Idea to launch: A long way for start-ups to succeed
Thorough planning is extremely important for success. It requires one to devote a significant amount of time in researching various dimensions.
Recently I had an interaction with a successful businessman who has been looking for diversification into related areas. He himself is a technocrat and well networked in the community of entrepreneurs and innovators. Few of his innovations are having large social ramifications in making life happier for citizens.
The meeting was meant to brainstorm about an innovative platform to build a cost-effective and space-saving vehicle parking solution. The solution has significant value-add for life of people in the city as it is very flexible and can be customised to available space and also it can be dismantled and relocated without much cost and time,
We know the parking space availability is a serious challenge for many cities like Bangalore. Indeed it is affecting the business fortune of many businesses in the central business district of the city, as their customers are finding difficult to reach them.
The parking solution proposed was very exciting and anybody can guess that it is path-breaking one to improve the scarce parking space utilisation.
We started analysing the project from commercial angle to understand the profitability. The brain-storming went on for more than five hours. We analysed all the elements of costing, regulations and more importantly how the customer would respond to tariff structure.
However, despite being such an attractive proposition as an idea, we could not get the commercial sense in the project. In other words, the project was not a viable proposition as it was non-remunerative to the position as a self-sustaining and profit-making venture. The benefits were more social and can at the best fit the bill of Malls and public utilities like airports since they obviously have facilities for parking.
Why is it so relevant?
Experts opine that 60% of the businesses fail in first three years. People too often tend to jump into business without carefully analysing if their idea works. The difference between successful and failed businesses is the depth of planning. This gap is more visible in many first generation entrepreneurs in India.
Had the above entrepreneur jumped at the idea and set up the unit in view of the market potential and space constraint for vehicle parking in the city, it would have been catastrophic because the price at which the service needs to be made available to make it commercially viable is too prohibitive.
Research is essential:
Planning carefully before launching a new business is not limited to preparing a business plan. While writing a business plan is certainly helpful, the real value is not in having the finished product in hand, but rather in the process of researching and thinking about your business in a systematic way.
If one doesn’t commit to in-depth research into various dimensions covering market, regulations, consumer preference, competitors position, operational strategy, human resources and financial modelling, launching a new business can be a very expensive lesson for an entrepreneur.
Understanding your future customer and human resource challenges are key areas for start-ups in India
In all business plans, one can find elaborate explanations about the industry, business, technology and financial aspects.
However, in most business plans, a description of potential customers and how they make purchasing decisions receives much less attention than operational details such as financing, sourcing and technology.
But in the end, it will be the customers who determine your success or failure. This is very pronounced in case of businesses servicing retail customers. Despite having very attractive products many are not able to succeed because they give lesser attention to understanding potential customers and ways & means to connect with them.
Another important challenge for new business is mobilising the competent human resources. In countries like India, it is obvious for any businessman to consider this is a non-issue while planning new business because ours is a highly populous country and labour supply is abundant. However many entrepreneurs are facing a serious challenge in this area. Despite being highly populous, employability is a serious concern in India. Secondly, the aspiration for promotion, the desire for social security, and good working conditions are becoming serious issues to attract good employees to work with.
Entrepreneurs while planning new business should devote adequate attention to human resources aspects.
Analyse all issues and plan upfront:
Many a time entrepreneurs prefer to focus on the one issue at a time and they believe that this is appropriate and postpone the rest to future date.
Once you start up the business, it’s likely that you will be consumed with operating details, often with little time to think and even less to make adjustments. Implementing the right plan from the start is far more likely to yield success than figuring out a plan on the move.
Entrepreneurs should not jump at an idea and get into launch as if they may miss out or someone else may capture the market. It is very much essential to appreciate the importance of research and analysis to laying the proper groundwork before launching their business.