“Mighty oaks from little acorns grow”. This proverb sounds hackneyed but that does not diminish the truth that it contains. Successful startups are the stuff of legends and there is hardly anyone who has not heard the stories about Apple, Facebook, Google, Twitter, Amazon, PayPal, Instagram, LinkedIn, Firefox and many more. Truth to tell, when these startups first hit ground, they were looked at as fanciful ideas.
Would you believe that, when it was launched, Google was the world’s 20th search engine? Sergei Brin and Larry Page tried it though they knew that all the 19 others had almost failed. It was their conviction that led them to success.
Almost everyone knows about Facebook. Nothing, not even Google Plus has been able to take down its popularity. Today, it is difficult to imagine that it all began with the bizarre idea of putting pictures of girls online.
Smile! A group of friends decided one day to stop working for an established firm and instead concentrate on transforming photography into a vehicle of communication. And, voila! It gave birth to Instagram.
The entrepreneurial eco system has multiple sources for raising funds but the road to success begins with a niche idea and personal conviction. The criticality is that your idea must result in an outcome which is a product or service which is valuable to the customer. Venture capital is much talked about as a fund source for startups but it is not as widespread as the media would have us believe. The truth is that most startups are largely self funded particularly at the inception stage till the time that cash flows turn positive. A secondary source is loans against personal credit cards and assets followed by borrowings from family, friends and relatives (commonly known as hot pockets). This approach proves the adage that you have to put your money where your mouth is. Fundamentally, the proposition is “If you are not prepared to invest your money, why should anybody else invest theirs?”
Much later do angel investors and venture capitalists come into the picture. Today, crowd funding is also a viable option. The traditional banking channels do not have any products for startups though a Start Up Assistance Scheme exists on the books of the Small Industries Development Bank of India. Yet, there is no dearth of availability of funds for entrepreneurs with self-belief and products with value.
Start up entrepreneurs would do well to,
- Slow down. Most entrepreneurs want to build a big business overnight. Remember that old proverb – slow but steady wins the race.
- Guard against diluting equity too quickly. Do not be desperate even if you really do need cash. Remember that this is your idea and your business. Be grateful for investments but do not let the business be run by the investors.
- Pay attention to your hunches and intuition. Write them down, lest you forget them. But take care that you do not rely only on your intuition. Make sure that you also look at the numbers. Acquire a rudimentary understanding of finance. Remember that your profit and loss account and balance sheet are your score card and matter considerably when you approach investors.
- Guard against committing the sin of hubris. Do not take imagine that you are the sole repository of wisdom. Listen to ideas from everyone but do not lose sight of the fact that nobody knows the business better than you do.
- Accept your achievements with humility. Be paranoid about competition.
- Build a team and teach them the business.
Beside the companies I named at the beginning, there are companies such as Federal Express, PayPal, Microsoft, Reliance, Nirma, Vadilal, and Rasna, which also started small before becoming business behemoths. Of course, all of these companies took time to scale up and get to where they are today. And it’s difficult not to think, “It’s a long and winding road”. Of course, it is. Whoever said being a successful startup entrepreneur is easy? The questions to ask yourself are –
Do you have an idea which has value to the customer?
Do you believe whole heartedly in your idea?
If your answer to these two questions is a resounding “Yes”, then Get Started!