Wittiest experiences in the field of startups and Innovations and enumerates the cautions that should be taken by a rising startup.
According to IBM Institute for Business value, 90% of Indian startups fail in the first 5 years. The reason behind this problem is the lack of exactly needed innovation. We show that we are innovating but actually we are copying others. We have given a complete article on the plagiarism in innovation but this week we are pointing out some serious issues responsible for the failure of most of the Indian startups.
Let’s start with a factual thing which shows the contribution of Indian innovators in the world of innovation. If we talk about only Asia, then during 2015-16 India has filed only 1423 patents in comparison to the top of the list Japan with 44200 patents.
We are lacking in filling the more and more innovations on the world forum. It’s not that we are lacking the talent, but the real problem is the identification of the talent and maturing the innovations.
In the last few years, the scenario of Indian startups has drastically changed now the big investors are not showing their interest in Indian Startups. We have facts for the same but instead of looking into the factual part we must focus on the real problems with Indian Startups.
We should ask ourselves why not a single city is able to make its place in the top 10 startup cities of the world. Silicon Valley, New York City, Los Angeles, Boston, Tel Aviv, London, Chicago, Seattle, Berlin, and Singapore are far ahead from us in nurturing the Startups and Innovators. Let’s talk about some brief reasons behind it.
Businessman thinking of themselves but not about the customer. Customers Profitability, Liquidity Growth,Productivity, Gross Margin, Revenue Inventory,Turnover,Cash Flow, Brand Equity,Customers Acquisition,Retention,Speed of transaction should also be kept in the mind. Innovation comes when you solve a problem which customer can’t solve by itself. We are more into copying the successful startups like when Uber came we had Ola and other apps so are the case with Flipkart after Amazon and many more such copied versions of successful innovations. Frankly speaking, we haven’t done any big innovation by ourselves so far.
2. Negative cash flow/ negative working capital
The Biggest reason behind the failure of Indian innovator is the Negative Cash Flow. We run our business for the sack of profit but the Indian market is little different especially while you are working with the government.
It runs on the cheques and credits but until you are not sure about the recovery of the money stay away from such business as soon as you don’t get the money in the backup. You need Cash in hand, for next business and if you’ll be lacking the Working Capital, then the complete focus will come on the recovering the Market investment.
Successful Indian Startups like askme.com auto raja etc. failed due to this negative cash flow.
3. Lack of Scalability and the Expansion with a negative margin
The market acquisition is important but with loss leading strategy it can be dangerous. You should have a profit roadmap. Many of the time Margin is compromised for the sake of expansion and this could also lead to the wrong direction. Prepare first for the profit, otherwise, the complete energy will be sucked out by the repairing strategies.
Along with this Scalability is equally important i.e. how to increase the business. There are startups which are having Profitability, margin and regional strength but still, their business is lacking the scalability, customer retention, and recurring cost model.
One should have to have continuous revenue generating customer for sustainable growth. Startups should work on a recurring model with the existing customers instead of running out for the new customer. This model gives them real base and strength for the scalability.
4. Lack of talented teammates
You have everything but lack of High potential, High performance, High skill, High will lead you nowhere, A successful startup should have a team where teammates can transform ideation into execution and then reality. For this purpose, you should have a team of most talented people around you. Lack of good teammate, highly efficient people is another reason behind the failure of many Indian Startups. They were not able to assure the engagement of manpower and their output for the company.
Product positioning should be done only after identifying the real market. You should know your perfect customer and the perfect market. Along with this knowledge about the perfect product and imperfect product is also important.
Then comes the product planning, segmentation, market demography, market photography and single signal identity. It means one should know it’s strength whether it’s newest, problem solver, convenient, cheapest, best value, maximum feature, most reliable etc.
There are many ways you can identify your startup. After Identifying it your positioning should be perfect according to your strength.With this, you should package, brand, market and present your product and services in the market. This could be supported by scheme policy and back end work.
Presenting product as a laggard or a latecomer in the market has always a limited growth or no growth at all. Don’t fall into the line create your own line. For that adoption curve of the market should well understood. Along with these, one should be prepared for the competitor’s eye. For that, you have to create a market barrier with the help of Intellectuals, Patents, Proprietary technology etc.