Startup Business Success

Making a Startup Successful – The Mindset & Tools Required

Start-ups play a key role in building the economy of the country. It fosters innovation, creates new jobs and builds competition, all of which works to boost the economy of a country. However, creating a successful start-up is no easy task. Research shows that 90% of start-ups in India fail within the first five years. This is largely due to a lack of innovation and starting off with the wrong mindset.

If you are starting out on a new venture, it is important to go into it with the right planning and mindset. Most entrepreneurs have a passion to change the world. However, it takes more than passion to get a business off the ground. There are a lot of sleepless nights, obstacles and mental, physical and financial strain that goes into creating a successful start-up. Build the right mindset and make use of all the tools available, while getting your company off the ground.

Build The Product For The Customer

Build The Product For The Customer

It is important to have conviction in the product that you are selling, but it is also important to ensure that the customers will like the product too. 42% of new ventures fail because they built a product that consumers didn’t want. As an entrepreneur, you should be open to feedback. One of the biggest mistakes that you can make during the early days of the company is to be too rigid about the vision of what the company does.

In order to ensure that the business develops and grows, you have to adapt to the different needs of the clients. Before investing more into the product, you must work with different clients or pitch the product to customers and adapt based on the feedback. By taking a flexible approach, you will be able to better connect with the target audience and build a product with an interested customer base.

Some of the primary tools that you can use to connect with the customer base are:

  • Online Traffic: Make use of tools such as Google Search Console to understand how customers are connecting with similar platforms. Use this information to plan the best strategies to draw more traffic to your platform.
  • Paid PR: Tools such as Google Analytics and SEO software such as MOZ and Long Tail Pro help you build high-converting online traffic.
  • Collect Feedback: Make use of tools such as Surveypal to collect online feedback and build better relations with the customers

Set The Right Workplace Culture

Set The Right Workplace Culture

All successful endeavours have two things in common – effort and consistency. It is essential to consistently work on a project in order to ensure its success, and this extends to the workspace. Many small or new companies forget to set the right workplace culture; this can often lead to clashes between the employees and the management.

Whether you want to flat organization structure, build a fixed hierarchy or keep flexible work hours, it is important to set the guidelines right at the beginning. Having the right workplace culture helps both employees and management teams stay motivated.

Reports suggest that 80% of small-sized businesses have no HR departments. This makes it difficult to maintain a consistent work culture and address the issues faced by various teams. Companies can put in place small HR teams and make use of online tools to handle these tasks. Reports show that making use of HR tools can help boost workplace efficiency and boost productivity. Some of the best HR tools that can be used are:

  • PeopleStrong
  • Qandle
  • Keka HR
  • greytHR
  • Farsight HCM Engine

Build A Strong Brand

Build A Strong Brand

Most entrepreneurs pay too much attention to creating the perfect product before selling the brand. However, it is important to build the brand along with the product in order to improve customer retention. Reports show that companies that presell their productssee up to 6 to 13% improvement in revenue. By preselling, companies get the opportunity to build products in accordance with the demand.

In order to successfully manage tasks like preselling, it is necessary to have a brand in place. The key elements that go into creating a brand are:

  • Name: The most obvious element of a company or brand is its name. Make use of online tools such as NameMesh, Oberlo or Namelix to get a unique and catchy name for your enterprise.
  • Website: Either hire an agency or make use of tools such as Wix, WordPress, GoDaddy or Shopify to create an online domain where customers can find and interact with the company.
  • Logo: A company requires a unique symbol that users can recognize and associate with the brand. You can make use of online tools such as Designhill, Logojoy or Canva to create a logo.

Define Clear-Cut Goals

Define Clear-Cut Goals

One of the key elements of setting the right mindset is defining what winning means for you and your company.Connect with industry experts and conduct your own research before you define what it means for a company to be successful. This includes clarifying what targets you see your company cross in terms of the number of securing funding, gaining clients, and increasing revenue.

Although a start-up must always stay flexible and adapt to changing scenarios, having a target can help define a path for the company. Clarifying your goals makes it easier to set clear tasks on a daily, monthly, quarterly and yearly basis. There are a host of tools that can be used to handle different aspects of goal setting:

  • Project Management: There are a host of tools that can be used to keep track of the progress and communication with respect to specific projects. Make use of tools such as BaseCamp, Asana or Scoro to keep track of company goals and project progress.
  • Office Communication: Maintain an online repository of the important communication elements and shared information with tools like Slack, Biba, Verishow and more. This helps keep track of set targets and past communications.

