What is required to make a Startup Successful?

Every startup starts with an idea. An idea generated by the founders who are passionate about solving a problem that affects millions of people. An idea can also be about creating a new space where no other player exists. This idea once it is validated in the market gives shape to a successful startup. On the other hand, if the idea fails during pilot, founders need to take steps to change offering that matches the market need or shut down the operations.   Startups operate under challenging conditions. The primary challenge is always the want of capital to meet operational requirements and also for expansion. Many surveys give different reasons such as disagreements among shareholders, pricing issues, market need among others. All of these factors determine the success rate but falls behind precedence of capital. Adequate capital at the start of a venture will help startup founders to escape the harsh reality of funds falling short and also help to focus on the core business. There are different factors that help a startup stand on its feet. We have outlined some of the most relevant ones in our article.

1.      Fund Corpus The first thing that founders must focus on apart from the core product development or offering services is to create a fund corpus that will help them to sustain the operational gap. The timing of the initial fund raise when you take fund from investors and the launch of the product or services should be minimal. The objective here is to ensure that the raised funds are only used to plug the viability gap and also use a part of the funds for marketing and expansion purpose. Sometime entrepreneurs may find it challenging to create the financial forecasting for the next financial year. In that case it is advisable that they take professional help from individuals or organizations offering feasibility study services. They can help to break down the financial requirements and map it to the exact cash requirements required month on month.

2.      Capital Requirements This far for the capital requirements! Now let me focus on another very important and often repeated word "perseverance". I think that after capital the single most important factor that determines success or failure of an organization is perseverance. An entrepreneur will face multiple challenges in the journey to success and as Jack Ma has rightly said "Today is cruel. Tomorrow is crueller. And the day after tomorrow is beautiful". We need to understand that the "day after tomorrow" that Ma is referring to may be a long period of time which can run into a few years. During this period the grit of the team will determine failure from success.

3.      Team Work I would also like to highlight teamwork as another important aspect of a successful startup. Each member of the team whether they are founders or employees should perform their roles diligently. Founders need to be very careful while hiring team members because non-performance can cause a severe drain on scarce resources and limit the company's ability to generate revenue. There should be well defined KRA’s that will enable the management to measure the performance of the team members.

4.      Avoid clients who do not value your work   There will be clients who will never appreciate the work done. It is difficult to understand the nature of a client until you start working with them. However, based upon my experience I have seen that clients who take very long in closing a deal, negotiate hard and take long time to give a feedback are generally the ones that should be avoided. Apart from that if a client does not display professional attitude during calls and meetings they should generally be avoided. It matters losing a client during the formative years but it is better to avoid working with a bad client who may give you difficult time in the long run.   

5.      Making mistake is not a crime   As a startup founder you are bound to make mistakes. These mistakes can be anything like buying a cheap computer to save some money, a bad hire or a bad marketing strategy. All these matter when resources are limited. However if you are not making any mistakes means that you are not taking risks at all. An entrepreneur who takes even a certain degree of risks is bound to make mistakes. We should not feel bad for these mistakes but at the same time we must take corrective actions to remedy the mistakes as quickly as possible. Do not delay a decision because that can be costly.   Every mistake that we make should help us to improve and ensure that the same mistake is not repeated. It should make us think why the mistake was made in the first place and how it can be avoided in future. This path of thinking should lead us to the next level of innovation and success.  

6.      Control of your work schedule The biggest advantage of being an entrepreneur is controlling your own schedule. Sundays can be fundays for some but for an entrepreneur it can be the best day to do your work. Entrepreneurs are free to choose their breaks and holidays. It helps to refresh and rejuvenate before they start on another hectic schedule. Your regular work schedule need not follow the 9 to 5 cycle. You are free to work either in the morning or late nights depending upon your requirement. The work-life balance can be achieved by working your own timings. Many start-up founders work from home and come to office as per their  

7.      Setting Up Deadlines Timebound and result driven initiatives can be a determining factor of success. If the founders decide on developing a new product feature or a new marketing initiative, these should be clearly defined by results to be achieved at the end of the time period defined for the job. A project management tool could be the best solution for this. There are multiple project tools that are available in the market and adopting one of them to track your project metrics can give positive results. The data that is collected should be monitored closely and graphs created to determine the direction of the initiative. Timely interjection when an initiative is not going in the right direction will also determine success or failure. Founders will need to check the analytics and derived graphs to get a quick snapshot. If the product development is taking more time than expected, immediate steps should be taken to ensure that the development program is back on track. Similarly in the case of marketing initiatives, if the traffic numbers or expected leads are not increasing steps should be taken to correct the same.

8.      Proper Legal Structure The foundation or legal structure of a startup is what founders need to have a clear idea from the beginning. This is one area that founders are not really bothered about when they start the company. They are interested to develop the product and get clients as fast as possible. However, with Government regulations tightening on startups with respect to funding, valuations and taxes it is wise for founders to take professional help in these matters. Once these aspects are set-up, founders can focus on building the business and scaling-up quickly. Angel Investors and VC’s also prefer to invest in companies that are well structured. It becomes easier for them to decide on their investment. Founders need to ensure that areas like shareholding, exit terms and other factors need to be sorted out at the beginning. These are areas that can cause litigation at later stages and can be reasons for failure.

9.      Having a Mentor Advisors and Mentors also play a big role in determining the success of a startup. Advisors should include people who have done it before and know the challenges and intricacies of scaling-up a venture. They are able to flag-off the challenges and risks along the way and guide the startup on the right path. Networking with industry, investors and other stakeholders are some of the other areas that mentors can help. These are very important factors for startup success. All these factors and more clubbed together determine the success or failure rates of startups. Founders should always be on the top of the game to ensure that all functions of the company are running efficiently. The line dividing the work functions of founders in a startup maybe blurred but that does not stop them to micro manage the team. The delivery efficiency with respect to all functions should be adhered to ensure that the start-up is a success. In conclusion I would like to sound a cautious note for all founders. Startup is a difficult game and very few are able to make the cut. There are multiple challenges that will come our way but we need to handle every challenge methodically and not crumble under pressure. Founders need to take responsibility for their failure or success. However they should enjoy the journey as it unfolds. Family, friends and wellwishers can always offer the social support and comfort to help founders take up these challenges and move ahead. This much for today. More in my next post when I speak more from my experience.