Simplistic startup tips for first time entrepreneur

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The objective of this article is to tune expectation realistically for first time entrepreneurs, to help in decision making. The world needs more and more entrepreneur to make people’s life easier. Load of problems needs to be resolved in this world, particularly in the developing countries. Each problem spans a billion dollar opportunity to be tapped and exploited. However, it is not that if you solve the problem people will get to know about it of their own and come running  to take the solution. It is Entrepreneur’s responsibility to create visibility of the solution, provide easy access and way through wide distribution channels. He should bring out its economical or emotional value.

A first time entrepreneur should consider these parameters and must avoid making mistakes as it costs his time, money and other resources.

Startup is a journey, a long trail of five to six years of facing social and mental challenges, hurdles, financial crisis, work life balance  issue etc with an abnormally low success rate. But, the true picture is not that gloomy as it sounds. A positive aptitude and passion drift mind makes the journey The journey is fun if you have passion to do, what you do.

Startup and Business tips for new entrepreneurs

Objective

What is your objective? Is it money or a cause? If it is money, then the probability of failure is high. If it is a cause and you have vision to drive the cause, then you will be strengthened enough to take it through years of long grind. The cause, need not be a social issue or problem. It can be anything which will make people feel good or actually make good for people. Anyways, If your startup is successful money will come automatically. In my opinion, “Money preferably should be kept as a by-product, not as objective of startup”.

Startup Vs New Business

There’s a thin line differentiating Startup with New Business. Startup is where both business model and target market is not established Whereas, In new Business,  the business model is already established. Both are difficult for first time entrepreneur. However, the startup takes more time to establish the business model. In startup  multiple round of pivot is required, till market fitment is done.

Startup Idea and Execution

Closely relating to the real problem is the key to the first step towards the success for the first time entrepreneur. Often, they are too emotionally attached to the core idea. But the core idea need to change through multiple pivots for market fitment. Execution is key to success of any startup along with the team, timing, idea and luck. Discussing and talking about your startup idea with the people in similar trade, helps in building up the right solution.

For example redBus team, a highly successful startup from India, initially developed the Bus transport ERP, which they never used. They quickly realized, that product is not market relevant and changed the focus to “Bus ticket demand generation” which runs successfully. Hence, Keeping a close watch of the consumer behavior helps augmenting the success rate.

The analytics need to be primary driver for deciding the next pivot of the Product or solution.

Advisor

Constant input from Advisor or Mentor is a must for initial two to three years. One needs to choose the advisor very carefully. Potential startup advisor should have successfully completed at least two to three startup from the chosen domain. Your team and you should be able to share all the positives and constraints to get accurate and effective input. Advisor should be trusted like a “Guru”.

Technology Vs. Solution

Most of the time startups choose a trending technology and then, decide upon what problem to solve. Rather, it should be the other way around. The trending technology may not fit to your solution. Technology or a product is not a startup. Choose the problem first and use Technology as a problem solving tool.

Money

In startup context, funds accumulation and financial estimation are major factors for consideration. Typically the cost of building the product is 15% and rest covers the cost incurred towards product marketing, sustainability and growth. It has been observed that the both the estimated time and the estimated amount escalates to 2.5 times.

So, a reserved fund is required for sustaining at least three years, through own sources/ angel/ family etc. A separate fund is required for social and domestic front like fooding, lodging, utilities etc.

The dream car, dream vacation for family will be delayed by next six years or so. Your family entertainment budget, weekend budget and other discriminatory spending (As per you discriminatory and for family it is essential) will be squeezed or would not exist. All that need to be considered in your personal aspect.

Money is the most essential resource for startup to survive and then flourish. Hence take the cockroach startup approach, till you get venture capital funding or other significant money inflow. It pays in long run to survive with minimal resource consumption.

Timing & Solution

The market readiness for your startup, is critical for its success. Many times either it is either too early or too late. You can validate the timing with MVP (minimum Viable Product), whether market needs your solution to the identified problem or not. You can test it at abnormally low budget using lean startup model by Eric Ries.

The product need to be developed through Agile MVP model. The first version should hit the market, in less than 30 days. Take feedback and do the required changes quickly. Do not build a product assuming you will have million users on day-one. If you really get million users then that is a nice problem to have. Let the server crash and then only fix the problem.
Stay alert to market pulse, change your MVP in small iterations. The methodology can be applied for software product as well as non software product.

Co-Founder & Team

Startup is a journey, where you face maximum amount of unknowns. Decisions need to be taken brazenly first to survive, even to flourish. Also, it is a fairly long journey with many ups and downs. You need somebody trustworthy to rely on quick decision making. You need somebody to share your pain. Co-founders  comes handy to ease you emotionally and financially as well. Moreover, if you choose a co-founder with complimentary skill, it will help your entity move fast. Hence if you are Biz person choose co-founder as Tech and vice-versa.

The founding team chemistry decides the fate of the startup. Choose your team members who has strong opinion, great attitude and superb IQ. Last but not the least, select only members with whom you can travel for more than 10 hour, with an enlighten journey. If Yes, He/ She is the person you need. Skill can be taught, culture and attitude cannot.

 

Build Vs Buy

Many time founding team are from specific domain like Finance, Healthcare, Media & Entertainment, Automobile etc. Founding team brings tremendous domain knowledge to the table. In the event of, the visualized product/ service need significant software play or hardware play, which is not the core skill of the team, then the team need to analyze thoroughly build verses buy decision. Both options has its pro and cons, which need to be vetted before deciding.

At SmallDay, We help startup to develop MVP, handhold through market fitment and scaling. Please refer SmallDay Agile MVP Model.

Few Handy Books

Please consider the following suggested books to start with

  • The Lean Startup by Eric Ries- Good book for early stage startup.
  • The 7 Habits of Highly Effective People by Stephen R. Covey – Helps in stay organized and focused.
  • Zero to One by Peter Thiel with Blake Masters – Helps in innovating than becoming another copycat startup.
  • Trillion Dollar Coach: The Leadership Playbook of Silicon Valley’s Bill Campbell by Alan Eagle, Eric Schmidt, and Jonathan Rosenberg- The books gives unusual perspective to your ways of working, which has created huge value for silicon valley stars like Google, Apple, Intuit etc.

It is journey worth taking, as it gives the experience, which no business school can teach you. It gives the courage to explore and go beyond your physical, psychological, financial and emotional limits. You will be a pathfinder professional, irrespective of whether you have tons of money or not.

At SmallDay, We would love to hear your challenges, we can become a sounding board in your startup journey. You can reach us at info@smalldaytech.com.