Lessons for an Entrepreneurial journey
Entrepreneurship or a Startup is a great journey of learning. It is a vocation that brings out the best in you. It allows you to fail and still learn from mistakes. It gives you a chance of lifetime to rise above ordinary. It instils the life virtues of a better work ethic, a stronger appreciation for value of time & money, creative thinking, better goal setting, risk-taking, improved people skills etc. You become a master of your own voice. A startup, an entrepreneurial journey is the best investment in yourself as it develops & polishes the brand “YOU”. Either you make money if you are able to execute the business model well or else you become much wiser for a good job. The ‘learning by doing” that comes with the shocks of failures and sweetness of success teaches you lifelong lessons not taught at Harvard or IIMs.
A startup also qualifies to be a good contribution to society, it adds economic value, improves the way goods and services are produced/delivered, creates jobs and hence a more preferable productive engagement for the youth of today.
A question I have been often asked is what is the best time to be an Entrepreneur. Wise people say “if you’re going to take risks, do it at a young age“. When you are young you have no bills to pay, have few commitments and plenty of time? However, if you missed the bus when young, just remember “It is never late”. KFC, Intel, Linkedin & many more were started by entrepreneurs at a late age.
Rather than when, I would argue how does the entrepreneurial journey start? The reasons are as mundane as being moved by peer success, family & peer pressure in a joblessness situation, or when a friend or family member wants to start a business with you. A newbie in this area could be fighting dislocation or a layoff or even be hating one’s job or the boss to find a reason to spawn a startup. Sometimes it is driven by the dreams that beget from success stories of the unicorns or just because most in the peer group are doing it. It could also be because you want to work less or have flexibility of time at work to have more time for fun with friends etc.
We must realise that some of the start-ups initiated by virtue of the reasons listed above may succeed by sheer luck of being at the right place at the right time but none of the above lend a greater probability to success of the venture for the simple reason that most of these do not have passion or hunger as the underlying reason. There needs to be dream, a belief and the deep desire to create something new for which the required homework needs to be done.
On a lighter note, I would argue that the best time to start a new venture is “yesterday”. On a more serious note, the ecosystem was never more better than “now” when the government is pitching in massive support & resources into the ecosystem. India has a vast pool of technology talent to dip into today. There are numerous Incubators, Accelerators & Venture Capital Owners who are hungry for good ideas to support. The geographical boundaries separating consumers exist no more in the e-commerce driven markets. Consumers are more demanding & willing to experiment with newer models of doing business. Information is omnipresent on the internet and just a press of a button away. You just need to know what to look for? Further, e-commerce works round the clock and business happens round the clock even when you are sleeping. The good number of co-working spaces, specially in the urban districts, offer office space and utilities that can reduce overheads and bring complementary skills & facilities under one roof. Also with the increasing sophistication and use of social media & data analytics today, the entrepreneur can do a targeted marketing to the customers with the largest potential. If all efforts bear fruit, the valuations offers unfathomable income potential as well.
So what stops you from getting on to the startup bus. I have seen around that people fear failure and they are worried about how to sustain during the struggle period. In my opinion these are just challenges of a different size and order. The choice is really between an ordinary and extraordinary life. The fear that one would be short of money or would have to compromise on the standard of living may be real but I have a question for them- what is life without an ambitious goal? What is a goal that is not worth sweating out for? The other fear of failure is also a state of mind. I would understand that the younger generation has been ill prepared to face failures because of the protective style of parental upbringing during childhood. However, I am so glad to state that a failure eventually helps such a lot to make you wiser for either your next startup or your next employment. My interactions with hundreds of recruiters gives me a strong belief that the skills of a failed entrepreneur is in great demand.
Let us get a little deeper into the issue of startup failures. Various surveys and researches have pointed out a failure rate start-ups in the range of 60% to a high of 90% & upwards within 3 years of their formation. When the success rate is so low and the challenges are one too many, the obvious question that would come to mind would be who is more likely to succeed and are there any ways & means that increase the probability of success. A quick look at the numerous articles & write ups on the topic will throw a number of success factors including a good idea or a product, a good business plan, a good market need to serve, a good cost structure below the selling price, passion, business acumen, hard work, patience, timely funding etc. There is not much literature available on failed startups that could throw vital leads on “what not to do” or what to take care before the downhill journey starts. While all the success factors enlisted above are important, there are some very crucial factors or what I say practical learnings that startup founders must know and ensure.
