Hi folks! It's been a while I've posted here on account of few personal commitments that I was engaged in. I'm back now and let's keep the ball rolling.
The key point that was reiterated in the previous blog post was that the success of business these days is directly proportional to the amount of 'cash burning'.
Cash burning has been the reason for the bout of start-ups that have been started with superior and extraordinary ideas to shut shop within a little time of their existence.
As we have seen in our earlier post that the concept of funding took it's birth to make able the budding entrepreneurs smell finances to run the business who have minimum access to capital to put in the business.
We see umpteen programs each day popping up everywhere in the media that are aimed at boosting the startup culture. Though this support system is much appreciated, the truth at the grass-root level is that they are of no avail to the budding startups. All such programs actually keep so many conditions to avail the benefit, that would mostly be given to the startups which are governed by an influential person or may be backed by political support or should either be run by filthy rich persons. Such instances of providing benefits to genuine startups is meagre and limited.
For instance, lets consider the government initiative to support startups. It has been noticed that the government funding will be sanctioned to the startups only if 25% capital investment is shown. And that 25% of capital investment should be shown exclusively in the setup of machinery or the core part of the startup. This scenario is like if the startup builds the foundation, then the government will give some sort of support for the construction of the building. But doesn't the government realize that the building would not stand still if the foundation is not sturdy?
That way the government support for 99% of the startups can be ruled out. The situation to get funding from banks is even worse as they expect the startup to operate for three years and then register profits post which the banks would be able to evaluate and decide if they can fund the business. The thriving of the business for the initial three years is actual the crucial time for funding, rather than getting the funding after three years post registering profits because the business in itself can reinvest in the business and grow steadily albeit a slow pace. Once the startup is profitable in three years, then availing finances by way of funding by investors is not a herculean task. However availing finances in the initial stages from the investors is something where the entrepreneur has to take many risks and chances.
The story changes with the advent of the mentors and investors. In the name of mentoring, the idea of the startup with which it has been born and is ideally the core DNA of the startup is tweaked, changed, twisted, crushed, convoluted, blended, braided and swivelled into a totally different setup. This happens in the name of moulding and guiding the startup in the right direction as the startup has no experience in the business. With the investment brought in by the investor, the control of the entrepreneur goes in the hands of the investor with the majority of the stake-holding in the business. For the sustainability and continuity of the business of startup and in the need of the finances, the entrepreneur gets influenced having no other option after multiple attempts by the mentors and investor and compromises the core DNA of the startup for the mashed up idea of the mentors and investors. Now the entrepreneur is left to swim and survive in the ocean of reality and meeting the obligations to the mentors and investors. There have been many instances where the startups have ceased to operate because they have got choked by the mentors and the investors leaving the entrepreneurs with no other option than to shut shop or sell off the business stake inspite of being able enough to manage the business.
In the name of accelerator programs, the mentors or investors influence the entrepreneurs that funding is compulsory. Under compulsion and influence, the entrepreneurs get fooled around that success can only be attained with the exposure and participation in such kind of programs. The influence in most cases is to that extent that the entrepreneur ends up concentrating more on the programs than the startup's idea itself. Eventually commercialization has taken place in the startup culture too, because most of the programs do good to themselves (in terms of getting a stake or earning money), than to the startups.
It is to be noted that there exists few mentors who genuinely help in the growth of the business with their experience. However, the entrepreneur has to be wary about the extent to which he take his mentor's advice. The prime issue of having a mentor is that, one's vision and thought process would be limited and guided between two lines. Considering even the day to day operations of a business setup like marketing where in printing pamphlets, it's distribution, online advertising, TV commercials, etc., have to be done using the existing contacts of the mentors at a pre-determined price. This leads to limited scope to creativity, innovation and lessens your bargaining power. When you are not able to decide on the vendors and suggest ideas for differentiating your startups among your peers, then how will you deal with the customers of your startup? You are ultimately creating more dependency on mentors and making your choices limited. The nuances of the business will be understood once you actually get into the market, interact with number of people, vendors and shortlist yourself the best bet for your budget and service requirements rather than limiting yourself with the pre-defined set of parameters. Thinking out-of-box and not limiting your opportunities is one of the essential characteristics of an entrepreneur.
So ultimately the entrepreneur is left with the option of raising funds from family and friends with no interest rates or many times at high interest rates. Many a times, parents do not support the idea of setting up a startup which leaves the entrepreneur taking digs at many instances in the way forward and affecting his confidence levels. However a little support from the parents would go a long way in boosting up the confidence of the entrepreneur if not essentially a financial support.
My advice to all the budding entrepreneurs out there is to stop running after money and do not get blind folded by the mentors and investors. Do not let your passion die out and get swayed away by external forces. The core idea of the startup should be the crux of all the decisions taken ahead. Do not let your passion die out and stay determined on your idea of the startup. Do not mind to say a 'NO' if you are required to compromise on the core DNA of your startup. Be aware of all the programs and people you are associated with.You have taken on this journey of setting up a startup because you do not want to bow down to somebody, isn't it? Then do not let that happen even during your journey into a startup. Success will definitely be yours!
