The entire premise of the movement called “Start up India” was initially launched to make India a start up country. Now it is the time to recall all those promises evaluated and made by the government, as it has completed its four years of service.
Has India actually become a start up nation? Where does Stand up India stand now? Does this scheme really execute at its best? Start ups: A Boon or a Cursed to the Indian Economic System? Everyone wants to hear the answers to these questions!
India is blessed with the title of being the third largest start up the economy in the world. Unfortunately, this blessing has turned into a curse with the failure to start up plans. According to a report issued in the year 2016 by the BMI Institute for Business Value and Oxford Economics; almost ninety percent of start ups in India fail within the first five years of its establishment.
On January 16, 2016, Prime Minister Narendra Modi unveiled his idea of “Start up India, Stand up India.” It was probably the first time in the history of the country when the government was not representing or supporting the powerful section of the society, i.e. renowned industries and business families, but rather encourages the new and young talent of the country. The idea of this scheme was simply to roll out the action plan for rendering a fillip to entrepreneurship and innovation the nation.
On the contrary, it is beyond the imagination of the people to think that start up plans are the results of unemployment itself. People who are unemployed or does not have any job to do, are involved in this scheme. However, the leading party and the government claim that Start ups will surely result in job creation and will be helpful for those who seek a job.
Moreover, it is quite hard to believe that the start ups plan is the result of unemployment and give rise to a more jobless situation. According to a survey, more than three thousand ideas of a start up get sanctioned every day. And out of which around ninety percent start ups get failed within the first three months of its incorporation. It is evident that the lack of innovation and gainful employment opportunities force people more and more to opt for self employment and start their own venture that consequently results in low productivity and low quality of work. This makes the venture incurred losses and even they are unable to pay salaries to their employees.
Lack of innovation and unique ideas are another reason for the failure of start ups. Majority of start up ventures are the copied ideas of foreign companies; such as Ola offers similar services like Uber, Hike is the copied idea of Whatsapp, Flipkart follows the path of Amazon and so on.
Another reason the cause the downfall of Start Up India is the improper funding for such ventures. With the Start up India Action Plan, the government unveiled that the Union Cabinet had approved the establishment of FFS, Fund of Funds for Start ups, in June of the year 2016 at SIDBI, Small Industries Development Bank of India. This also contributes to several Alternative Investment Funds, AIF; which is registered with Securities Exchange Board of India for extending and supporting the funds for the start up.
According to data and reports, the total number of new start ups venture has now declined steeply for two years in a row. Only 1000 start ups were added last year in the list. This also results in the drop in investments and deals last year.
What make start up ventures curse for the nation?
#1 Sometimes market act as a hindrance
Almost every starts up venture is driven by the market. Marketing factor is the major reason for the failure of such ventures. Startup ventures usually face the problem of little or almost no market for their products which they have manufactured. However, the market size of the people and a large amount of funding also affect such business venture.
#2 Failure of business model and plans
A business model is like the skeleton of every venture. It dictates the economic and commercial viability o your startup venture for generating value and money. The incompetent and weak business strategies, plan and business model are directly responsible for the failure of such ventures. Inefficient and ineffective business models are featured by the low or unknown lifetime value of the customer, high cost to attract customer, and no measurable ways to gain a customer.
#3 Weak and inefficient management team
Management is the brain and heart of a company. All the important and influential decisions are taken by managerial persons. Poor and weak management team exemplifies ineffective and incapable strategic decisions, no or very little work on product market fit, the communication gap between team members and management committee and inefficient recruitment system.
#4 Shortage of cash
A proper and continuous flow of cash helps in keeping business alive; irrespective of the number of users, how great your own innovative idea, paid dues, clearing bills and marketing agencies. However, some entrepreneurs fail in maintaining a proper record of accounts. This results in the failure of their startup venture.
#5 Product related problems
In this competitive market, customers make a comparison of your product with other competitive products available in the market. Developed and high tech products had taken the market to the new level and had ruined the customers for eternity. If the products had a bad interface then you need to take a bit of time for processing and gathering more information to uplift the quality of the product. It is also important that customer should differentiate your product from other available competitive products, not just for its value but also experiences.
#6 Poor marketing strategies
Marketing is not about making people aware more and more about the features of the product; but it also creates a marketing element within the product and allows exploring unexplored venues such as re-targeting and influencer marketing.
#7 Loose focus
Losing focus may lead to distraction and waste of resources as well. Moreover, micro management is also responsible for losing focus from the business venture.
#8 Legal challenges
The most important thing about a venture is to realize the value of data security and customer privacy. Once a venture grows, they get exposed to several legal challenges. It is mandatory for a start up venture to be aware of every rules, regulation, and legal laws; as every field have different governing rules and laws.
