When you are in the early stages, don’t think that a cheque of Rs 1 crore, is going to solve your problems.
You must bootstrap your business, hustle to get a few customers, build your first teams and figure out your unit economics before you raise money, advises Aneesh Khanna.
- Start-up and funding-related questions? Ask rediffGURUS HERE.
Entrepreneurship and failures are two sides of the same coin.
The start-up journey is often filled with adventures and challenges of all kinds that test your determination.
If you are a first-time entrepreneur, here are five mistakes you can try and avoid:
1. If I share or seek guidance, someone will steal my idea
An idea in itself is just your vision as an entrepreneur. However, an idea cannot create value.
It is important to think about what it will take to convert this idea into an enterprise.
To take the ‘Idea to Enterprise’ journey, you need to be open about your idea and articulate it to potential customers, existing entrepreneurs, experts in your industry and well-wishers.
The biggest mistake is to keep working in stealth mode.
It takes a village to get a start-up going. So find your tribe that will guide, mentor, support, give brutal feedback, help you refine your idea and give it shape.
2. Entrepreneurship is fundraising
The reality show Shark Tank India is by far the single biggest contributor to entrepreneurship education in our times.
My daughter, who is 12 years old, loves talking about annual recurring revenue, valuation, royalty, etc, with my 78 year old father.
What we need to understand is that a 10-minute pitch takes over 100 hours of preparation time and a few years of effort to create an exciting, educational and entertaining show.
When you are in the early stages, don’t think that a cheque of Rs 1 crore is going to solve your problems. I am not saying it cannot, but it is not necessary.
You must bootstrap your business, hustle to get a few customers, build your first teams and figure out your unit economics before you raise money.
During bootstrapping, you may also realise what is working; then, you can put more money behind it to scale your start-up once you receive your first angel or seed round of investment.
3. Hiring the most qualified people is important
The soul of a start-up is the ‘why’ -- an entrepreneur's motivation behind the entrepreneurial journey. This ‘why’ is the cause, purpose and belief of the start-up.
Your first hires should be aligned with your ‘why’ as an entrepreneur; they should be A+ on culture fit and could be B+ on skill.
You may hire for complimentary skills sets but ensure that everyone comes with a fire in the belly so that they can take over work across departments in the early days.
The first team is going to take you on the 0 to 1 journey of your start-up, so hire for culture and alignment with ‘why’ and not necessarily for qualification and skills.
4. Product first; customer second
There is no denying that a product and service which is ‘hugely better’ than the options currently available will create the initial 'early adopters' and 'customer love'.
But to arrive at that superior product offering, you must engage with customers at every level of ideation. Don’t assume that a feature-rich offering will excite customers.
American entrepreneur and author Eric Ries, in his book The Lean Startup, coined the lean startup methodology in which he says, 'Feedback of customers matter more than secrecy and that yields better results through building an MVP (minimum viable product) and then revising it through multiple iterations.'
It is through these product and service offering iterations that you will find start-up success so include the customer’s views in the earliest stages of product development.
5. I can deal with governance later on
There is no ‘later on’ when it comes to governance.
Just maintain one rule -- be squeaky clean -- in your dealings in the early stages of entrepreneurship.
Governance has to deal with company formation, employee compliance (PF and ESIC), taking your GST number, minimum wages, POSH policy for female employees, etc.
If you are going to embark on a fundraising journey at some point in time, you are going to go through a rigorous DD (due diligence) and, in the times we live in today, poor governance is a red flag.
You can’t possibly do everything yourself but get your hands dirty and don’t only rely on your CA (chartered accountant) and CS (company secretary). That being said, find a good CS very early on during incorporation.
Do not choose anyone only because he/she has been recommended by your CA or your father. Ideally, look at someone who has had experience working with early-stage companies, with documentation involved in angel fundraising and with some level of DD experience.
Aneesh Khanna is an early-stage entrepreneurship coach and consultant.
- Start-up and funding-related questions? Ask rediffGURUS HERE.
