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Fremont: Entrepreneurs try to learn the maximum they can from their own experiences, their partners, VCs, or any other person, who they think can show them the path to excellence. What they forget that change is the only thing which is constant; the global market is changing at such a rapid pace, that rules are made and broken almost every day. Here are few such rules, which reflect the changing nature of the startup scenario and can be applied to your startups.
When you plan to set up a business, the first question would be where would the office be? The geographical location of a company doesn't matter in today's world, where companies have dedicated logistics and use the internet to the fullest to ensure that they are constantly in touch with their customers. Hence, instead of bothering where to locate your company, focus on how to improve the product so as to win more customers. According to Mahesh Murthy, founding partner, Seedfund, "If Skype can emerge for Estonia and Nokia from Finland, you can start up from Yeshwantpur and become big."
Many of the startups try to follow the footsteps of successful companies by trying to improve the product offering and carve a niche for themselves. What they forget is that there is already a key player who has taken a lion's share of the market; thus, instead of following trends, go an extra mile and reach a place where you can be the number one. Venturing out where no one could go would not only give you an identity, but would make you the king of the sector, as it is very tough to enter an existing sector.
The biggest of the companies-Body Shop, Starbucks, Facebook, and Google-have all succeeded without spending even a penny or almost negligible amount on advertisements. The success of the company is not measured by how much its shares are valued in the stock exchange or how much of the share of the market it has to itself (they do matter), but the biggest measure of success is the customer's delight. A happy customer would not only be loyal, but would also talk about your products to his or her peers, making any of your advertising efforts seem frail. How much you should spend on your marketing budget would be inversely proportional to what is your marketing IQ. If your customers can happily talk about you, you are on the right track, else there is no use wasting your resources on trying to grab customers. It is better to leave as your advertising expenditure need not translate into sales. Enter a segment, where the customers would be glad to talk about you.
The reason why everyone is jumping to the digital media is because not only do they cover a large area, but are cheaper too. According to Forrester Research, by 2016, almost $77 billion would be spent on online advertising, which would comprise of 35 percent of the overall spending on advertisements. Mobile Ads have already hit the $8.2 billion mark this year, and the upward motion just shows that they would overtake social ads and email marketing.
Companies should not just think on a 360 degree prospective, but think 360 by 365, which means that just talking would not work. The company has to listen to their customers, respond to what they actually want, analyze the feedback of their customers, and then talk. They should move over the traditional format of garnering more customers and stopping after they buy your products. Restructure your company, look into what extra you can do which would make a difference to the customer.
Dell, HP, Microsoft, all originally started up without getting funded by venture capitalists; Oracle, Boradcom,and Walmart, all went public without bothering about getting funded by venture capitalists. This just shows that the best venture capitalist for a company is their customers - it is by paying their customers rather than giving in equity to the venture capitalists that many of the big giants have come up to their current stature. It is not necessary that the venture capitalist would be the knight in shining armor and pull your company out of despair, it might boomerang and before you know you would be sorry about your decision to venture to a venture capitalist. You would not only end up losing a significant portion of your equity to procure funds from them, but also lose focus from what you really wanted to what the venture capitalist wants.
Starting a company, in majority of the cases is an individual affair, where a person comes up with a great idea on how he can change the world, which he shares with others and forms the core team which help him take the company to the newer heights. Unlike team sports, where the contribution of every single person matters, in case of a startup, it is better that the entrepreneur keeps the control with himself in order to avoid his idea getting diluted.
According to Phanindra Sama, Co-Founder, Redbus.in, "I am very eco friendly when it comes to spending money. I still travel by buses and our office does not even have an AC. We are burn as little money as possible and pool that into the business." Entrepreneurs should try to break-even as soon as possible and cut down the expenses on luxuries.
The whole experience of starting up a company and taking care of it is a learning experience to the entrepreneur, the returns from the business are like the certificates of achievement for him or her. Whatever you do is the achievement and if you decide to move out from the venture, it is another achievement, as it takes strength to start something, but it takes a hell lot of your might and determination to end something on a good note.
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