Embrace The Ups And Downs

Embrace The Ups And Downs

A new venture will always face a host of ups and downs, but the key factor is to have belief in your project and consistently work through difficult periods. By adapting to changing needs and building a strong relationship with both employees and customers, a company can pave the way for success.

5 HR Challenges Faced by a Startup SME & How To Manage The Same

5 HR Challenges Faced by a Startup /SME & How To Manage The Same

There are 42 million SME in India which comprise of 95% of country’s industrial units contributing to 30% of country’s GDP (6.11% of manufacturing and 24.63% of Service GDP). Together these employ 106 million people, 40% of country’s workforce. Looking at the growth and job creation potential, SME should have good focus on their human resource, but there are many challenges relating to human resources that mar the growth of this industry. It makes it rather non- negotiable to work on the internal structure, HR processes and practices to ensure growth and attract talent. Enlisting some challenges that SMEs face relating to people that HR leaders, company owners and government should address.

HR Challenges Faced by a Startup

Image source : HRSME

1. Absence of HR department in SMEs

According to a CII survey, 20% of medium and 80% of small-sized businesses have no HR departments. It is not possible to implement people related processes and policies without an HR function.  There are two most important reasons for the lack of HR department in SMEs. First, SME’s are more growth oriented. When the companies are startup stage of small, all their objective is how to grow first to be sustainable and reach bigger scale of business. So, human resource is no priority.

Secondly, SMEs operate under budget constraint and perceive having a proper HR department as an expensive burden on their company budget. As, many SMEs have smaller teams, promoters end up managing the HR functions themselves to save cost, rather creating more HR issues. So, the promoter’s culture, value system etc become SMEs culture and when the organisations grow with culture – related issues and no one there to handle these. This leads to lot of politics as when people don’t know where to bring their grievances, they start talking to each other. The recruitments, the appraisals and promotions, exits etc are very subjective.

Solution – SMEs that think HR is just another administrative function, need to correct their perspective. Organisations must include an HR system right in the planning stage and build various people related practices like talent management, engagement, policies related to compensation and benefits. A proper HR function with manual sets standards that helps SMES to take objective decisions related to people’s recruitment, job responsibilities, remuneration, promotion, attrition, company’s stand in case of difficult situations.

2. Challenge in hiring the right talent

SMEs biggest struggle is hiring people with specialised skills. Limited talent pool, inability to offer competitive salaries and fierce competition add to the misery of HR managers.

Secondly, SMEs want to have best of the talent and expect them to multitask at compromised salaries much lesser than those provided by larger organisations.So, many employees resort to working in smaller & riskier organisation but aspire to working in bigger and safer organisations. These will shift to the larger organisations whenever there are vacancies.

Thirdly, SMEs show lack of awareness about the legal hiring standards procedures and practices. Some consciously and unconsciously violate the common employment laws and regulations. These could be as small, but significant as the company not offering a valid employment letter with proper job description, salary and other details to their employees.

SMEs

Image source : Economic Times

Solution: SMEs Organisations should consider human talent more as long-term investment and not immediate ROI. It takes time for a plant to grow into a fruitful tree. There is no other alternative than to have a pool of skilled employees. It is better to employ one employee with good skill sets at industry competitive salary than to have 2 -3 employees with lower skill sets. 

It is critical that all entrepreneurs even as small as a 3 member team should know and understand the employment law and try not to violate them. In case of low budget, SME should consider hiring the HR specialist/consultant to avoid facing the consequences. Having an employee handbook is the most desired element in company HR.

3. Challenge in Building and maintaining the Culture

An organisational culture is basically a uniformly understood set of principles along with non- negotiable organizational values that impact every individual in the company. But, many SMEs struggle in this area due to lack of proper organisational vision and plan and end up following the promoter- based culture.

