START-UP : THE SAD ENDING TO A HAPPY BEGINNING

START-UP : THE SAD ENDING TO A HAPPY BEGINNING

Getting to bottom, Does capability of Founder / Owner matter?, What was Noah’s Ark?, Craze for Funding, One company became my highway to get inside the mind of a start-up owner. Ego had killed the product, Start-ups Failure : Getting to bottom

Why do 99% Start-ups fail despite so much knowledge available in public domain? My consulting/experience over last 14 years puts the finger on precise reason. To put it mildly, the very person who started the start-up is responsible for its failure.

In 2009, a start-up hit upon an idea of which there was no solution in India. The demand was big. The target market was ‘Security Forces’. Demand in the first three years could have been total 300K pieces, thereafter nothing less than 200K pieces each year, year on year, and increasing.  Each piece was priced at ‘x’. Only two, uncertified foreign players were selling their items through dealers and commission agents. Price difference? Competitor 1 was selling at ‘15x’ and Competitor 2 at ‘30x’. Here our own Indian company was selling at ‘x’, a certified product.

In 2012, I came in contact with them. In three years they had sold less than 1000 pieces. Price was increased to 3x. Reason given was ‘we are the only manufacturers’.

In 2015, 2-3000 pieces were sold and price was increased to 6x.

In 2019, 2000 pieces. Price increased to? 8x.

Then competition entered market at price 3x. Sales of the original company were down to zero. Today they have exited the market. TEN years monopoly and what went wrong?

This one company became my ON JOB UNIVERSITY to get inside the mind of a start-up owner. Ego killed the product.

Does capability of Founder / Owner matter?

Does CAPABILITY of the owner/founder/MD reflect on company’s performance? Or are ‘review’ meetings enough? During my consulting, I measured performance of a company against the capabilities of the founder/owner/MD (we call him ‘this guy’). My discovery? IF the ‘this guy’ knew about working of each and every department & personnel from top to bottom. There was no reason to fail. Start-ups cannot afford not to know working of each dept.

We will take example of another company. This company sacked two directors, Head of BD, Head of Marketing and Head of Sales. The company was doomed isn’t it?

No it wasn’t. The ‘this guy’ of the company was tested for vision, mission, strategy, thinking, sales, regulations, laws, marketing, business development, exhibitions, promotion, content writing, accounts, HR, e-procurement, GeM, R&D, innovation, product development, market, competition mapping, administration – practically any and every aspect. He scored 100/100. There was NO reason for this company to fail. Why wasn’t it ticking? We carried a very tough audit.

The company size was eight people, three on top, two middle & three bottom. They were advised not to hire anyone till they get Rs 20 Cr revenue. Organisation was flattened. Trained. The ‘bottom’ rung manages the manufacturing floor!! The company is doing extremely well.

A start-up needs to carry out an audit, build a team, hire professionals, be discreet and get best out of team. For this to happen the founder / owner must first build his skillset.

Start-ups Failure : What was Noah’s Ark?

What is a CORE TEAM? What a start-up needs to understand on Day-1 is ‘who all will remain in the company when it is under fire. THIS IS THE CORE TEAM. Core team simply needs to be LOYAL. The CORE TEAM is a start-ups Noah’s Ark. Remember God spared Noah, his family, and one each of all the world’s animals from a world engulfing flood who were capable to recreate the world all over again.

This does not happen in start-ups. Reason? The persons who know that they will not abandon the company are made to look ‘equal to’ the people who will jump out. Hard decisions hence are hence not taken.

In consulting, we focus on the core team. I know of a company which has the owner with vast business experience, a hardcore office and computer person, a hardcore BD, Mktg and Sales trainee, a ‘traveller’-person who is willing to travel across India for weeks, an ex-house-keeping person who looks after manufacturing and quality control, a driver turned work floor worker. This is the CORE TEAM. I know this company from 9 years and have mentored it. It can never fail. Never.

This Noah’s Ark has people who can recreate businesses, are way above the educated and experienced and have just one character trait, LOYALTY.

Craze for Funding

Craze for ‘funding’ start-ups is the singular reason for digressing from the very aim for which the start-up was incorporated. The brilliant idea, sold to investors and venture capitalists draws funds. Calculations are made for the burn-out. Efforts for next round of funding start soon as new funds are received.

I get so many queries for helping to get funds. The start-up wants us to consult. When we take stock of the entire business, we realize that there is no thought given to overheads, capability of employees, specialisations and most importantly ‘selling’. It is assumed that (assumption) since the idea is so brilliant, people will come with cash and line up. It is more when it comes to government selling.

Result? Months after months pass by. BD-Marketing-Sales are minimal, start-ups wait for a buyer who will pay 100 times over, frequency of rounds for funding increase while having no fear of failure. A start up must race daily against the funds, make the best, specialise and arm itself for most tasks and then hit the BD-Marketing-Sales path running.

We have seen such brilliant products but all gone down the drain just because of one reason- they lost the race on the track called TIMELINE.

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Have you read CORONA AND WORK……….. https://colsanjaypande.com/corona-and-work-have-we-accepted-reality/(opens in a new tab)