- You must understand your idea, product or service very well and not in terms of what you think about its goodness but rather what does the neutral customers think about it. Does it satisfy a real need or just a feebly felt need? Your initial tests with a minimum viable product (MVP) over a convenient sample almost always throws wrong conclusions. Quite often, the founders are swayed by their own hubris, the feel-good factor of having given birth to an idea of a new or a different form of an existing product or service.
- One must spend sufficient time to build the MVP without committing too much resources behind it. This entails going through multiple surveys and testing rounds with the MVP over potential customers. What it actually means is the founder has to spend as much time to talk to and understand the customer as one can. And the potential customer who can give a real neutral feedback sits a little far away than family members, society peers, college groups, workplace colleagues & conveniently grouped samples. One must also understand that there is a lot of gap between a positive intention to buy as indicated in a survey & the actual buying.
- One must know and be hands on with the broad business plan with well thought out assumptions & limits on budgets and costs. This requires a lot of planning and cross confirming the assumptions with people who know business or understand costs and customers. An experienced mentor can be a big help there.
- Quite often even when a good product and a plan is under execution, startups find it extremely hard to manage cash flows because the timing of the inflows and outflows do not match and the company runs out of money despite the business being profitable. In that situation, the operations are not able to sustain, the performance graphs flatten, the investors lose interest which leads to drying up of investment fund flows.
- Money doesn’t take one far enough though it is an essential support. One must have or acquire some basic skill to be able to substantially contribute to business like technological, financial, marketing, operations or as basic as dealing with people, good communication & persuasion skills. If one is completely dependent on others for all these skills, such efforts lose track soon and do not last long.
- It is quite well known that there are limits to human performance specifically on the number of things one can substantially contribute to in business even if they have multiple skills. This means that a team has to be put in place for a good effort. They could be cofounders or the initial startup team members. The most important thing to ensure is that these cofounders/ members necessarily bring complementary skills on to the table. I have frequently seen that cofounders come together because they are relatives, friends, college-mates or office-colleagues and not necessarily ones who team up because they bring complementary business skills together. In no time, differences crop up because some people spend more time and hard work compared to others who find it hard to contribute complementarity and slowly thence the differences take shape of skirmishes and the teams fall apart. Thus, one must not rush into commitment with startup partners and the initial key members of the team. I strongly recommend to look for and engage with a mentor around who can help you in these issues.
One more question which is often asked by the wannabe startup enthusiasts is which sector to try for a startup journey. It is a very difficult question to answer. Normally I expect that an idea of a product or service comes from personal experience of having seen or felt a need. Often hot sectors are considered those where there have been a lot of funding stories of late. If somebody had to explore denovo, the sectors that have seen a lot of traction in the recent times include product selling through E-Commerce, Media & Entertainment, Gaming, Food Processing, Food Retailing, Financial Services (Lending, Fintech), Healthcare (Doctors on call, Clinics, Hospital chains, Medicines, Health history), Logistics (Trucking, Real time tracking, Load booking), Warehousing &Supply-Chain, Education (Simulation, K-12 courses, Learning & Training, Coaching), Travel (Bookings, Holidays, Time-share, Ride Share, Cabs-Auto-Bus), Cyber security, Social media, Custom Website, CustomSoftware, Custom ERP, Social entrepreneurship (Government/Public Problem Solving), Agripreneurship, Artificial intelligence/Machine Learning products, Data Analytics etc.
My experience says that a venture may fail but an entrepreneur never fails. He or she rises from the failure to start off another venture. The examples of people quitting entrepreneurship to get back to jobs are few and far between. Even if one were to do that, the experience of a failed startup venture is considered very positive for a job interview. It is a solid grounding which one would rather go through than not. I have strongly felt thus that the curriculum and extra-curricular activities at school should promote active entrepreneurship.
So then what are you waiting for? It is “YOU” who has to make the move. And the sooner you make that move, the better it would be as the ecosystem is a much better enabler in the recent times. You just have to think logicand reach out. Quite often, it is just one decision away. Don’t hold yourself back. Go for it and you would not believe how good this decision would prove for your above ordinary future.
Author: Dr. Kamal Kishore Sharma
- A Researcher, CXO trainer, Motivational Speaker, Mentor, Coach, Startup Enthusiast, Investor
- Fellow (PhD) of Indian Institute of Management Ahmedabad – Public Systems
- Former CEO at an MNC Subsidiary of Arcelor Mittal Steel Company, Kazakhstan
- Former Indian Civil Services Officer (IRTS-1995)
- Social Impact Catalyst – Agriculture, Water & Education