Startup Archives - TODAY INDIA

8 Sure-Fire Business Start-up Tips to "Know"

Know your business – Having a business plan is perhaps the most important part of business start-up. Lack of planning is the number one cause of business failure. A business plan is just that; a plan. It’s a blueprint of where you want to be in one, three, or five years, and a list of all expenses to get there, including personal expenses. What licenses, permits, and associated fees will be required? How much inventory to start with? Researching similar businesses, desirable locations, and area statistics are all part of a complete business plan. It should all be there, and following your plan is critical to success.

Know your product – Taking the time to fully understand your products or service will make you look more like an expert. Lean as much as you can and test your product for quality. Selling poor quality merchandise to earn a quick buck will do just that. But the bad reputation you gain from those transactions will detour customers away from doing business with you in the future.

Know your market – Make certain there is a market for your product or service before you dive in and commit. Can the area support your business? Is your area already saturated with similar businesses? With some business, saturation can be good. For instance, an area with an abundance of restaurants may bring more hungry people to that area. They know that if one restaurant is too busy, there may be another next door with ready seating.

Know your location – Location, location, location! If you are not accessible or visible to your potential customers, they will never find you. Choose a location which is suitable to your type of business. Also, make sure your signage is visible from a quarter mile away.

Know your competition – Competition isn’t always a bad thing. Take the time to introduce yourself to business neighbors offering similar products or services. Networking with other business owners can help bring more clientele into your area.

Know your customer – More than 50 percent of businesses will deal face-to-face with their customers. Good customer service is one of the most important qualities with any business. Of reasons customers leave a business, 15 percent of them stated they left because they didn’t like the quality, 15 percent didn’t like the price, and a whopping 70 percent left because they didn’t like the customer service. 96 percent of your customers with problems will never tell you they have a problem, they’ll just take their business elsewhere. Need I say more?

Know your finances – Keep all business receipts in one place and organize them into suitable categories. Use a worksheet to log all daily income and expenses. By looking at these worksheets daily, weekly, or monthly, you will keep better track of how your business is growing or losing and be able to determine your next step of action accordingly. How you keep your personal finances is a good demonstration of how you will financially manage your business. If you never balance your checkbook, find yourself continually in credit card debt, or are regularly late on your bills, it’s unlikely you will manage your company’s financial issues sufficiently. If this is the case, you may need to assign another person to control the financial decisions in your business.

Know loans! Avoid taking risky loans to fund your new venture. Unlike your home loan, where the loan is secured by real value, your business may never have real value unless you purchase the property your business is located at, so banks are reluctant to loan money for business start-up. So why do they? The truth is, they rarely do. Banks typically will require some form of guarantee; that is often your home or other personal property. If your business fails, you stand the chance of losing your property. Keep your business idea in proportion with the amount of money you have available. Only 27 percent of new business owners borrow money to start their business; try to put yourself into the remaining 73 percent.

Build Your Startup Business Infrastructure on a Budget

There are quite a few steps to take when building a business from the ground up. This article assumes you have already gained a basic knowledge of these steps and are at a point where you have some funding and you are ready to put the building blocks of your business in place. If you are not familiar with the basic steps to build a business, I encourage you to go check out the multitude of publications you can find on the web and then come back and revisit this article.

In most cases, it is paramount to build your business in steps, being very careful how you spend the precious funds that are available to you, regardless of the source of your capital. By now you should have a list of components that need to be put in place, such as the IT infrastructure, including but not limited to email accounts, a website, internal software systems (both “canned” packages as well as custom software) and more. On the creative side, you will need to decide on your branding (logo and color theme). Then most likely you will need business cards, brochures, letterhead, fliers, signage and the like.

Building a business in steps (or increments) can be done, but you need to look for the right talent. At the beginning, you will be much better off finding individuals that are competent in several different areas. The less resources you have to employ, in most cases, the lower your spending outlay will be. If one individual can perform the duties of six or eight people, your budgetary savings should be significant. Later on, when things are taking off, you can replace these multi-talented individuals with dedicated resources, as each duty will likely become a full-time job. Over-staffing too soon can put you out of business in a hurry or put undue pressure on your business to perform sooner than it is capable of.

