Tips for Your Startup Success
Introduction
Start-ups have 6% to 8% time higher possibility of getting successful in United States of America as compared to India, the reason being the lack of required ecosystem.As per the report of IBM Institute for Business Value and Oxford Economics, 90% of India start-ups fail within first 5 years of their inception, while rest 10% don’t survive for more than another 5 years.
Indian start-ups are facing several changes like:
- Increasing manufacturing cost
- Decreasing sales and revenue
- Low profits margin
- High market competition
Let’s decode the reason why Indian start-ups are failing, what are challenges they face, and what can be done to make India a start-up hub from Mr. T.V Mohandas Pai, Chairman of the Manipal Global Education and the Former director of Infosys.
Start-up Ecosystem in India
Although there are presently around 40,000 start-ups in India, out of which only 10,000 have got funding, whereas 30,000 have still not got any funding.- These start-ups have created a value of Rs. 10 lakh crore until now
- 1-1.5 lakh people are employed in start-ups every year
- These start-ups have employed 6.5 lakh people
Take a look at how start-up ecosystem performed in India in last 5 years:
- At present, in India there are 26 unicorns (billion dollar start-ups)
- 30 start-ups are in position to become unicorn in 2 years (less than billion dollar)
- $40 billion (3 lakh crore) have been invested in Indian start-ups in last 5 years
- $13 billion in 2017-18
- $12 billion in 2018-19
Also Read: 9 Tips to Grow Your Business
Success and Failure Rate of Start-ups in India
Before going deep into the reason of start-up failure, we must know success and failure rate of Indian start-ups.In every 100 Indian start-ups there are:
- 60 successful
- 10 blockbuster
- 20 very good
- 30 running business
- 40 fails
Lack of Funding for Start-ups
Although India holds 3rd position in start-ups after USA and China, there are very less start-ups funding in India as compared to them.
Annual start-up investment in top 3 countries is as follows:
- India - $ 10 billion: 90% FDI
- China - $ 65 billion: 65% local investment
- USA - $ 120 billion: 100% local investment
Why there is lack of Funding for Start-ups?
- India capitalists are not willing to pump money in start-ups in technology
- India banks are not wanting to invest in start-ups
- There is a lack of understanding of business and industry among investors
Steps to start a Successful Start-up
As suggested by one of India’s most successful entrepreneur, Mr. Mohandas Pai, start-up must follow below given steps to avoid debacle.Look for burning problem:
Find out the burning problems of customer. Conduct research and survey of study customer’s need and demand.
Design solution with technology:
What comes next is designing a perfect solution for that burning problem with the use of technology.
Execution:
When the solution is found out, the next important step is to roll out the execution strategy.
Team Building:
For accomplish all the above steps you need to build a team of three kinds of people as given below:
- Visionary: Bring people who have vision to do something big
- Technical personal: Bring people who have technical expertise
- Marketer: Bring people who are expert in marketing
Get Funding:
There are around 450 venture capitalists to whom you can ask for funding by presenting them your idea and vision.
Perseverance:
One of the most important things that all start-ups have to follow to achieve their entrepreneurial goal is – perseverance.
if your startup fails, you gain experience that is nowhere to be found.
Cost of Doing Business in India
In India cost of starting a start-up as compared to that of USA is very less.It can be understood with the fact that, the thing which needs to spend Rs. 100 in USA, can be done just for Rs. 15 in India.
The advantage for start-ups in India:
- Although, the returns are low, the cost of starting a business in India is very inexpensive as compared to USA.
- There is a high potential of getting big value chain in India.
- Being an IT hub, starting a business has become cheap and convenient as never before.
- You can launch your product/service through internet at low cost.
Which type of Start-ups are Successful in India?
Indian entrepreneurs are picking up B2C (Business to Citizens) business model as it easy to start and attract consumers.However, it is also comes with high risk due to high failure rate.
On the other hand, B2B (Business to Business) business model is difficult to start and run for to its nature of work.
Failure Generation must not be burdened by Debt
If students graduating from universities are overburdened with the education loan, they won’t be able to think about becoming an entrepreneur.They will go on searching for a job to repay their loans, making start-up a distant dream.
As such, to remove the financial burden from students, scholarships must be given, that can consequently motivate them to be entrepreneurs not jobbers.
As an example, in USA, students are under the burdened with loan of $1.5 trillion, that curbs their entrepreneurial abilities.
Future Possibilities for Indian Start-ups
In the next 6 years, Mr. Mohandas says, Indian start-ups will grow seamlessly owing to the technological and socio-economic reforms India going through.India has all the indicators of being a booming economy in the year to come as given below:
- Growing economy
- Increasing consumption
- Stabilized population
In 2025, India is poised to have 1 lakh start-ups that will create value of 35 lakh crore ($500 billion).
- 30 lakh people will get employment in these start-ups
- India will have 100 unicorns
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