#TakingCharge: What It Takes To Start Up?
We all know how startups have changed the game in business. And it's amazing to see the boom in the startup scene in India.
Prajakt Raut, Founder of Applify.com has recently launched his book - Starting Up & Fundraising. In his book, Prajakt focuses on helping entrepreneurs understand an investor’s perspective, and help them improve their chances of getting funded. The book also helps startup founders understand the building blocks of a business.
Below is an excerpt from his book:
In my view, easier availability of early-stage capital, public celebration & adulation of entrepreneurial heroes, a well-deserved respect for entrepreneurism and also society’s willingness to accept failures in entrepreneurial ventures make it easier for many people to consider entrepreneurship as a career.
A great idea of concept is not the same thing as a great business.
Once you identify a concept that has a meaningful value proposition to your potential customers, you should think of how you can build a strong, sustainable business around that concept. Think hard about concepts like revenue streams, business model, go-to-market strategy, resource requirements, etc. (They all seem very fancy terms, but are nothing but a practical plan on how you will do different activities in your business)
Don’t ignore challenges. Think hard about all possible challenges and then find a way to mitigate them. Entrepreneurs tend to overlook the challenges when they are driven either by a desire to be an entrepreneur or when a concept stokes their interest.
Entrepreneurship is NOT about taking risks. It is about identifying risks, and working on a plan to mitigate the risks.
Write a business plan. i.e. YOUR plan for YOUR business. Often, entrepreneurs assume that a business plan is to be written only when you seek funding. However, a business plan is nothing but your plan for your business. Create a document that will help you think through the steps you need to take in your entrepreneurial journey. And that’s your business plan.
Do not bother about templates. A business plan is not about templates or formats. It is an articulation of your story about how you plan to go from point A to point B and then onward to points C and D in your journey. And as you think through various aspects, including costs and revenues, the plan will start getting more robust.
Don’t focus on the excel sheet. Focus on the business model. A 5-year excel sheet projection is just that – an excel sheet exercise. It is neither a reflection of the potential nor a reflection of your ability to meet that milestone. However, an excel sheet making exercise provides you a reference point to consider different possibilities of scale and help you plan the intermediate steps in reaching those milestones. I.e. it is not important to detail the calculation for a Rs.98.74 lacs revenue by 2020 as it is important to be able to state
“We believe we can be around a Rs.75 lacs to a Rs.1.5 cr. enterprise by the 3rd year of operation and here is how we plan to go towards those milestones”.
It is ideal to gain experience about building and managing businesses before you create your own enterprise. Most successful entrepreneurs have built businesses after gaining significant experience across functions in different organizations. Though often celebrated, entrepreneurial successes of people with no prior work experience are a rarity.
Think big if the opportunity exists. Your ability to scale should be restricted only by your aspiration and not by capital. In today’s environment, it is far easier to raise early-stage capital than ever before. If your concept is right, if the market potential is large and if you have the capacity and capabilities to deliver on that potential, you will find the capital to fund your dream.
One of the most common observations of investors, both domestic and foreign, is that entrepreneurs (especially in India) are afraid of thinking big. Entrepreneurs tend to think that it is prudent to be very conservative in your projections, especially if you have no past record to prove your scaling-up capabilities. However, if you are seeking venture capital for your venture, the scale of your aspirations must be large. Of course, the aspiration to scale must be based on a validated assessment of the potential and backed by a strong, sustainable plan to deliver on that potential.
Make your own decisions but listen to what more experienced voices have to say. If several investors reject your proposal, it should be a signal for you to consider what aspects of the model seem to worry investors – relevance of value proposition, market potential, business model or your ability to deliver on the potential. Once you have identified the issue or issues, you need to revisit that in your plan and see what changes you may want to make to address any flaws in your plan.
Just because you do not get funded does not mean it is a bad idea or your plan is wrong. Often, especially with new concept, it is difficult for investors to take a bold step. Often entrepreneurs are able to create new markets based on their insights and conviction about the opportunity. Others may not be able to see the vision as the entrepreneur is imaging it. Hence, just because others reject your idea does not necessarily mean that this is not worth pursuing. But do also consider the points of skepticism as it will only help you iron out issues that you may not have thought about.
If you still do not get funded and do believe it is a concept worth fighting for, you need to find innovative ways of building a proof of concept.
Find mentors and investors with belief in your concept. It is also important for you to find investors who have a strong belief in the domain that you wish to be in and convince them about your ability to deliver on that potential.
Importantly, don’t be a lone ranger. Connect with other entrepreneurs. Seek guidance. Ask those ahead in the entrepreneurial journey to share their experiences. Network and seek mentoring from accomplished and successful entrepreneurs.
To end, I would like to clarify that entrepreneurship to my mind is not just about starting or owning an enterprise. It is about an entrepreneurial spirit that inspires individuals to take ownership of an assignment or area of responsibility. It does not matter whether it is in your own enterprise or whether in an organization where you work or whether the organization is a commercial enterprise or a not-for-profit entity. Do well in whatever you choose to do. Do it diligently, honestly, ethically and with enthusiasm and commitment. Always Think Big.
As the advertisement of a spirits brand said ‘It's your life, make it large’.