Let’s turn the clock forward and assume your business is gaining traction. Let’s say your multi-talented individuals just helped you get your business off the ground and now you are going to replace them with employees dedicated to specific business segments, or departments. It will be painless to replace them because they will be expecting it. Why? Because you brought them in as contractors. You have a lot of flexibility with contractors. If it’s in your interest, and the contractor’s interest, you can propose a contract to hire arrangement. Then if things work out well, you could bring them in as part of your senior staff since they will have such a good understanding of your business. Or, they could simply move on. There are many advantages to using contractors in a case like this. If things are not moving as fast as you hoped, you can reduce the contractor’s hours to stay within your budget. You can cut them loose if they are not performing as expected. You will also save money because you will not be providing benefits, and in many cases, not providing a work-space for them.

Another smart move may be to secure certain essential services on an outsourced basis. These days, you can even outsource your human resource department. Outside services are becoming more popular these days. Such services take the worry out of keeping up with ever-changing legal requirements, minimizing the exposure to your brand new, fragile business. The cost is normally a lot less than in-house staffing for comparable services. A good service company will come with a guarantee (they will have an insurance policy) that protects your company should the service company fail to keep up with current legal requirements, unintentionally creating a liability for your company. It is not practical for in-house personnel to make such a guarantee. In that case your business is assuming the risks for your hired employees.

Reducing Operating Costs for Your Startup Is Essential for Longevity

Cash flow management is already a challenge for startups, but COVID-19 is not making matters better. With unemployment rising and people spending less money on certain goods or services, startups are likely to suffer during this time. However, reducing operating expenses can help a startup stay afloat until operations are back to normal.

Reducing overall operating costs can certainly impact your bottom line, especially as the impact of COVID-19 is felt. Also, reevaluating the budget and allocating funds to different operations can keep essential parts of your business going. Keep reading to learn more about how to reduce the operating expenses for your startup while staying productive during COVID-19.

Review your budget with a new lens

When you created your budget for the year, the coronavirus was not likely to be on your mind. And, with updates and changes happening so fast over the last several months, 2020 can feel like one big game of catchup. Now that shelter-in-place ordinances are lifting and people are venturing back out into the world, it is a good time to reevaluate your operating budget.

Revenue projections are likely in need of an update, and your outlook for 2021 is different now than it was a few months ago. From lower sales numbers to higher churn rates, the priorities of your budget need to be evaluated. However, it is important to avoid simply slashing your budget. Wisely evaluating the numbers may indicate that some areas of your business are actually improving during this time.

Renegotiate contracts

The impact of COVID-19 is being felt across the country. If your business has shifted, it is likely that others connected to you have done the same. You may be able to renegotiate terms or contracts during this time to give yourself some breathing room. From reducing office costs to eliminating subscriptions, there are some measures you can take to prevent waste.

Office Space

If your company has shifted to remote work, you are likely paying for empty office space. Your landlord may be willing to negotiate your terms due to the unprecedented circumstances. In some cases, shelter-in-place orders may prohibit you from working in the office altogether. Review your contract to see if there are any provisions for a situation when the office space is not usable.

Subscriptions

Your startup likely has multiple active subscriptions. Whether you rely on monthly professional services, like IT support, or SaaS licenses to run your business, there might be some room for cuts. Try negotiating with your partners or vendors to reduce subscription costs. You may have licenses that you are no longer using or termination fees that can be renegotiated.

Deferred Payments

In cases where you cannot reduce operating costs in numbers, ask for deferred payments. Lengthening the payment cycle can improve your cash flow temporarily and get you through a rough patch.

Eliminate nonessential tools

When you reevaluate your budget, you may find that it is skewed in one area. Go line by line to review the various tools and services used by your business, determine which are essential and which items can be cut. Reviewing financial statements is a great way to visualize where your budget is going, instead of assuming. You may have duplicate tools, tools that are no longer in use, or items that can be replaced with a less expensive alternative.

Cut Unnecessary Licenses

Reviewing all the tools and services used by your team could also highlight which services have too many licenses. Are all licenses being used, or can some be eliminated? Also, you may be paying for additional functions that you could go without, at least for the time being. Dropping your subscription tier or reducing the number of licenses could help lower operating costs.