E.g. StartUps, in the initial and initial growth stage, display full of energy and fast moving entrepreneurial culture in the organisation. The environment is often friendly with young and energetic teams working and interacting closely. There are exchange of ideas and feedbacks. It starts to die down as the company matures. This is when people start getting bored and lose interest. The structure firms up from informal interactions to formal monthly meetings.

Challenge in Building and maintaining the Culture

Image Source

Solution – SMEs need to articulate long-term organizational HR objective for achieving the desired culture and should have a structured plan to get there. HR in turn, can play significant role to keep the culture by laying the standards and keeping everyone informed, engaged and involved. HR can run several initiatives to connect everyone through various platforms – Outdoor sports & picnics, Intra office blogging, social media campaign, coffee mornings where people can share their stories of gratitude towards the organisation and fellow employees. In fact many SMEs are working towards growing bonding among employees and making the employees feel like the part of a family.

4. Aligning Values – A Big HR Challenge

Another big challenge facing HR managers in SMEs is to see the founders’values are aligned with that of larger employee group. Many a time, employees bring in conflicting set of values not in alignment with those of founders. It requires a lot of unlearning on the part of employees and adjustment on the part of the founders. This misalignment often leads to lot of decision-making conflicts, employee dissatisfaction, lower morale and higher attrition rate.

In such challenging situation, HR needs to play a critical role by bringing the attention of founders and employees towards organisational vision and goals.Firstly, HR needs to make the new entrants aware about the SME objectives and set the right expectations right from the point of hiring and induction. Secondly, HR needs to  bridge the gap by inculcating a culture of transparent communication between the founders and employees.

5. Challenge in building capability- based organisations

The real challenge that lies in front of the SMEs is in building a capability-based organisation than individual based organizations, and not forgetting that individuals are the building blocks of the successful organisations. SMEs should implement effective training and development programs for employee upskilling and growth to build organisational capability. But, is it that simple? Due to the budget constraint, it is seldom feasible for SEMs to involve external vendors for upskilling of their employees. So, SMEs lag in case of specific skill-based training.

Challenge in building capability- based organisations

Thought the customised training and development programs are ideal for building organisational capability, SMEs can focus on developing good in house and on the job training programs.Mentorship programs can be one low cost option for training employees. Here, a senior employee mentors a junior on one on one. At least, this keeps both the levels in tune with each other. Juniors feel empowered by learning new skills and getting to know someone senior in the organisation.

6. HR Challenge in Retaining the Talent:

Small companies face great challenge in retaining employees, especially, at the lower level. Salaries are not too good, and teams end up multitasking and over working. Attrition rate in junior level is highest as they might change jobs for small increments without even giving prior notice. Middle and senior employees may find unclear role definitions and unknown career path frustrating and they change over for more clarity and more lucrative offers too.

HR Challenge in Retaining the Talent

SMEs should couple their equitable pay grade for employees with other intangible factors for retaining their employees. Consistent compensation package, job security, employee growth progression plan, employee care and bonding, workplace comfort, inclusive growth are some of the important factors why employees stick to the same organisation for long.In addition to this, how the company behaves with the exiting employees cast impression on those still inside. SMEs need to have more professional approach towards those choose to leave and treat them with equal respect. This will build a culture of mutual respect within the organisation too.

Way forward

More founders need to recognise these challenges that HR and their SMEs can work in tandem to solve and create HR healthy enterprises. When the founders will start viewing HR as a strategic role in the organisations they want to build and not just an administrative function, they will be raising the bars of their organisations. At the same time, employees perceive the enterprises with HR function more positively.

HR managers can also make use of technology and research various factors and trends to analyse satisfaction, performance, appraisals, attrition for getting best talent, the employee retention and SME growth.

Different Types of Funding Sources for your StartUp

Different Types of Funding Sources for your StartUp

So, you have been finally bitten by the entrepreneurship bug and are just about to press StartUp button. Your next question is how you will raise the funds. There are many options to finance your business. We are listing all these sources for you along with their pros and cons so that you can decide which is the best option for you. You may also combine two or more to strike balance.

Types of Funding Sources

1. Self-Funding – Your own savings

This is the first option most of the entrepreneurs try.  So, if you are planning to use your own saving,

Pros:You can straightaway start your business without being answerable to anyone.

Cons:There is a risk that you will lose your hard-earned money if your business doesn’t do well. And, you will suffer guilt for burning your money.

