5 DOs and DON'Ts for first-time entrepreneurs
Prof Kaustubh Dhargalkar, Associate Dean -- Innovation at WeSchool, Mumbai, who has mentored a number of young MBAs and fuelled their appetites for entrepreneurship shares some important fundas for start-up success. Illustrations by Uttam Ghosh and Dominic Xavier
Most business school graduates during the first or second year of their MBA term start dreaming of starting an enterprise.
A majority of these aspirants are unable to turn their dreams into a commercially viable venture.
Here are some things you must consider before taking the plunge and to make it into a success.
1. Believe in your hunch... but do your research
Many a times, it happens that we get some brainwaves when they are least expected; we keep that idea at the back of our minds but don't act on it.
A few weeks/months later, we come across a decent-sized business based on a similar, if not the same, concept.
I am sure this has happened to each one of us, not once, twice, but many times over.
We respond in two ways to these happenings: We say, "I will act quickly on my hunches”; the second response is, "I will not share any of my ideas with anyone".
The first response is desirable but does not necessarily get implemented all the time.
The second response comes typically from the human instinct of 'possessiveness', 'not wanting to share'.
However, if you are serious about executing the idea, you need to do the following when you get a brainwave:
a. Validate it
b. Prototype it
c. Get a few people to try it
d. Get feedback
e. Refine it, tweak it based on the feedback
However, none of the above would be possible if your response was the second one.
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2. Discuss your idea with 'relevant' people
The undesirable side-effect of this is you get confused with too many people advising and cluttering your judgment.
One may come across someone very senior who might tell you, “This won’t fly!” and you will get deflated.
Internally, you are deeply convinced that the idea WILL fly.
At such times, introspect deeply and answer the question, “How well do I know the consumer segment that I am aiming at?”
If the answer to that is, “Very well”, then you need to check the validity of your idea with folks from THAT segment and not with the expert who is a ‘supposed-to-know-all’.
You might be wondering what I am talking about.
At the beginning, I said, “Do discuss your idea with relevant people” and now I am saying, “Go with your gut”.
The adjective ‘relevant’ is important in the above phrase; the years of experience may not be as much.
Your target segment is more ‘relevant’ than the ‘supposed-to-know-all’.
3. Keep 'critical success factors' under your control
I run an ‘Innovation lab’ at WeSchool and am also a mentor for start-ups with the CIIE( Center for Innovation Incubation & Enterprise) at the IIM- A.
By virtue of these positions, I have a lot of young students coming to me with fantastic concepts in e-commerce, m-commerce, healthcare, robotics, online education etc.
My first question to them is, "How you plan to create the product/service offering?"
Usually the ones who come in with technical concepts like robotics, healthcare etc. are the ones who have the technical expertise.
However, most of these who come in with ideas in e-commerce/ m-commerce, respond by saying, “I will get the web platform developed from a friend of a friend who happens to be the cousin of another friend’s girl-friend”……..
I, then ask, how will you get the work done from this friend’s friend’s cousin’s...?
Well, you got my point, right?
The most common response is, “I will outsource all the development work of the web platform” and I ask, “How will you ensure the quality of the output, the timeliness of delivery etc?”
The usual response is, “I will sign a foolproof Service Level Agreement (SLA) with the supplier”.
If things were as simple as that, then everybody would succeed at entrepreneurship.
What if your ‘outsourced’ developer promises you a delivery in one month and never shows up again?
Even assuming, he delivers a great web platform to begin with and you begin your operations, but after a few weeks there are some bugs to be fixed and the developer then keeps dilly-dallying in attending to your requirement.
In such a situation, what will you do?
To avoid such situations, identify the Critical Success Factors of your business and form a close-knit team (using whatever enticements that you think are practical!) that will be able to deliver on the same.
Have these folks under your wings rather than outsourcing these criticalities.
An investor lays more emphasis on the team than the idea.
4. Make your first 'guinea pigs' feel special
Don’t wait too long to perfect your offering.
Create something tangible and test it out with your target group.
It gives you a lot of real time insights into what you are going to face in reality.
Make those who are trying out your prototype feel really special.
Take copious feedback; make them feel that they are a part of a revolution to ‘change the world’.
After all, that’s what you are trying to do as an entrepreneur, right?
5. Don't get disheartened if you do not get funded quickly
Every start-up, these days, wants to pitch to seed funds, angel investor networks and what have you.
My advice is blunt: Please sit back and check actually how much you will need to create a tangible prototype.
The answer, many a times, will be a few ten thousands.
Do you really need an external investor for this?
And remember, most investors will not look at your idea if you do not have a proof of concept.
Investors in India (Be it Angels or call them by any other name) do not fund an ‘idea’, they fund a ‘business with REAL customers’.
You might have heard of stories about how Google got funded when it was still a PhD thesis, well……..that happens once in a blue moon (If something like that exists! ).
Google is an exception not the rule!
This does not mean that you don’t approach investors.
When you approach and present your concept to them, they evaluate you and your business model well enough to point out obvious flaws in the concept or execution.
This ‘free advice’ is worth its weight in gold/platinum/ iridium.
So, do pitch to investors, but don’t get disheartened if you don’t get funded in the first year or two.
Carry on with your good work and get valuable feedback from the target consumer/angel investors/seed funders and keep improving your offering and get your revenue stream in place…investments will follow!