Cut Out Paper

While it may seem small, going paperless can help your bottom line. Businesses spend quite a bit on paper, printers, and ink every year. If your team is working remote, there is even less reason to use paper. When you return to the office, you can continue the habits formed during quarantine to reduce the overall paper usage of your business.

Stay flexible

Things are likely to continue changing as we learn more about COVID-19 and its overall impact. There may be unlikely opportunities to reduce your operating expenses over time. The unpredictability of COVID-19 combined with the changing nature of startups makes it important to stay on your toes. You may find yourself considering new or innovative ideas that you would not have previously thought of.

Evaluate More Frequently

Periodically evaluating your budget and outlook can help you stay more agile and flexible. As your startup changes and evolves, your operating costs need to follow. Set up more frequent evaluations to stay on top of your operating costs and adjust as needed.

Pause large investments or projects

For many startups, cash flow is limited. COVID-19 is putting major purchases and projects on hold until businesses can stabilize. Instead of considering these pauses as losses, pay attention to the money you are saving and the cash you are making available.

New Equipment

Were you planning to upgrade everyone’s laptops this year or purchase a new phone system? COVID-19 may not be the right time to make major investments like purchasing new equipment. Instead, stick to only buying what is necessary. Look for refurbished or second-hand items when possible to save on operating costs.

Marketing Initiatives

Unless your marketing initiatives are seeing a positive ROI, it may be time to pause big projects. Instead of rolling out previously scheduled campaigns, reevaluate your marketing calendar to determine what will move the needle for your business. If your customers are pushing off on buying decisions, now might not be the time to invest in sales and marketing.

Utilize Free Trial Periods

If you absolutely must purchase a new service or equipment, take advantage of free trial periods. Ensure the vendor is the right partner for you by testing their product or service ahead of time. In some cases, vendors will negotiate on the trial period if you are serious about buying.

Reduce payroll

Finally, reducing payroll can help lower operating costs. Many startups see this as a last resort because it greatly impacts your operational capacity as well as the individual lives of employees. However, in some cases, it is a necessary measure.

Implement a Hiring Freeze

You can make steps towards reducing operational costs by implementing a hiring freeze. Avoid filling positions unless necessary. Your team may be stretched thin, but you can avoid eliminating current positions this way.

Contract Out

Instead of hiring for new positions, contract out when possible. For example, you may need financial guidance during COVID-19. You can contract with a freelance CFO to work part-time at a lower cost than hiring an executive-level position. Firms like K-38 Consulting provide services from top-notch financial advisors, and you only pay for services when you need them.

HR Outsourcing: A Start-Up Silver Bullet

If you are considering a start-up, you may want to avoid the hassles, headaches, and burdens involved in building out your HR infrastructure.

The big guys are doing it!

As recently as the early 90’s HR outsourcing was a very small, emerging option that was met with skepticism by big business (over a billion in revenue). These early outsourcing companies did not have the tools, paths or resources to meet the demands of their early adopter clients but with the vast improvements of the internet and workflow processes, by the early 2000’s outsourced HR had become a 165 billion industry.

Not only did it grow but it grew very well in regard to retention. An Accenture study in the mid-2000’s had shown that over 80% of companies that chose to outsource HR functions were happy at the management level as well as the employee level. During this period, the Shell Oil Corporation was able to reduce HR infrastructure and overall HR costs by 40% while improving benefits and employee retention.

Great, it works for the big guys, what about the start-up?

With this in mind, anyone considering a business start-up can be free to remain focused on the business they are developing verse trying how to meet compliance, policy issues, and finding all the right tools to track all employee needs. This cumbersome task is time-consuming as well as costly.

With a little research and due diligence, a start-up can identify cost effective solutions that are now plug-n-play and will be developing a partnership with their provider. Many of the options in today’s market place are well suited to grow as the underlying start-up grows.

Any glance at today’s startup world shows the great need to get HR correct from the start instead of the mad scramble that seems to be in the news on a weekly basis as companies fail in this most critical issue in running a business.

Cash is king!

