POLL

 

MOST VIEWED CONTENT

How does GST impact your wallet?

How does GST impact your wallet?

Deemed as the biggest tax reform, what does GST have in store for your finances?

6 Documents that must be linked with your Aadhaar card

6 Documents that must be linked with your Aadhaar card

There are several documents you need to link to your Aadhaar card. Here’s what you must know about them.

Could GST make your dream home a reality?

Could GST make your dream home a reality?

Potential home buyers could be in for a treat post the GST rollout. So, what does the one-tax regime bring with it?

FAQs about fixed deposits

FAQs about fixed deposits

Need a crash course on opening a Fixed Deposit account? Here are some of the most asked questions regarding FDs.

Beware of these 6 fees when buying real estate [Infographic]

Beware of these 6 fees when buying real estate [Infographic]

Buying a home is a wonderful accomplishment. But it sometimes comes with hidden costs. Here's what you must know

Property inheritance: What you must know when making your will

Property inheritance: What you must know when making your will

A will is an essential document if you want to leave behind an inheritance. But do you know how to go about the procedure?

Identity checks to be mandatory for cash dealings of above Rs. 50,000

Identity checks to be mandatory for cash dealings of above Rs. 50,000

Banks and financial institution are now required to check IDs for cash transactions above Rs. 50,000. Here's what you need to know about the changes

boy

We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.

NEWSLETTER