The importance of the small things

Once you have decided that the peripheral ideas are sound and the go to market strategy is the optimal one , you go about and set up your startup in a form of an entity.

This could be a pvt ltd enterprise , a partnership firm or any of the 2-3 options that the current registrar of companies accept. A word of caution here , read up about the pros and cons of the entity type very clearly before you take the leap. Some models have a clear advantage over the others when starting up whilst others are better , even though more expensive , in the longer run.

Whatever your decision maybe , my post today is about the little things that matter , as always. God is in the details and the tiny things , as they say! While you have the know how and technical knowledge to start up and go about your business , you need a team of people around you who will help you with these tiny but all important details.

Start with a good Chartered Accountant for e.g. This unique breed helps you navigate the complexities of setting up your organisation and de mystify the jargon surrounding the establishment. India has definitely progressed in the ease of setting up a start up but spending a lot of your time in non profitable , non revenue generating activities in the beginning of your journey , is something you need to avoid.

At this time your most important commodity is your own time. Use it judiciously. What worked for us is getting a local CA who stayed with us since inception handling all the filing requirements , board resolutions , AGM’s and their filings , applying for a DIN , making sure that your returns are filed correctly and once you go past a year , ensure the balance sheets are prepared in such a way that you are able to attract further investments.

Similarly there are plenty of players in the startup journey that traditionally you may consider a cost center. Don’t scrimp on these. They are important cogs of the startup wheel. We engaged a lot of these in the form of a branding freelancer for designing our logo, basis our inputs , to a patent lawyer who filed for trademarks so that our brand would remain ours for posterity !

As you move ahead , depending upon your core competence and the ones of your core team you would need people of a certain caliber around you. Most investors look at the technology or the product as a core business and prefer the core team to contain a technical person , a software professional with a vision if you look at a software or similar service product or a operations guru if yours is unrelated to a software build.

The core team should have the person controlling your service features and whose primary responsibility it is to ensure that your product is built to the requirements of your audience. If that’s you, all the better ! If not get a person who will sync with you to move your ideas to fruition. Very important !

Then comes the rest. Hiring your employees is a task that is of highest importance ! While initially you would handpick your team , when you grow you will need to rely on your sense of the company to translate to the values that your team must have to work with you. Getting an external agency to do this might sound simple , but research and partner with the right one. Be open to changing the partner or addressing issues that might crop up when you launch. It’s a process that keeps evolving. And like a Chinese whisper every time you pass the baton of values to someone else to do the job , expect a slight mismatch in the thought process.

Marketing ! In today’s day and age , this is no longer a cost center. Be it digital , out of home physical , Public relations or any other medium , marketing plays a pivotal role in how your customers perceive you. I would recommend insourcing the decision maker for this position but hiring an agency to implement the vision of the core team. Digital marketing is always evolving and an agency whose only business is this, will be able to manage the business far better than one person within your team. Having said that , it’s important you control what your brand stands for , hence the in-house marketing guru.

PR is a similar avenue that I personally feel is overlooked by a lot of startups. Getting your name in the news , be it in the papers , blogs , digital media , forums that tour customers might frequent etc is of paramount importance. This is also an ongoing exercise that needs constant monitoring. Get a good agency on retainer to plan and execute this. Spend time with them to design how your brand will look in eyes of the public , this is after all why you started up !

As and when you become more and more successful, bigger , you will need more leaders to be a part of your startup. Start looking out for them, grooming them. That would be the primary role that the successful startup leader would find himself or herself playing. Happy starting !


Starting up 3

Well, you have your mind made up. Your business plan looks good , at least on excel ! What next?

There are three types of entrepreneurs according to me, and please take this with a pinch of salt, it’s a matter of opimion. The first is the one with a sheer brilliant idea , the idea that will change the paradigm, the one that matches the current expectations of the investment fraternity. His idea and its implementation is just a question of formality! Very few of these around any more.

Then there is the person who is a serial entrepreneur, has the experience , has the funds and the know how of what to do right to make the decisions that will move the startup towards success. These are more in number and their tribe will only grow.

And then finally there is the rest of us.

People who believe in their ideas, the common man who puts in all their efforts to make their idea click. Not a uniquely different idea maybe, but different in its own way. Not much in terms of investment runway but has planned their finances decently.

Regardless of which bucket you fall into, my advice to every entrepreneur is the same. Don’t start with a Big bang. It’s ok for the creation of the universe, but us mortals might have a little lesser time to evolve ! When we started ScoutMyTrip, once of the best advice we got was this. Don’t invest all you have on tech or manpower and definitely not on a fancy office or hardware. Test the idea. Take a smallish subset of the community around you and release the product in its most basest form amongst them. If yours is a service led product, this will tell you what the customer feels and help you to identify your points of failures. If yours is a product itself, think of the beta launch as the best way to spread the good word and get your initial customer feedback. The money you earn will spur you to get the next lot of the products ready too!

Our first community was on WhatsApp, we got our friends and fellow travellers to use the service that we offered to plan their trips. There were so many comments, good and bad , which helped us fine tune our product roadmap. We tested our revenue models and scrapped the excesses , boosted the successes.

There are a couple of things that you need to look out for.  One, this is still a microcosm of the market that you are finally target, there fore use the results judiciously. Once you have ideated, make the adjustments after the pilot , but don’t close your eyes to the fact that there could be newer models or that the model that you scrapped could be what the larger market needs. The strength of the Startups is plainly this – flexibility. The biggies have range, reach and money that you don’t, but they can’t match you for sheer decision making speed and adaptability, that’s your forte.

