Want to startup ? Questions to ask yourself
Startup forums and resources for entrepreneurs are full of advice about what you should know before you start your venture, or the qualities a successful entrepreneur needs.
Startups are booming in India. What is different in the
business environment today is that it is easier to do business in a completely
legal way and make a profit. Startup founders are more willing to take risks. Entry barriers are lowered – Access to money, connections or the right
community matters less.
One consequence of the rise of the startup culture is that government departments
have become more startup friendly and there is more choice and more professionalism
in the services a startup requires -
Law firms, Marketing & PR, design firms etc.
In my years of first running a startup, then being part of angel investor
groups and advising a few startups and entrepreneurs, I find the people who
want to take the plunge into entrepreneurship
are not asking themselves what I think are basic questions about their ability
to startup.
A caveat. I am not a `techie’. I started my career when people used
typewriters, there were no cellphones and one went to a library to get
information. I see technology (if it is an app) as a means to make your product
accessible to the customer, or a way to solve a problem better. However, the
ability to create an app or have access to a tech led solution isn’t the reason
one should start up, particularly when it is easily replicable. The
fundamentals of business and the qualities of an entrepreneur have not changed
over decades and it is these I want to talk about. These questions are based on
what I have seen in the Indian startup ecosystem.
1.Are you comfortable serving customers: Business is
about serving customers – the people who
are going to pay for your product.
These customers are always right, even when they are wrong, will
often be disagreeable, will sometimes try to
take advantage of you, or may simply `not understand
your offering’. If you are not
comfortable dealing with customers (passionate is too strong a word),
startups are not for you.
In a country with high unemployment, there are always
vacancies in the retail or restaurant sectors, because many people simply to
not like the idea of serving a customer, especially in the India, where the
relationship between buyer and seller is similar to master-servant and not a
relationship of equals as one sees in the West. That said, it amazes me that
people want to start a retail business, but will never work in a store, or
start a restaurant, but will never work in a kitchen or be a server, or start
10 minute delivery but have no idea what the life of a delivery boy is like.
We are the only country I can think of, where people join the retail industry
with an MBA, but no experience of ever working in a store. You can be very
disruptive if you have grassroots experience of your industry. I have found
that the best people to work in supermarkets are those from a rural background,
where getting up at 6 am makes you lazy and handling crates of fruits &
veggies is easy
work, as opposed to a city bred graduate who will often be late and believe
certain kinds of work is below their dignity.
When there is no understanding of the customer or a
willingness to see things from their point of view, we have startups that sell
products to people who can’t afford them, or make complaint redressal very
difficult, or simply do not understand customer pain points and what is needed
to address them. Throwing tech at the problem (e.g. you can now contact us on
whatsapp) is no substitute for a human touch. I’ve often asked promoters or C
level people to call their own call center to try and resolve a simple problem,
which is when they realize a IVR or AI enabled chat response, far from
resolving the customer’s problem only irritates them, with the system’s lack of
knowledge or a human touch.
On a personal note, after my MBA I fancied myself as a
marketing guy and felt field sales (in FMCG) was not for me and not something I’d
be good in, as I felt I was an introvert. A later stint took me to Russia as a
Sales and Marketing head. I had to sell to distributors personally, in an
environment where there was a language barrier (my Russian was basic) there was
some racial prejudice and the distributors business was often bigger than ours.
I grew to like sales and realized its importance for anyone who wants to start
a business.
2. The startup idea has to come from you.
The best ideas are those which come from your experience or education, not what
someone else has suggested. Most businesses are family fun because family
members have been associated with the business since childhood. Your idea should
be one you know a lot more about than your peers and through research, more
than the average investor, or someone who has worked in a related industry, or
a supplier. Your knowledge would come either from your education, work
experience, or seeing something more often than others and getting an insight
that others haven’t. There are many things a startup founder will not know and
will either learn it, or hire people who have subject matter knowledge. What
cannot be outsourced or learnt on the job, is a basic understanding of your
business. Before starting off you need to convince future employees, partner or
investors, that you understand the
your product better than they do.
Your business can be different from one you have experience
in, provided there are common elements. I am associated with a restaurant in Goa,
started by a promoter who runs a successful and very niche inbound travel company,
whose core proposition is `once in a lifetime’ authentic travel experiences. It
is a three decade passion for delivering a world class customer experience and crafting
an authentic experience that is what his restaurant is about.
I have rarely seen startups work, when people start it because `their friend
invited them’, `it was a hot sector’, `everyone was doing it’ etc.
3. Research the customer: A learning I had from my
early career in Unilever, is when developing new products (akin to starting a new
business), spend more time understanding the customer than anything else. This
was despite the company already having a wealth of knowledge on customers in
related categories. The people whose views matter most are paying customers. I
am constantly surprised as to why people who ask me for advice on their idea haven’t
spoken to a single potential customer. The only things worse than not getting
customer feedback, is seeking validation from friends and family.
There is no substitute for talking to customers yourself. Until you do, you `Don’t
know what you don’t know’. In my
experience you can never stop learning about your customers. It is possible to
research your competition, or connect with senior people in the Industry. When
running a chain of frozen yogurt stores in India, we would track the activity
(and learn from) every frozen yogurt chain worldwide, with more than 10 outlets,
through their websites and being connected on Linkedin. One chain we followed closely
was one in Pakistan, because our customers were similar and they started a few
months earlier with a similar expansion pace.
If you want to know the turnover of a store selling the same product or service
you are interested in, interviewing a store employee will get you a lot of
information, which can be validated by doing the same thing in other stores. I
would not however try and get sensitive info from the management team of a
potential competitor. Instead, data on the turnover of a private company is a
public document available on the ministry of corporate affairs website, or
through 3rd parties for a small fee, or even request for guidance from someone who has been
in this industry earlier.
I’m often surprised by promoters who want my opinion of their
big idea, when they haven’t done even basic research on google, or spoken to potential
customers.
When I tell people who message me that I have concerns with
their idea, I would be happy if they get me to change my position through s
robust fact based discussion. What I find instead is that their assumptions are
not backed by any kind of research, but just a gut feel, which also does not
stand up to
scrutiny.
4. Can you `get things done’ ? This
is particularly relevant in India where the bureaucracy and regulations can be
a barrier to doing business seamlessly. There is also a problem with service providers
in the unorganized sector. It is possible
to do business in India and get your regular work done without paying a bribe or
even facilitation money. For that one has to have an attitude of being able to
get work done, rather than have a defeatist attitude of `I have to bribe, or
find someone who can do the job on my behalf’. Can you for e.g. get work done
in a police station, or get a document from the municipality without second
thought ?
`Getting things done’ includes the ability to network so you can find the right
person for a business need.
Can you find a retired person who can advise you on GST, or compliances instead
of paying CA firm ? Are there experienced people who can informally share
opinions on you business problem?
5. Are you starting for the wrong reason ?
The most common (wrong) reason I have come across is wanting to startup to escape
long hours, or a
toxic work culture. While I don’t subscribe to the view that one needs to work
70 hours a week (I never have or asked anyone to) its important to understand that as a startup
founder, your time is never yours, it belongs to all your stakeholders. Some of
whom may be more toxic than those in your current job.
https://rpdeans.blogspot.com/2023/11/joining-startup-checklist.html
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