As a start-up, keeping cash as long as possible is always important. What many new businesses fail to see is that high-cost investments into HR infrastructure have no R.O.I., these costs can be avoided by tapping into the outsourcing company. Yes, there remains a cost but is spread out over each new hire.

Two other cost saving benefits that many are not aware of in today’s market are, pay as you go worker’s compensation and payroll funding. Each of these silver bullets can be a cash saving life line for any new business.

With proper vetting, all these great tools can be a part of any start-up who chooses to outsource their HR infrastructure.

Secretarial Services and Typing Services – Start-Up Cost

Here’s what you’ll need to start a secretarial business and provide typing services and what the estimated start-up cost is.

You can start your secretarial business and provide typing services with just a computer, printer, a few business cards, and a pack of paper. You can get additional equipment and supplies later.

A computer. Any computer will get you started. You don’t need a high-end computer for word processing. However, if you want to provide graphic design or web design services, then you’ll want to get the best computer you can afford. Cost: From $200 for a used computer to $300-$2500 for a new computer. You can find used computers in your local newspaper and specialized local computer publications.

Software: Most computers come with a word processing program. I recommend using Microsoft Word as soon as you can afford it because that’s what most of your clients will have. Cost: Check Microsoft.com for current prices.

A printer: I recommend a laser printer but many secretarial service operators and typists use an inexpensive inkjet printer. Cost: From $10 for a used inkjet printer or $400-$2000 for a laser printer. Get more information at Best Buy, Fry’s and other computer stores. Check websites of HP, Cannon and Samsung.

A desk. You can get a small computer desk or use a table. Cost: $30 and up. You have many choices for $100-$200.

A computer chair. Choose one that feels comfortable to you. The more expensive chairs are not necessarily the most comfortable ones. Check some office supply stores. Cost: $30-$200.

Office supplies. Supplies you may need include paper to print your clients’ work, printer cartridge, pens, paper clips, envelopes, a filing system, and a stapler. Cost: Check local office supply stores such as Office Depot, OfficeMax, and Staples. Or order their catalogs.

A telephone: I recommend getting a separate phone line from the beginning. Cost: Check with your local phone company.

Business cards: Printed business cards will look more professional than cards you print on your own printer one sheet at the time. Cost: $20-$200 for a set of 500 to 1000 business cards.

A business license. Cost: $20-$100 depending on the city and county.

If you already have a computer, a word processing program and a printer, your start-up cost is minimal. You can start your secretarial business and provide typing work with some basic office supplies and buy additional equipment or software later when a project requires it.

All the best success with your secretarial business!

Sustainable Startup Business Ideas

Starting a business at this time when even the world’s major economies are struggling to keep up with the economic crisis can be a big challenge.

There are people who believe that while this is true, this is actually the best time to start a business provided you have the right startup business ideas in mind. While no one can guarantee the success of any business, you can however choose a business that will stand the test of time.

When you talk of sustainable startup business ideas these days, you no longer just refer to green business ideas. A sustainable business idea means a business that is needed by the society not only for now, but for a much longer period. It is a business that can survive even the toughest economic times because it does not require lots of capital and overhead expenses to keep it operational.

Here are some sustainable startup business ideas you can explore if you have what it takes to go into these types of business:

Consultancy

Professionals who want to spread their wings but do not have much capital to go into business can start their own consultancy companies. Thanks to the internet, you no longer have to rent out an office to start one because you can work from home and promote your consultancy business online. It is important to be some sort of an expert in a certain profession before you can go into consultancy. It can be in accounting, writing, information technology or some other skills you have trained for and earned an expertise in the past years through employment, education or other methods.

But even if you are an expert, you still need to market your consultancy and in effect your brand. The best way to start a consultancy business is to create a website in your own name. The website should include all the services you offer and if possible, referrals from past customers who have benefitted from your services. Take advantage of social media to promote your website and your consultancy business. But do not just stop there. Send proposals to companies or individuals who may need your services.

Online retail

The Internet plays an important role in every aspect of society’s life today including how we do business. Thanks to the increasing accessibility to the internet, the retail industry now provides a level playing field even to small startup business ideas. Thanks to the internet, it is now possible to start your own online retail business without thinking about paying for the rent and other overhead costs that goes with operating a traditional retail business.

