Problems Faced By Startups In India and Solutions

I recently had a chance to visit my graduation college for a start-up event. I was overwhelmed to see the enthusiasm among the students to create something of their own. The strange thing was students as young as 2nd year and 3rd year were involved in starting something of their own. They had great ideas and when I saw their product pitch, I was amazed to know that all of them had already developed their product. There products were already available in the market. I won’t say all of them were unique but definitely the students were quite passionate about what they were doing.

I was quite impressed by one start-up that was giving newspaper to the college students which was written, edited and designed by the college students itself. It was not a regular standard newspaper, but the one that covered all the essential news along with college gossips. Yeah, it was sell-able. One start-up had designed a learning management system in a different way and another was keen on producing t-shirts for youth. It was amazing to know how innovative our new generation is, however, I was equally concerned if they were really prepared for what they were doing.

A successful start-up not only needs an idea and passion, but a whole lot of leadership skills. Along with, this there is a need of understanding of a market, great communication skills and a level of maturity to handle different situations appropriately. One cannot start a business just with passion and an idea. You need to know how to make others passionate about your idea and product. You need to know different challenges that come along the way while keeping in mind that not all can be Mark Zuckerberg.

This is not in a way to demotivate any of them. I know they are really doing great work and they are much more passionate than I was at that age. But the reason of worry is genuine because of the data that has come along from the last one year. The number of start-ups that have shut down in 2016 has increased by 50% as compared to 2015. More than 210 start-ups have closed before even the start of 2017. Even the big start-ups that received,heavy investments from top VCs in the country faced losses which eventually led to their shut down. PepperTap was one of the big talks in the start-up community when it closed down. The company was founded in 2014 and within a year it raised more than 50 million USD from the big investors across the world. In just one year, it reached to 17 cities and that was like a very quick advancement. However, the company made several mistakes in order to grow at such a fast rate.

PepperTap was not the only company, many others followed the same route and had to see an abrupt closure. Housing.com can be considered as a case study for this abrupt shut down. Other companies that shut down were DoorMint, Parcelled, azo, Fashionara, Ask Me, Purple Squirrel, AutonCab etc. No doubt, they were disruptive, they were passionate and they worked really hard. However, it was not alone that was required. There is a need of strategy regardless of your desire of growing fast or slow. You need to be having enough resources that could accommodate your desire of growing fast. Funding alone can’t guarantee success, that is in fact only a support system that you take to grow your business and handle challenges that could have emerged due to financial constraints.

When I observed some of the start-ups that are working quite well in their respective fields, I was amazed to know that all these start-ups took at least 3-4 years to attain stability. They did not build their whole infrastructure in just one year and the pattern of fund raising was also very particular with these start-ups. Let’s discuss how they grew step by step.

Taking time for understanding what you are selling

Mostly, start-up founders have ideas about what they are making as a product and what they want to give to their customers. The problem arises when they fail in understanding the response that customers would give for their products. Some of the products need to be refined according to the needs of customers however, start-up founders have an unshakable belief in their own products and their gut feelings that they don’t try to gauge what customers would have wanted. Some other start-ups probably hit the chord of customers but fail to realize the demand of their product. When the demand increases, they find themselves unable to handle it and fail to the expectations of the customers.

Understand your caliber and hire resources accordingly

I have seen many start-ups which started hiring people at a rapid scale as soon as they got the funding. Success of a start-up can only be expected only if it follows a lean model. You need to understand what kind of resources and skills you desire and in what number. You need to clearly identify the role of each and every person including yourself. First, this will clarify the expectations from each person and they will be able to take responsibility of their own job. Second, you will be saving on redundant job roles. This forms an important part of success and every start-up founder needs to learn it at the earliest.

Make proper planning with timelines

Many start-ups fail in the first three years due to lack of proper planning. In the beginning, when a start-up begins its operations, the cost of running is often less and as it grows, it is supposed to increase the cost of running as well. Many costs increase such as salary of employees, infrastructure, inventory etc. However, what start-ups do is, they initially check all their costs and sell their products accordingly and it generally becomes difficult for them to maintain the same pricing in the coming years. The strategy of heavy discounting can be assumed to be a parasite that can make the whole business hollow from within.

Not all start-ups fail and not similarly, not all start-ups reach the heights in the first three years of its operation. Mostly, start-ups are idea centric and are much ahead of time. It takes some time for the society to grasp that idea and start using it. For example, career counselling start-ups started surfacing in the market after 2010, however, they did not get much traction until 2014. After 2014, government also started focusing on this industry and people started adopting to the new practices in education industry. Similarly, there are many more industries which make their way slowly and start-up founders need to show patience and dedication in the first few years to make their service or product a success in the coming years.

The above is a guest article by Aakanksha Aggarwal who has an entrepreneurial spirit, passionate for studying dynamic nature of market. I keep myself busy with studying market changes and upcoming trends in the market. May contact at aakanksha.a@craftdrivenresearch.com

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