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.
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