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Today, India’s market is full of startups. A majority of start ups are seen to be in technology space, broadly led by consumer Internet and financial services startups.

The scenario of Indian startups looks healthy and flourishing. Various government reforms are helping startup generation grow, and their number to spread across the country.

But the hard fact is not all start ups achieve real success, only few become big.

Of course, valuation is not the best metric to measure the effectiveness of a startup. But the fact that 70 percent Indian startups will fail cannot be ignored, in fact it should ring some alarm bells. This indicates how many startups fail to achieve the goal they had set out with.

The question rising here is why a country with so many intelligent youngsters have such a high startup failure rate.

Many challenges threaten the startup space, in India and anywhere else. There are few which are most crucial ones and can either make or break a venture, not just in its initial phase but also when it stabilizes. Following are the most common challenges faced by startups:

Business Model

A business model plays an essential role factor in the growth and sustenance of a startup. The business model is as important as a compass is for a ship. The absence of an appropriate model paralyses a startup right from the beginning.

A business model is about much more than just a document. Its major roles include detailing the target market, their pain points, how the startup’s offerings serve as a solution to the consumers, strategies for marketing and partnering, and much more.

Unfortunately, ninety percent of startups do not build a model. They try to compete with established businesses on basis of price. This is definitely not sustainable. Startups need to rather compete on basis of value and reaching out to niche markets, instead of releasing second of its kind products at cheaper costs.

A startup founder should realize that he/she is the maestro, who conducts the orchestra. Founders must focus on working on what they are best at, instead of trying to do everything. That is how a company not only survives, but grows. The business model defines this roles to begin with.

People

Another crucial factor that differentiates a startup from another is its people. Unfortunately, it also counts as one of the most overlooked factors. Passionate people with the right talent and quality of work are the lifeblood for any organisation.

A startup shouldn’t compete on salaries, perks and stock options. Because competitors can counter those offers.

Startups must hire people who are good at their field of work, have an appetite to take risk, and are fine if they are remunerated less than their peers in other established companies.

Meaningful work should be given more importance than monetary benefits. Hire good people, provide them autonomy and stay lean. Talented people will gladly work with you to turn your startup’s vision into a reality. The business model in achieving this aim has evident significance.

Money

Cash-flow is the MOST important factor for a business. Startups need to be careful of how each penny is spent, even when they are making good money.

If a startup is able to address a pain point and develop an effective strategy to hit its target market, it can surely generate better results even by spending a small budget.

A startup must analyze the cost involved with every aspect of its business. The potential return on investment for all expenditures should be gauged.

It’s not how much money a startup possesses, but how the money is invested, that matters.

 

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