The Growth Profile of a Startup: Some Key Elements

Startup

This is truly the age of startup entrepreneurship! In Kerala, the culture of starting businesses young, looking for interesting products and services, and also daring to embark on that journey is avant-garde. But it takes far more than great ideas and innovative business models to build an institution of repute. Popular research reminds that companies are ‘not entering their teens any more!’ They run into closure in the first 12 years. Another finding is that barely a few survive the first five years. That is disturbing. While institutions like Kerala Startup Mission and KSIDC do excellent work to support the youngsters there are a few noticeable changes one has to take into account.

 

The evolution of a startup into a fully-evolved business establishment
requires many more things than great ideas, says Rajesh Nair

 

IDEATION TO EXECUTION

Idea is always the seed of a venture and one cannot under-appreciate its value and necessity. But ‘execution’ is the part we often tend to ignore. No idea is complete without the ability to execute it. If the founder of a company cannot get into the details of a ‘dirty, muddy, roll-up sleeves’ plan, he has to hire talents. It is time startups understand that the ability to execute is what makes the difference.

INDIVIDUAL TO TEAM THINK

We are conditioned to work in groups but are always wired to think individually. This often proves the death knell for the entrepreneur. As an entrepreneur, you have to believe in the power of groups not only in doing things but also in finding solutions. A collaborative mindset helps you delegate, breed trust and cultivate the value of ‘taking onus and responsibility’ not just for your actions but for the collective decisions as well. Mentally you have to make that transition from aspiring to inspiring others!

WORK STRUCTURES

“We have a flat organisation and we don’t want creativity to be stifled in work structures.’’ Personally, I have heard entrepreneurs and professionals say this. Work needs order and it benefits from a structure. Delegation, which is a key management necessity, works best when you have structures. In fact, fundamentally, an organisational structure facilitates more division of work and allocation of targets.

TOP TO BOTTOM-LINE FOCUS

Client acquisition and sales will always hold the prime of place in entrepreneurs’ minds. But as you progress beyond the idea stage, concepts like savings and burn rate (a monthly outflow) need to govern your decisions. There may be funds which will underwrite your losses, expansions and customer ownership, but you need to remember that you can never make money while enduring losses.

Besides these shifts in thinking, there are also common decision pitfalls.

ROLE DECISIONS

We have seen friends starting companies, college mates coming in and even spouses joining the business. But you have to be clear about their roles. Who takes decisions? Who is the CEO? Who looks after finance? etc. This cannot be taken for granted or even subtly understood. Job descriptions need to be scripted!

‘REWARD’ DECISIONS

How much should the entrepreneur take as salary? Should I not take a salary during the initial days? Should I forgo my pay for the first few months/years? There are no golden rules governing these decisions, but definitely serious thinking is necessary.

DIVESTMENT DECISIONS

During the initial years, you may be tempted to reward an advice by offering a stake in the company. This is okay especially when there is money on the table and the advice you received could help you pivot on the right lines. But excessive dilution will make your organisation lose its basic character.
It will definitely be a roller-coaster; from exploration to efficiency, complete autonomy to some regulations, from short-term rewards to long-term viability – it will be a bumpy ride!

(The author is Director-Markets, Kerala & Tamil Nadu, EY and President, TiE Kerala)