This pilot phase is a very important one , it will prepare you for what you can expect when you go full hog into the market. It’s a honey moon phase, where your idea and you are testing the water to see how far you can swim.

My other suggestion for this phase is to remain hungry. That is probably a good suggestion for through out the startup journey, but is very important in this phase particularly.  Stretch your rupee to the maximum, see how far it can take you with a limited budget and then see how you can better that in the next phase.  Only spend on what you have been able to justify to immediate core team that the spend will being back the investment multifold.  That brings me to the second point that I consider very advantageous if you are able to implement. The core team.

While there can be a single person who is an ultimate decision maker, it helps if there are at least 2 more people that you respect who are a part of the decision making process. What this does is give the process a new dimension. The old adage goes that the two heads are better than one. Discuss with a team of professionals and come to an informed decision. If you still veto them and go ahead with your decision , try to explain why and what you hope to achieve with the risk you are taking. It helps ! When the core team is invested as much as you in the process as you are, you have built owners of the business, and that can never be bad.

Starting Up – Part 2

In the previous blog we talked about talking to friends and family and then making up your mind to take the plunge.

One of the most critical success factors of any venture is how one handles the finances. Now that you have decided to go ahead with your Idea, its time to talk money!!!
Even before you start, you need to consider a budget. This is not just a budget for the technology, manpower, infra etc for the startup.. that comes later. First and foremost budget for yourself and your family. The best way was, and still continues to be putting it on pen and paper. In today’s age, an excel sheet works just fine.

Look at your basic expenses, the EMI that you have to pay, the household expenses that you cant do without-on a monthly basis, medicines, education.

Take help of your bank and card statements and do a monthly budgeting exercise. What you must have every month after cutting out any heavies (eating out once in a while isn’t a luxury) should form the basis of what you pay yourself as a salary. If there are multiple partners in the Startup, do this as a joint exercise, I find this brings about a larger sense of understanding amongst partners. Ideally See if you can start saving towards a year’s worth of such expenses so that you aren’t under any pressure. This must be a forced Saving that the partners do voluntarily and not look at taking out of any investment you get in the first tranch.

Once that is done, move on to the startup Costing. There are many methods that experts
advice on how to cost for a startup. A lot of it depends upon whether you look at a service or a product based model. Typically the heads that the excel sheet must have are:-

1. Technology or product cost

I a) Cost of software to build the tech, licences etc 

I b) Cost of hosting, if applicable.

1 c) cost of building prototype to showcase.

2. Manpower costs

2 a) Salaries per person, type of person 

2 b) Administrative Costs (Can be included in misc but also here)

2 c) cost of contracting of nonessential manpower

3.   Infrastructure costs.

3 a) hardware Costs, laptop, servers etc

3 b) office Costs, One time, recurring. 

3 c) lot of third party Integrations. (this can Come under tech costs also)

4.  Marketing costs.

4 a) Cost per marketing tool you use 

4 b) Digital Marketing agency,

4 c) Public Relations agency

4 d) collaterals printing and distribution

5.  Starting up costs.

      5 a) Cost of Registering a Company

5 b) shares allocating amongst partners,

5 c) Statutory compliances, hiring a CA.

5 d) Identity creation-Logo, letterheads, brand colours, values etc.

Once you put all these on an excel sheet, it will give you a fair indication of what you need to sustain for the first year. Now aim and see if you can save/ scrounge up this money by yourself.. Ideally you should keep 1 and a half times the required money to run the startup for a year, and expect that it will get over in 8-10 months!!!

This sheet is your handbook , your go to book. Not just because it gives you a basic indication of how much money is required. but periodically reviewing this will ground you. You will realise that all the predictions you had made were either inflated or were under quoted. This gives you the error percentage that you start factoring in when you do your next level projections. This is why your first excel sheet is also your biggest teacher. Please also note, its ok to go back and modify the sheet, but just for kicks, keep the original copy, years later when you have a successful startup, you will open this one file and Sigh. This is where it all began!!!

The Starting ….

Starting something new is always a difficult thing to do. Whether it is to start a new class, Invest in a new lifestyle or even taking interest in a new hobby, the inertia to start is always the biggest hurdle to cross.

If you have worked a 9 to 5 job, you would remember the times when you wanted to quit your job and go to a new workplace. Just the decision to move from one steady Income to another would elicit a myriad Set of pro’s and con’s discussions. Now imagine how it would be when you are quitting this Same steady Income job to start something new, all by yourself. Your new startup.

Its natural to feel scared and over-think your decisions multiple times. Infect it is a good thing. Because once you take that decision, you must never take a step back and regret the original decision you made. So my first advice to all those who want to build their own new companies is-Think, talk and discuss. Get hold of all those whom you hold in good esteem. talk to them about your decision, get their inputs. Remember every person has a different Risk taking and processing capability. After listening to each of their views, Jot them down and go through them before you take the plunge.

This does 2 things. You get a lot of new perspectives, some that you hadn’t thought about and can use and the other more important benefit, weed out the self doubt by systematically & Scientifically answering all your fears . Then and only then should you boldly take the step forward.

By step forward, I refer to the next step in planning! Not just going out and starting something new.

But thats for the next in a series of musings that I hope to bring to you, basis the limited experience that I have running a fulfilling startup for the past 5 years after leaving a very lucrative and high paying corporate Job. Keep watching this space…