Guide to Startup
STARTUP! Friends, today many of us want to have our start-up, but very few of us understand how do we proceed further? Just because you are splashing in the water does not mean you are swimming. We all see the life of an entrepreneur and think that how great a life they are having. But what we don’t see that the pain behind it, that how much pain they suffer. If you want a start-up only for the sake of earning money then I will advise you not to have started up. There are chances that you will fail if you are doing it only for money.
All of us see the success of entrepreneurs on social media, but there is one thing other than their success that we don’t see. And that is their pain, their capability that how much pain they have endured to reach here. When someone goes for a startup then people around him say only one thing that you won’t be able to do it. It will be not possible for you. But despite all this, the person who succeeds becomes the king. Gone are the days when only the son of the king will be the king, today every person can do something big In life.
Here are the 6 steps framework On HOW TO START A STARTUP .
You create an idea. Now to create an idea the most important thing is problem solving. Find a problem of your own and see if this problem is faced by many people, if it is like that then you can have that idea. Very few start ups succeed without a great idea, one of the example is Dream 11. This does not solve any big problem but still today their valuation is $8.5 Billion.
While generating an idea it doesn’t need to be very unique but your idea should be executable, you should be able to work on that idea. You should remember three things while generating an idea. The idea should be simple as well as practical. Byju’s and Unacademy are good examples of this. Very simple idea, they are aggregators in education platforms, they created it and they just aggregate.
Second most important thing is Futuristic Approach, your idea should not be just for today but should be based on future say 5 years or 3 years from now. Have an estimate of at least 5 years while creating idea.
Apart from this the third important factor is Tweakable. This will help you a lot. Many people compare tweaking with stealing. People think that you have stolen someone’s idea. No! To tweak means to do existing thing a different manner. Let’s take the example of pharmacy which exists from hundred years. This is an existing business, so just tweak it slightly and brought it online with discounts and there is startup called Pharmeasy. This is know as Tweaking.
2. FEASIBILITY ANALYSIS
You have to perform some feasibility checks in your startup. Feasibility will let you know that what is the probability of sustaining the startup. You would say, why is it so important? I will give you a simple reason for that. You will know first what the viability of business how much is the business viable? What is the probability of sustenance? And when you perform Feasibility Analysis then What is the probability of sustenance? your risk is reduced and helps you take calculated.
You have to check 3 factors, first is that startup should be Economically Feasible. Now what does this mean? You have to check whether all the people are ready to pay for that. Not like you alone are thinking that people would pay me for this, talk at least to 100 people, before starting a start up if they will pay or not.
Second is startup should be Financially Feasible. You have to check whether more Capex or Opex is not required, Capex means Capital Expenditure means like you have to purchase a building or very high capital expenditure is there. Opex means your running cycle. Means your operating expenditure, it should not need million of dollars to run the startup.
Third factor is check Technical Feasibility. See how much technology you will need? It’s not like you are having Kodak technology business in today’s era of DSLR and smart phones. You have to take extra care that your business is technically feasible or not.
3. MVP ( MINIMUM VIABLE PRODUCT )
This is your key to wealth. MVP is your first product, in initial phase, on the basis of which you can acquire few customers and make talk with investors . Keep three things in your mind,
First is to create Market Segmentation in the starting itself and decide which people you will target and what is your audience?
Second factor is Market Analysis. Do complete analysis of market. It should be not like you are entering such an industry which is about to shut down.
Third factor is Competitor Analysis. check the competitors properly . Read about their funding, COCA, average revenue per user, all the things, how much profit they are making, everything. Never get so busy with your work that you forget about your competitors. Otherwise one day competitor will knock you down.
4. PILOT RUN
Firstly you perform the pilot run. You will come to know many things with pilot run. First thing that you will come to know is whether your idea is actually executable or not? Or it is just an imagination. Acquire the first 1000 customer. After which you will get two things clear,which are very important for you to know, first is Illusion versus Reality. You will come to know that you were living in illusion and what reality of market is.
The second thing that you will come to know is What next I can do to bring the best? What I can do to make this better? And how much money do I need to do so? Be prepared with financial plan from start. You have many benefits of having financial plan. Many people ask for funding without proper financial plan, chances are your funding will be rejected . See you focus on branding first, design, value, strategy, logo, marketing, identity, build the trust .
Do all these things. Branding is like a relationship, if you don’t care for it, it won’t care for you. Network with other businessmen build a proper network. Either be the first or be the fastest. Either you enter very early or run so fast that no one can compete you. Not like you have created an ordinary business and expecting the success.
5. TEAM BUILDING
This is core, this is the most important one tell where your business will head towards. And it is very important to keep many things in mind while hiring these team members.
First thing that you need to see is whether the person you are hiring is reliable or not. Apart from this two other important aspects are there, first is Vision Oriented Hiring. Whether the employee you are hiring is aligned with your vision? Is he able to get your vision?
Second aspect is Action Takers. You hire the action takers not some casual guy, its of no use. And someone who is motivated by only money don’t hire him at all. Why? Because the day someone will offer more money, he will leave you.
Hire fast action taking employees because they will save not only your time but also organization time. And bring fast growth to your business. These aspects matter a lot. You can never execute fast if you have slow people with you. So take care of these three things, first is Leverage, whether the people you hire are creating leverage or not? Can they perform in your absence? Because such people will give you more output in less time.
Apart from this the second thing which is Time Freedom. Are you getting time freedom or not? Is it like you keep on doing their work and you have don’t have time for the important work ? .
The third aspect which is very required is Compound effect . Is your team able to create compounding effect? Because in business 1 +1 is not two it’s 11.
6. PROFITABLE AND SCALABLE BUSINESS MODEL
This is where the game changes, it is very important. In business, profit, as well as scalability, is important, if you are having a start-up. Scalability is very important. Two things are needed for that first is Growth Plan.
First make a growth plan that how start up will grow? How I will take it further? How will I acquire customers? What will be my COCA-Cost of Customer Acquisition? What will be my cost of expansion? How will I expand? Calculation for cash burn, be prepared with calculation of cash burn.
Second & very important is – Profitability Plan. Most of the people don’t create this. Create a plan that how will I earn profit from the customers that I have acquired. What is my plan to be profitable? How will I generate profit? Because the profit is the only factor with which business is made sustainable. How long will you depend on funding? Make a plan of how you can become profitable in next 2 years or 5 years.
For that, remember four things, first is Dependency. That what are factors on which your profit depends. Whether it depends on customers or on his pocket. Second is the Cost. What is the cost of business expansion? Is it like it needs lot of money to grow the business.
The third factor is Recurring or One-Time Revenue. You check whether your revenue model will be Recurring or you will charge customer for One-Time payment. Apart from this Upsell and Cross sell. See how can I upsell or cross sell to customer in future. Cross sell means, came to buy cold drink & I cross sold burger as well. Upsell means he came to buy Rs 10 product and I sold product worth Rs 100.