In the United States alone, over 24 million now rely on the retail industry for their livelihood. Food, clothing, books, appliances, automotive, name it and you will find an online retail store that sells the said product on retail. The market may be saturated but there is still room for innovative startup business ideas and yours might be another brilliant retail idea.

You only need a small capital to buy the items you need to stock up on your retail store. Then build a website and take advantage of the social networking platforms to promote your brand. This can be done even if you are operating in a home office which lessens the operating cost of your business.

Not all startup business ideas can become a successful venture but if you are passionate about any of these two ideas then you might be the next big thing in the industry. But first, you have to make your idea a reality.

Starting a Startup Business? Choose the Right Business Consulting Firm for Success

Being your own boss is the dream of many and lately, the instinct seems to be taking the world by storm. People are now more inclined to start their own firm, it seems to lure many people and running an own business shows the larger than life picture, however, the reality is a bit different. As an entrepreneur willing to start a new business you need to understand the market, do the need analysis and many researches before executing your plan. You might be budding with business startup ideas but mere planning will not help you succeed, rather you need a right plan of action to succeed.

The upsurge of small business consulting firms has proven to be a panacea for startups. They offer the consultation and startup mentoring services which work as a guide for entrepreneurs to successfully implement and execute their business plan. Not only it supports the Business Startup Ideas but provides feedback to improve the business plan which helps in removing bottlenecks usually faced by startups.

Why do you need startup mentoring?

There is no denial to the fact that many startups fail in their nascent stage, and they may have a number of reasons for the same, the likes include entrepreneurs being naiveté and lack of supportive startup ecosystem, lack of funds, poor market conditions and much more. But, the most important factor that most of the startups miss is a lack of guidance, inspiration, and feedback from small business consulting firms and no startup mentoring. It might sound absurd to a few strong-headed entrepreneurs to take the support of a mentor to execute their business plan but these firms are a must to make your business successful.

Startup Mentoring – your ultimate supporter and motivator

In the lead to succeed, most of the entrepreneurs break rules or make mistakes which they are not even aware of, these mistakes, however, can adversely affect their business. Also, many times as an aspiring business builder you find yourself stuck in a situation where you don’t know how to proceed. Startup Business Consulting firms and mentors work as a savvy guide who constantly provides you feedback.

Initially, you may be having a lack of confidence but with the mentorship of a good startup mentor, you can move ahead with confidence and without hesitation.

How to find the right startup consulting firm or a startup mentor for your company:

You are entrusting your faith and vision on a person who will be your mentor or support or guide, hence, it is very important that you have a strong relationship with them and at the same time, it’s important that your startup mentor’s or consulting firm’s vision should coincide with yours. A good startup has the following qualities:

An expert-level experience
Already a successful entrepreneur
Are patient and action oriented
A harsh critic yet supportive

Before moving ahead and getting associated with any firm or person, as an entrepreneur you should check for the aforementioned qualities.

What does a good startup mentor do?

A good startup consulting firm or a mentor will:

Listen to your concept and give honest feedback
Will give you time and talk through your areas of difficulties. Since they carry with them good amount of experience, they also share their experience which helps you understand your problems and come up with right solution
They are action oriented and hence, always suggest practical ways on how to start a business by making optimum use of available resources

Takeaways-

You must accept the fact that it takes a village to become a successful entrepreneur, of course, your vision and idea is important but what’s paramount is its right and timely execution which only comes with the right support system. The upsurge of companies like Virgin startup is a move to support and guide the newbies in the business world to succeed and survive.

Best Startup Business Ideas: Some Suggestions

Are you looking for the best startup business ideas? Everyone dreams of starting his own business someday. As a child, you probably have dreams of creating your own toy factory, or creating your own boutique someday. As we grow older, those dreams don’t fade away. Sometimes, they just stay untouched and unthought-of at the back of our heads because we got too tied with other things, like managing other people’s business. We all want to be our own boss and be able to generate enough or even more money to live the life we desire.

The desire to own your own business is sometimes fuelled by your yearning to have more money to buy your dream house, drive your dream car, travel to different places, or to save up for your kid’s college education. Everything is fuelled by your dreams of having a better and comfortable life.

