India has the third largest startup ecosystem in the world, with an annual growth rate of about 15-16% . In the last decade, India grew in number of startups from 7000 to 50000 from 2008 to 2018 which intimates that 3-4 startups come up each day .
According to Grant Thorton (2016) startups are an organisation which is an entrepreneurial venture partnership or a temporary business organisation engaging in development, protection or distribution of new product services or processes .
With flexing laws in favour of FDI(Foreign Direct Investment limit) and IPR(Intellectual Property Rights), India is to witness an increasing cult of entrepreneurs in the upcoming years. Foreign companies are gung ho in investing in a country that has about 34% of its population under 24 years, the largest in the world.
But why startup? We know startups produce unicorns and entrepreneurs are helping our economy to grow and not to mention the immense number of jobs that it produces (40000 every year). India has not yet seen proper exploitation of its human and material resources. The intellectual acumen found in India are either ignorant of the possibilities of providing value through a brand or they are intimidated by its societal nature. This is why the government is trying to build a startup friendly ecosystem that counts among top three startup friendly countries.
There are certain challenges posed by Indian market that result in the failure rates to soar as high as 90% such as inadequate financial resources, lagging infrastructure, varied demographic and culture, lack of awareness, govt regulations, low internet penetration and the list goes on.
And even more are the opportunities that India as an entrepreneurship stage possesses and to survive here, these key factors need to be considered.
1) Idea reception. Before jumping into the market with an awesome idea, it is imperative to check its reception in the market. This can be by connecting to the targeted audience through social media and building a rapport with them. It can be the source of many of the first customers and can be used to propagate the idea as well.
2) Branding and Positioning. These might be the most important factors that build a brand out of a startup. Positioning is using the customer’s experience of the world to communicate with them and using the elements of customers’ mind to stand themselves out. A brand should present itself on the basis of a speciality that would make them a go to brand in some specific category. Branding is the perception of the brand in people’s mind. For startups to sustain, it is imperative for it to have well planned branding and positioning.
3) Proper cash management- Cash is what that runs a startup. It needs to be tracked and forecasted. There are many unprecedented obstacles that arise in operating a business like hiring rates, hike in taxes, infrastructure cost etc. Having an animated running cash from customers to company keeps it out from depending on investors and funding agencies. Negative cash flow has caused the demise of many Indian startups.
4) Growth v Sustainability. For a startup, sustainability comes before scaling. Many times startups have to downsize due to lack of funds to run bigger markets. When a company starts to sustain on its own and has a steady inflow of profit, scaling is expedient.
5) The team. In growing economies like India, it is a challenge faced by many emerging startups. A highly skilled and hardworking workforce can create all the difference in the thriving of a business.
6) Exceed customer expectations- In many cases startups in India are found to lack in providing real value to their clients. Fine tuning the products or services with the market demand is important along with a recurring revenue model. Finding new customers is important, but retaining customers is what will bolster the brands market position.
7) Mentorship- It is found that startups grow 3.5x faster and raise 7x more money when mentored. Effective and pragmatic decision making is important for each business and having a helping hand can help sustainability and growth.
8) Marketing- Every business needs marketing. How can a brand sell a product when no one knows about it? A product or service that is more appealing and exhibits clear objectives is more likely to sell than its counterparts and for that to happen, proper marketing is necessary.
Seth Goden- ‘People do not buy goods and services. They buy relations, stories and magic.’
Reference- www.startupindia.gov.in www.startupindia.gov.in Startups an overview Grant Thorton India (2016)