#9 Bad debts
Most of the start up ventures agrees to work on a credit basis in the initial days. This often makes the condition more critical or even worst for the new venture. It is quite difficult to avoid credit request for showing initial traction. In such situations, if you face financial crunches or your client get mischievous then surely your start up venture will suffer.
Most of the founders of start up ventures could not take burnouts and ultimately quit! Sometimes, it took two or more years for the product to get fit in the market which makes the financial situation and work life balance suffers at its extreme.
Start up India plan was a blessing for the nation; but the improper functioning, lack of entrepreneurship skills, inadequate funding, and high level of unemployment had turned it into a curse.
How to turn start up into a blessing for the nation?
#1 Start on a small scale before stepping all out
There is no doubt in saying that entrepreneurs are risk takers. But most of the entrepreneurs do not like to walk blindfold on the limbs. In spite of, they prefer to control the risks. Generally, entrepreneurs test an idea of their start ups by launching it on a small scale. Once it works, they build what works well, tweak the promises and discard the failures and disasters.
#2 Get a well prepared business model and business plan
The incompetent and weak business strategies, plan and business model are directly responsible for the failure of such ventures. Try to analyze customer acquisition strategies properly and make them scalable. The costing involved in the acquisition of a customer should be recovered within twelve months from the customer. Moreover, make the actual estimation of your return on investment and sales cycle as well.
#3 Choose the correct business for you
Find a need and fill it… This works here. The most important thing to analyze is the product line of the business, its need and demand in the market and the risk factor involve in it.
#4 Maintain a proper track of cash and accounts
A proper and continuous flow of cash helps in keeping business alive. It is the lifeline of a venture. For any startup venture, it is important to maintain a proper track of accounting records and should work to explore all funding options and security of funds.
#5 Be sure what to sell in the market
The biggest and the most common mistake for a startup venture are to make assumptions regarding the needs and demands of the consumers. These assumptions often proved wrong and make the entrepreneurs suffer losses. To minimize such risks, you should never assume such market demand. Instead, research the idea and interact to real potential prospects for finding out the facts of their need, demand, and pricing schemes.
#6 Build a strong marketing strategy
Marketing is not about making people aware more and more about the features of the product; but it also creates a marketing element within the product and allows exploring unexplored venues such as re-targeting and influencer marketing. Marketing should not begin with the completion of the product; instead it should start much before the manufacturing of the product. It should also involve customer experience and product development as well.
#7 Don’t lose focus
Losing focus may lead to distraction and waste of resources as well. Moreover, micro management is also responsible for losing focus from the business venture. Solve the issues first and maintain focus on the right track. Do not get away with new and innovative ideas and features. Along with a to do list, make a to not to do list.
#8 Embrace digital marketing and promotion
Every entrepreneur needs to have a comprehensive digital presence even if you are running a local business or venture. Try to give a professional look to your business website with an e-mail list which helps you in communicating with your customers along with your presence on social media channels and prospects on a regular basis. You can also provide coupons, special offers, discounts and other privileges that insist and encourage the customers and prospects to buy your product or make the re-purchase of your products.
#9 Avoid Bad debts
Before issuing credit make sure to analyze client reputation and credit profile. This will surely help you in avoiding the issue of bad debts in start up ventures. Furthermore, you should also take cheques of post dates and if they get bounced, then follow the procedure of recovering the amount through cheque bounce.
#10 Maintain a balance between personal and professional life
Most of the founders of start up ventures could not take burnouts and ultimately quit! Sometimes, it took two or more years for the product to get fit in the market which makes the financial situation and work life balance suffers at its extreme. Start up is the dream of the founder. Try to understand the target and maintain work life balance.
#11 Solve the market related issues
Before starting up any venture, go out and talk to people about the product. Moreover, also make proper research of your industry, analyze them and make changes in the initial stage; as it is quite easier and cheaper to make changes in the beginning.
#12 Get a strong and efficient management team
A good management team acts as pillars for a strong venture. It is the brain of a company. All the important and influential decisions are taken by managerial persons. Try to make people answerable to each other’s decisions by facts and data; not by biased experience. The management team should own its firm decisions and maintain a healthy communication and connectivity with its team members; as an over communication is always better than under communication.
#13 Solve the product related problems
It is important to understand the crucial factors of product development such as engineering and designing.
#14 Complete all legal formalities and documentation
The most important thing of a venture is to realize the value of data security and customer privacy. Once a venture grows, they get exposed to several legal challenges. It is mandatory for a start up venture to be aware of every rules, regulation, and legal laws; as every field have different governing rules and laws. You can have a consultation with an experienced lawyer. It will not only save your time, but also save your money in the later period. Moreover, you should also keep the venture and employees compliant with rules and regulations.
#15 Keep learning and trying new things
Learning and trying new things is the law of nature. Keeping yourself updated with new techniques, new rising demands, and requirements will help you a lot in flourishing your business wide.