Many successful entrepreneurs say that one of the best startup business ideas is an online business. With the power of the Internet, there are tons of business ideas that you can have. You can create a virtual assistant service, a small call center facility, a Public Relations business or a web design and development business if you have the right skills and knowledge. A lot of people nowadays shop online. You can start selling various products online like clothes, shoes, toys, bags and accessories to a huge market with a great buying potential. Because you can sell almost anything online, all you have to do now is to be creative with the products which you plan to market. Online business also involves life coaching. You can offer to help other people deal with their stress and problems. You can help them become better persons and help them manage their life as positively as possible.

Other best startup business ideas include candle-making business, cake decorating, real estate agency, customized jewellery shop, events planning, toy cleaning service, personal shopper or flower arrangement. You can start an accounting service, payroll administrative service, travel agency, be an interior designer or farmer and sell crops. You can grow your garden of flowers and start your own flower shop. There are so many business ideas out there, you just have to pick out the right one for you.

There are several things that you have to consider when choosing the best startup business ideas. You need to consider your budget, your knowledge, skills, and the amount of time that you can give to your startup business. Remember, for a business to succeed, you should have the skills and the time to make it successful.

10 Effective Small Home Based Business Ideas for Startup Small Business Owners

It is always desirable by many of us to establish a home-based business where we can work from the comfort of our home and can earn a handsome residual income. Therefore, we have listed here ten effective home based business ideas for starting up a home-based small business. Why do we say these “effective small home based business ideas”? Because these are all ideas which are tested and we actually made money through these ideas at one time or another.

1- Develop a Niche Affiliate Site

A niche website is a small website that only focuses a single segment of market. There are hundreds of thousands of niche-websites on the web. You can search for a segment of your interest or expertise and then build a catchy website with high-quality content. Choose the products based on high turnover and handsome commissions for affiliate sales on your website. Promote your site for targeted traffic and then track results.

2 – Get paid by Online Paid Surveys

Online paid surveys are a popular and easy way of generating a residual income stream for you and your family. Every global company is spending a lot on the market research and consumer behavior patterns. They hire survey firms to conduct market research for their existing and upcoming products and services and pay generously for views of the people. So it is easy to sort down reliable survey companies and filling out surveys to get a comfortable way of earning from home.

3 – Selling on Craigslist & eBay:

Craigslist is an online garage sale site. It is free to place your sale offers on the craigslist, and sometimes you don’t even need to be worried about shipping and packaging; people come to your home and pick up the items they bought from you. You can sell anything at craigslist or eBay from the old garage items to your small handmade unique items. You can find a clientele for almost anything on these sites and can earn money for you and your family.

4 – Design a website:

If you are running your own website or blog, then you will be familiar with the WordPress and can learn how to create websites by using readily available WordPress themes and how to fix them. You can offer these services to other peoples by learning some customizations like changing color schemes, designing simple logs and banners, make small changes in the layout, etc. In this way, you can easily create and sell unique websites for others and can earn residual income.

5 – Earn Money as a Virtual Worker

You can sign up websites like MicroWorkers.com to offer your services to the individuals and small businesses. MicroWorkers.com has different categories like content writing and social media. You can earn money by completing small tasks like writing a review of a product, posting comments to the blog posts and being fan of a Facebook page, etc.

6 – Earn through Ads on Your Website or Blog:

If you are running a website or blog which has a reasonable amount of daily visitors, then you can earn through placing ads on your websites. Quality content and high-traffic site can give you a handsome stream of advertisement earnings through CPC and CPM campaigns. In these ads, you will be paid for click or impression of the ad placed on your website. You can place any good ad network like Google AdSense for ad campaigns can enjoy extra money through advertisements.

7 – Domain Name Speculation:

Speculating and registering domain is a popular and easy way to earn money online. It involves creativity and thoughtfulness of the person. People find and register domain names, which appear valuable and wait for the time when someone approaches them to sell that domain name in the future. Such domains are parked on pages, which clearly indicate that these domains are for sale and also mention the contact details of the owner. Meanwhile, these owners place catchy advertisements on parking pages and earn advertisement money.