Clever entrepreneurs never use their personal savings for their businesses.

2. family and friends

Next good option you can use is ask your friends or family members to fund your StartUp. You may approach your well to do relatives, uncle, aunt, grandparents. 

Pros: Your friends and family members want to see you successful and will not exert pressure for returning the money soon. This is a faster mode of finance too.

Cons: Family members’ decision to support you is rather emotional and not business like. You may not need to show any projections to them. But, if you fail, you may be subject to humiliation.

You need to make up your mind whetherthe money you are borrowing is a loan with interest or you are offering them equity. Give a timeline when you will be able to return the money and make them aware about any risks involved.

3. Crowdfunding

When a large number of people contribute small amount towards your business providing you with the capital to start your business or a project, it is called crowd funding.

crowd funding

It is mainly a form of social funding where you as an entrepreneur can post your funding requirement for a project, product development,event or a cause etc on digital crowdfunding platforms like Ketto, Wishberry, Fuel A Dream etc.  This will be available to the members nationally and internationally. You can share with your network of friends and family too.

Many people who connect with your dream will pledge their funds without any expectations of returns. Many of these platforms charge small commission fee.

Pros:Get a pool of investors in one place to fund or expand your business.

Cons:Crowdfunding can’t be your long-term funding solution.

In India, there is a trend of people more inclined to give to the social cause unlike other countries where crowdfunding for the business is a usual method.

4. Angel Investor

Angel investors are high net worth individuals who offer you funds in exchange of equity.

It is easier to get angel investors if –

  • Track record to show – If you have already started up and showing a growth sign tells your investors that you are serious.
  • A sharp Business Plan with clear timeline – to show to the investors that you mean business
  • Your Team Experience – Angel investors look for more experienced team. So, it will pay off if you can get a good team of 3-4 on board
  • Get advisors/mentors on board – This will help bring the investors’ fears down.

Pros:A Good funding method with flexible terms. Angel investors come with their wisdom and experience and will guide you as they have invested in you.

Cons:You will be answerable to your investors, so be ready to control your decision making. But, you can negotiate and be explicit about your decision making freedom with them.

5. Venture Capitalists

You can approach a venture capitalist in case your funding requirement is huge and you are looking for scaling up. In turn, you will need to give equity in your business and returns if you go public or another company acquires you. Venture capitalists will be interested in your business only if it has the potential to give good ROI

Pros:Venture Capitals are sharp business people who can mentor you in growing your business. Getting a venture capitalist on board will give your business credibility and limelight too. It opens doors to future funds.

Cons: As the funding amount may be significant, the size of equity will also be sizeable.

6. Get an SME Loan

It is a very good form of funding for you if you still fall under the category of MSME as government recognises that this sector needs special support to become viable. The Government of India provides MSME loan schemes to micro, small and medium enterprises under various MSME loan schemes. These loans are disbursed through schemes and incentive platforms such as Mudra LoanCGTMSE, etc.

Pros: Has longer than usual payback period.

Cons:For getting MSME has typical eligibility criteria. A lot of financial consultants, NGOs will tell you they can do the job for them in return they will charge a fee. But, it is better that

7. Bank Loan

You can also explore getting a bank loan for your start up. Before applying for a bank loan, it’s important to ensure that you are well educated about the various options available.

Pros:It is a fast mode of funding once you qualify. You will not lose any control on your business.

Cons:Loan has interest component and a pay back period in which you must pay back. You may need to pledge a collateral for security to the bank.

Bank loan application requires a lot of documentation and understanding of terminology which can be cumbersome. You many require help of a professional CA who will execute the job for you but will charge 1-2% of the loan.

8. Borrow from P2P Digital Platform

Peer to peer is a another good option for If you are not able to secure loan from the bank and time is running out you can try P2Ps. Digital Peer to Peer Lending platforms like Faircent and i2ifunding that connect individual lenders and borrowers allow you to borrow funds at low cost.

Pros: Very Quick process as compared to all above if your credit rating is good.Get funds at low cost interest rates.

Cons:You can’t borrow more that Rs.50,000 from a single lender across all the P2P Platforms.

