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In today’s dynamic business environment, it takes more than money for a new company to succeed
Whether it’s your own capital or a venture capitalist’s investment, money can only finance your big ideas and plans. It’s how solid you make those plans and how well you execute them that decides whether your business will taste success.
Here are five guidelines that founders can keep in mind while establishing their businesses:
1. Know your market
You may know your offering in and out but knowing everything about that makes you intelligent and equipped only in your area. As a business, you’ll be operating in a much larger space and thus need to have in-depth knowledge about the market and especially your competitors.
Strengthening domain expertise in a field also enables you to become more in sync with the needs of your customers, more attentive towards market opportunities and better equipped to tackle the competitive landscape — consequently enhancing your credibility significantly in the eyes of investors.
2. Don’t compete with the big guns in their territory
It is essential for startups to tread carefully when competing with big brands, as established companies have unprecedented regulatory advantages that can easily crush new entrants.
Competition needn’t always be direct and rough, it can be discrete and peaceful as well. It makes a lot more sense for startups to identify the weak areas of their big competitors and try to provide solutions in those areas in order to create a market of their own. If you offer solutions that they don’t, there is a high chance for you to win over customers without engaging in a direct war with a big brand.
3. Know who you need and invest in them
Startups need to be smart and hire incredibly well. One of the biggest blunders new businesses make is to hire the wrong people, and then to take too long to fix it.
Your business is going to be as good as the people behind it and if you don’t keep a check on under-performing employees, you’re headed for trouble. Startups are low on resources and the wrong people cost both precious time and money.
You need to hire the best people; compromising on human resource can be fatal. Founders also need to know when to let people go — people who are bad for business make for an unstable foundation.
4. Don’t be a jack of all trades
It’s never advisable to take on more than one can chew. Successful startups aren’t those that try to do everything, or as much as possible, but those who try to specialise in a few things. The best businesses are those that do less very well and avoid spreading their resources thin.
It is imperative to find out and understand what is it that your customers want and then work towards offering them just that. Maintain focus on your core offering.
5. Keep an eye on over-spending
While it’s unfair for new businesses to be overly frugal to the extent that their staff and organisation suffer, that isn’t what’s being suggested. However, one of most significant drivers of profitable startups is their ability to control their costs.
Founders must ensure that the money is being spent only where needed. Spending less automatically enables you to make profits faster.
This is applicable especially to those who rely heavily on investor funding. Most startups that burn investor cash mindlessly end up spending the money too fast and thereby take themselves out of business early.
The writer is chairman of the Institute of Chartered Accountants of India (ICAI) — Dubai Chapter
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