Achieving prompt growth after college may seem very appealing, however, achieving it in a sustainable manner will require an elaborate strategy. Many entrepreneurs assume that a well defined startup idea will always be flexible enough to attract funding easily. In actuality, there are many failed startup attempts in comparison to successful startups that manage to gather a large sum in funding. To avoid failure and set yourself up for sustainable growth, follow these 5 key steps shared by Bada Business Professor Paritosh Sharma.
1. How to Create a Business Model that is Focused and Effective.
A business model is essentially your go-to strategy for tackling a business problem in detail, defining the demographics and region your service or product targets, and creating a brand differentiator. Here are key points to keep in mind while creating your business plan:
Recognizing the Issue at Hand: Understand what specific problem does your product or service hopes to address.
Understanding Your Demographic: Figure out who the ideal and non-ideal customers for your business are.
Brand Differentiation: What makes your product or service accomplish the services better than your efforts primary competitors.
Market Survey: Study the existing competitors and the services they offer in order to gain a sense of the market.
An entrepreneur targeting to make 1% of a large market is an unrealistic goal setting strategy. Setting reachable objectives such as quarterly milestones will reap better results. First, allocate the first two quarters to product development and the last two for launching the product and monitoring growth.
Avoid creating a business plan immediately, run the plan by experts from business incubators, mentors and others. A good plan is comprehensive and increases chances of success while minimizing chances of failing to meet the expectations of the investors.
Where To Look For a Co-Founder
A co-founder can help divide the work and make the professional journey easier. Having multiple founders increases the chances of successfully closing deals since there is optimal division of labor and more skills. For example, a marketer wanting to start a tech business can find a partner with programming proficiency.
Some of the well known ones include Razopay and Flipkart which started with college friends. When looking into a co founder, identify someone whom you believe you can work with in the long run, instead of someone you personally get along with.
Make sure that you and your co-founder are on the same page when it comes to responsibilities and stakes. This information should be captured in writing along with your partnership’s Key Result Areas ( KRAs) and Key Performance Indicators (KPIs) to avoid confusion in the future. For instance, if you and your co-founder put in equal investments of 50%, ensure that this is documented within the company paperwork.
Securing Investment
In the early stages of setting up your new business, you should reach out to Friends, Family and Fools (FFF) for capital. While business is the primary focus for early-stage investors, it is not uncommon for them to support an individual rather than the business concept. For instance, when Paritosh Sharma ventured his second business, he was unable to fund his trip to Silicon Valley but managed to secure a deal with an investor meeting in a hotel and netted himself ₹5 lakh.
As you gain traction with your startup, you will gain business angels, a term for an affluent individual keen on funding ventures that show promise. Next, you encounter venture capitalists (VCs) who typically invest in the range of $1-$10 million to grow your business even further. There’s always a first time, and to kick start your growth journey, getting investment from those who hold faith in you and your vision is the first step.
Creating Interest Regarding Your Enterprises
Traction is a crucial metric for evaluating your startup’s growth and staying power. When it comes to products, apps and services, customer engagement touches every level. Along with Traction there is also value added with other interactions.
For instance, consumable FMCG products like soap, track how many purchases customers made or if it’s a mobile application, the Monthly Active Users (MAUs) and Daily Active Users (DAUs). If it is determined that your customer base is growing, then there is a higher chance for potential investors to put their money into your company.
Moreover, taking caution to read the term sheets thoroughly is incredibly important before affixing your signature. Be sure to get business consultants or chartered accountants to have a look so that the terms are of benefit for you. This is of utmost importance particularly when dealing with Intellectual property and equity ownership.
Making Changes in Areas Where There Is No Progress
Planning and execution are essential but things still can go awry. This is pivoting. Pivoting is the process of changing your business model or strategy to something completely new when the tactics that you are currently using are not providing any promising results.
This is the correct approach to business strategy: College is the best time to explore ideas and try out different business models. A Fintech startup is just one of the many options you can pursue. By the end of your third or fourth year, you should have a rough idea of the entrepreneurial business that you want to pursue.
A pivot is not a weakness; it is a way to reposition your business in line with your changing needs and market trends.
Conclusion
Novelty in business takes a lot of hard work and planning in addition to dedication. The five steps that should be taken are writing a comprehensive business plan, getting a co-founder, getting an investment, getting traction, and knowing when to pivot. The entrepreneur in you knows that success happens in the long term. After all, entrepreneurship is about being patient and resolute at every turn.
Consider coming from a middle-class family. Lacking the financial cushion of 18 to 24 months means your entrepreneurial dreams may vanish. Plan carefully and prepare to survive in the market.