8 – Be a Freelancer:

If you have some expertise in graphics design, programming, writing, marketing research, data entry or any other simple administrative work, then you can offer your services through freelancing websites like guru.com and elance.com. These sites offer a fantastic platform for the people who want to work online. Simply join any of the reputable freelancing website, offer your services in any given category and start earning without spending a penny from your own pocket.

9 – Offer Transcription Services:

Transcription service is the procedure of creating text form of data from recorded voice and conference calls. If you have extra ordinary listening and writing skills, then you can offer your transcription services on the web and can earn a handsome amount based upon your work.

10 – CPA Marketing:

Cost per Action marketing means getting paid when a specific action is performed through your referral link. The referring money can be from $1 to $25 depending upon the type of action performed. This is a quick way to generate cash by referring people. It is highly recommended to use trust worth websites after proper research.

Indian Startup Scenario – India Towards Its True Potential

India ranks among the top five countries in the world in terms of the number of startups founded. India has made tremendous growth towards the creation of innovative startups and has emerged as the 3rd fastest growing hub for technology startups in the world.

Introduction of initiatives like GST and Make In India have given a momentum to the startup economy. Indian Start-ups are moving on the upper line and are expected to increase in size and number in the coming year. It is measured that India houses around 4,200 start-ups, creating more than 85,000 employment opportunities. With over $5 billion worth of investment in 2015 and three to four startups emerging every day, it is projected that the number of startups in India will increase to more than 11,500 by 2020, with job creation from these entrepreneurs reaching 250-300k. The number of Investors has also risen multi-fold in the past few years.

Recent Developments

Indian startups have undergone many developments in the second quarter of 2017. From being selected in the Google’s accelerator program, to raising funds from the Chinese investors, the startup ecosystem has been quite encouraging. Google selected six Indian startups for the accelerator program in July 2017. Startups using latest technologies such as machine learning and artificial intelligence have been chosen for the same.

Limitations

Despite such promising statistics, only 9% of the Start-Ups have female founders/co-founders. Delhi NCR, Bangalore, and Mumbai, along with Hyderabad, Pune and Chennai account for more than 90% of the Start-Ups in India. The focus is largely limited to information technology-enabled products and services including e-commerce, aggregators, analytics, health-tech and online payments. Amongst all this, the product start-up sector has been largely ignored. A big factor behind India’s growth is software enabled firms such as Flipkart and Ola. Rarely do hardware product companies bring about such success. The reason for this can be attributed to the lack of funds. India’s ecosystem clearly does not have any scarcity in terms of capital. However, only a very small amount of this capital reaches these startups. Additionally, startups in India spend five times the amount of effort to raise funds as compared to US startups.

This is where the Government intervention is required. Through the provision of alternate sources of funding and through a partnership between the Industry and Academia, the government can facilitate and accelerate the growth rate. Alternate debt financing instruments will help Start-Ups and other small enterprises to overcome the problem of lack of adequate collateral, limited cash-flow and the high risk involved. While direct support of start-ups and the right kinds of skills to start & run a business are important, the ease of doing business in the country also matters a great deal. This includes ease of starting a business, obtaining relevant permits, accessing credit, paying taxes, etc. The Labour laws in India are out-dated as well. Thus, appropriate government policies are required to make the Indian Start-Up Ecosystem reach its true potential.

However, Government and international organizations are investing in innovative ideas. Monetary and infrastructure support is accelerated. Start-ups are also making good use of the facilities available and are showing a sign of good times. This can certainly not be dismissed as a passing trend and it’s surely going to change the way the markets are working today in India. Government initiatives are also expected to play a vital role in the startup ecosystem’s bright future. For instance, the commerce and industry department of the Indian Government is planning to organize a south Asia regions’ meet of startups for exchanging new ideas and increasing interaction among them, thereby showing confidence in startups.

Thus, the scenario in the last quarter suggests that the investors’ interest towards funding the India startups remains strong. Next quarter is likely to be more attractive owing to the economic reforms and their implementation. Startups are now focusing on cutting losses, increase their overall valuation and attain operational excellence. These qualities along with the positive sentiments of the investors and support from the government can make the startup ecosystem of India reach new heights in the near future.