You need to study all the above given funding options in detail, talk to your fellow entrepreneurs, discuss in forums before finally going for a particular funding option. Don’t depend on someone else completely but educate yourself well. After all, it is you who is responsible for the money.

P2P – A good option for SME funding needs

P2P lending – can it help MSMEs for funds

Since 2017 when RBI recognised online P2P industry as financial service segment and allowed NBFC-P2P status to 11 P2P lending platforms in India, it has given new hope to the MSME sector.

The Credit Problem

Despite the fact the MSME’s contribution to the GDP is 30% and provides employment to 100 million of population, banks consider it risky to lend to SME. Lack of data makes it difficult for banks to assess the credit history and financial health of the concerned SME.

the fact the MSME’s contribution

Image Courtesy: MoneyControl.com

This has led to a credit gap of $600 billion in India’s MSME sector (as per Omidyar Network and Boston Consulting Group’s report) with 60 million MSMEs where 40% of MSMEs are forced to turn to unorganised sources e.g. individual personal bankers/lenders at double the interest rates. Inability to get funds and funds at high cost leads to non viability of many SMEs. 

P2P – A good option for SME funding needs

Online P2P lending platform is an alternative form of financing when an individual can get loan directly from another individual without the involvement of a financial institution eg banks, NBFC, etc. The P2P lending that mainly targets unbanked has great relevance in India and increasingly getting popular with Small and Medium Enterprise who don’t have much credit history to show. 

P2P – A good option for SME funding needs

One SME requirement, Multiple offers:

As an SME, you just need to place your requirement and wait. Based on your credit score, multiple lenders will get to view your requirement and auction for your need by sending you their proposals. It’s up to you to choose which proposal to accept. So, as compared to going from bank to bank, now you have many people competing to give you funds.

P2Ps offer faster credit:

P2Ps digital platforms being paperless and least human intervention are much faster. Your borrower profile goes through the credit rating procedure and background verification. Being the promoter of the SME, your profile is equally important. So, P2Ps use AI-Analytics based model to evaluate important data points about you and your company for the better assessment. As soon as your borrower profile is approved, you can have your P2P loan sanctioned and money transferred in a few hours.

P2Ps don’t require collateral:

Whereas banks require collaterals as security in order to sanction a loan, you don’t need to provide any security or collateral. All that you need is a good credit rating and your ability to repay the loan.

P2Ps are low-cost credit option:

Lenders on P2P platforms offer rates as low as 5% to 30% high depending on the credit rating of the borrowers. Also, you minus the intermediary costs, so you have cheaper credit. P2P loans are transparent without any hidden charges, fine print, no prepayment charges as well.

P2P – SME Challenges

According to the NBFC-P2P regulatory guidelines, a single lender’s combined exposure across all P2Ps cannot be more than Rs. 10 Lakh. Same way, a single borrower can max get Rs. 10 Lakh loan from all the p2p combined. Also, a single lender cannot lend more than Rs. 50.000 to a single borrower with loan maturity not to exceed 36 months.

With this kind of limitation, It is not possible for the P2P sector to derive volumes, hence hinders the sectoral growth. At the same time, it is impractical for an SME to borrow from different lenders. It will remain a challenge to help India’s SME unless Reserve Bank relaxes its P2P guideline.

SMEs due to lack of knowledge are also either not much aware of the P2P lending or don’t consider it as a credible source of funding. Many P2P operators that see MSME as an opportunity are trying to pull in more SMEs by engaging them via many awareness drives.

Way forward

P2P portals are seeing a huge opportunity in the SME sector and have the potential to support their funds requirements. Despite all odds, Faircent.com gave 64% of its total disbursement to SMEs in 2018. RupeeCircle, IndiaMoneyMart, paisadukan, LenDenClub, and CashKumarare some of the prominent players in India’s P2P sector. Whether SME also sees the same hope in P2P and RBI consider relaxing the regulation at least specifically for the SME borrowers will further help minimise the SME credit gap.

