What’s the first thing that comes to one’s mind when we think of the word Entrepreneurship?
Risk? Innovation? Self-Employment? Independence? Fun? Adventure? Money? Riches? Well, different things to different people, I guess!
Startup Entrepreneurship is a word very much in vogue for the last decade or so in India, thanks to the startup culture in the IT sector, built over the last three or four decades. Many young people, fresh out of college, with or without Engineering or Management qualifications, with or without work experience, are getting attracted to this magic word and trying to discover a new way of life.
What is it that’s making more and more people look at Startup Entrepreneurship?
It is probably the excitement of doing something new, something different and to build a life with greater aspirations and achievements. But if we pause for a moment and think, is this the first time a large number of people are going towards entrepreneurship? Definitely not!
India has been a country of self-employed risk takers from time immemorial.
Agriculture, the largest occupation in this country for thousands of years, is the most common risk taking enterprise. From sowing seeds, to employing labour to work on the farm, to praying that rain doesn’t play truant, to taking the harvest to the market to get the best possible price; the farmer is investing and taking a large risk.
Over centuries, millions of families have evolved from agriculture to move into other, more predictable forms of enterprises; be it trading, skill based services or manufacturing, where the risk levels are moderated with a reasonable ability to estimate demand, both in terms of products and quantities. From these have arisen businesses that grew large and eventually became employers of thousands of educated and trained personnel.
But today, there’s a new wave of Startup Entrepreneurship – exciting, intriguing and much talked about.
This comes from a class of people whose families, over a few generations, had moved out of traditional occupations, to become a new class of educated and trained professionals; working for governments, business or social organisations, with a sense of security that years of stable incomes provide and whose skill and ability is to visualise, plan logically, analyse and execute. They are however less open to taking financial risks.
These traits and abilities, coupled with technological capabilities, are the largest investment the startup entrepreneur brings to the table, hoping to find investors to provide funds for the enterprise.Thus has started an era of collaborative entrepreneurship, that puts a premium on ideation, innovation and execution and reduces the personal risk of the entrepreneur by sharing it with partners.
This new model has given hope to millions of people to take the plunge into entrepreneurship once again. It is also a great way to drive economic growth. It generates employment, not just in the startup, but also in the upstream and downstream areas of the business.
Typical Risks in Startup Entrepreneurship
But is startup entrepreneurship that simple to get into? Is it enough to have an innovative idea and the zeal to do something different?
While collaboration enables sharing the risk, for the entrepreneur, there still are sufficient risks in this model, such as the risk
- Of not being able to raise even the initial funding
- Of not being able to build traction; and failing to either become profitable or raise further funds to grow and reach profitability
- Of losing out on the comfort and security of incomes from a salaried existence for an unknown length of time, till adequate funding are raised or the business generates enough cash
- Of living for long periods of time with uncertainty about the outcome of the venture
It is these risks that need to be negotiated well, by applying the very assets that the entrepreneur is starting out with – visualizing, analyzing, planning and executing.
The ideal Startup
The key elements that we could logically expect to see in an ideal startup today are
- An innovative product or process, using technology at the core
- Delivering true value to the customer by either solving a problem being faced or by giving significant improvement and ease in doing something
- An ability to scale up the business to truly bring a transformation in a large part of the society
- Making good profits for the startup
- Building great value for the entrepreneur, investors, partners and employees.
- Thus building a large self sustaining enterprise adding to economic growth and employment generation.
Common issues with Startup Models
Often the typical situations startups land up into are
- The product idea fails to find any customers.
- The customer accepts the product but doesn’t want to pay for it.
- The customer accepts the product but the startup has no funds to implement the delivery.
- The investor wants to see a working model before putting money into the business.
The root of the problem can mostly be traced to one of the following
- Problem being solved: The product is not really solving any serious problem the target customer perceived.
- Opportunity Size: The investor did not see the size and scalability of the opportunity.
- Timing: The product is way ahead of its time; or, there are already too many players in that space.
- Core Team composition: The team’s capabilities do not have a balance between product development capability and business management experience.
- Revenue Model: The revenue model has not been well thought through and validated by market study.
- Execution Strength: The team size has limited capacity to execute the orders.
The above issues need an amount of maturity and experience to visualize and resolve. Getting the project idea evaluated at the very first stage by speaking to potential customers, potential angel investors and domain experts gives deeper insights and scope to eliminate potential issues once the project starts.
Communication and presentation of the model to customers and investors is another major challenge which must be handled well.Having a mix of experiences and capabilities in the think tank and the core team of the business helps look at and address all aspects at an early stage, without losing precious time and money.
The opportunities are there all around; what’s needed is the ability to narrow down to the best ones and deliver efficiently.
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