8 Things a Start-up Entrepreneur Must Keep in Mind

8 Things a Start-up Entrepreneur Must Keep in Mind

The ones for whom passion, creativity and freedom are important, are the ones who would rather start up and live their dreams than slog in nine to five jobs (hey it’s no more ‘nine to five’). These start up entrepreneurs have the energy and desire to contribute to the world. Though the idea of having your start-up may be quite exuberating – your own brain child, success, fame, dollar value, etc., but the ground reality is quite different. It takes sleepless nights, over working, firefighting, stress – physical, mental, financial for some initial years before the start up takes off. Here is a curated list of suggestions that prepare the Startup Entrepreneurs to avoid failures and minimize their risks to come up as successful businessmen:

1. Money should not be the ultimate goal

Money should not be the ultimate goal

We are not saying that money should not be the goal. Of course, it is important for businesses to be viable. Most important objective of the business is rather in answering what value is it providing and how it plans to do that. Focusing on money can be misleading and potentially drift the startup owner to drift away from the plan given the financial struggle one may face. An entrepreneur by constantly focusing on the value proposition will not only develop your clientele in the long run which would increase revenues too.

2. Use Freedom Wisely

Freedom from the boss who breathes down your neck, now one is answerable to oneself. But it is a bigger responsibility. Freedom to work for any number of hours and from any location, is such a respite. This so-called freedom must be coupled with daily goals or else it would result in loss of the productivity. There are very good productivity apps to aid the working. As a start-up entrepreneur, one’s venture is a clean slate and how one pulls the reigns will decide the future of the start-up. Have a plan and execute it. Delegate proper work to the employees and see it gets finished on time. Procrastination SHOULD NOT BE part of an entrepreneur’s dictionary if he/she wants to achieve and establish credibility in the market

3. Growth Mindset

A Startup entrepreneur must assign a dollar value to his products & services and a growth plan for 1, 2, and 5 years right before he even starts. In addition, an entrepreneur who wants to grow should be open to new suggestions and ideas from his team, must be willing learn from others and his own mistakes and use different methods to make his products or services better over the period of time.

Use Freedom Wisely

4. Creativity driven

A Startup entrepreneur is bombarded with different sorts of challenges and requirements. Unless one is creative enough to solve the problem even though it may mean designing impossible candies like Willy Wonka it is fair enough to survive the startup game. No no, one can’t afford to relax with the current success, it will get one complacent. Rather be creative and be proactive by improvising existing products and come with new ideas. A successful businessperson who is able to offer something new to the market will keep consumers happy and competitors on toes.

5. Brand building

Brand building

The moment the market starts recognizing the brand, it means the startup has done a good job in establishing the brand. But, bigger question is how the startup wants the market to perceive its brand and for how long it remembers. Today, brand building of the start-up begins with the brand building of the entrepreneur himself. The name of the start-up and the name of the products must be unique and catchy to impress investors and clients. As an entrepreneur, you must be prim and proper in appearance for every meeting.

6. Prepared for instability

A job means security and stable income but for an entrepreneur, it’s more about instability than about security and stability. There would be highs and lows on his way of turning a startup idea into a big successful business. There will be days when there will be operational hurdles, market fall, and loss of investors or customers etc. Always be prepared for revamping your business strategies to deal with the uncertainties of the market. Your strategies must be in accordance with present market situations.

7. Plan – B

Having a plan B may prove as a big savior in the face of uncertainty and challenges. A Startup Entrepreneur should develop alternative offerings whether within the existing startup or a separate idea as a rescue plan or something to fall back upon because the one thing that everyone can related with is that we all are prone to failures when we are trying to do something new and a startup idea is always a new thing unless it becomes a successful business or a big brand.

8. Regular market research

A market research to start with, helps one know the customer better, who they are, what they want, what they like or don’t like, gives the right basis to build the business upon. Unfortunately, many entrepreneurs startup based on their capabilities and gut feeling. That’s ok. But, matching up with the real market research gives the true picture. Now the entrepreneur can build up on the accurate foundation, target the right customer, market the right way. Once the business starts rolling, startups should conduct regular market surveys to understand customer satisfaction and to improvise product and services.

Regular market research

This checklist will assist a startup entrepreneur to prepare for the success while working on these points to avoid mistakes and walk on the road of one’s dream venture. On the other hand there are times when failures are sure to come as in case you are trying to achieve something big. And if, failure does happen, remember that failure is just a stepping stone to success so, one must not take failure to one’s heart and get demotivated. Instead, entrepreneurship is all about learning from the failures and build a strong base for your dreams.