A friendly word of caution for budding entrepreneurs in India
- Honest Perspectives
- Jul 7, 2023
- 4 min read
Transformation of the Indian ecosystem
The Indian market is noticing an unprecedented surge of entrepreneurial ventures. Insights from the Ministry of Commerce and Industry indicate that India is the 3rd largest start-up ecosystem in the world and is experiencing a consistent annual growth of 12-15%. Indians are beginning to recognise the role a healthy start-up ecosystem plays in our society and television programmes such as Shark Tank India have only gone a step further in creating a mass-scale acceptance of entrepreneurship as a viable career choice.
Why is entrepreneurship great but at the same time, not so great?
The entrepreneurial wave that India is experiencing is great for its economy. It creates new opportunities, employment, and fuels our path to development. It empowers youngsters to think creatively and disrupt the norms of doing business, explore new market niches and address previously uncatered customer requirements. Needless to say, the individual rewards of being successful at a new venture are numerous – freedom of working on your own terms, pursuing your true passion, financial independence, the ability to create a team and work with like-minded individuals, etc. However, it’s only fair to say that the entrepreneurial dream comes with its own set of challenges and the primary one being the ‘selection bias’ that we suffer from as a society when it comes to assessing entrepreneurship as a viable career choice. We often talk about and glorify highly successful new ventures but do not talk enough about the 90% that fail. Worse even, we do not talk about the ones that are quite mediocre – i.e., ventures that haven’t failed but where the founders could have had better financial or intellectual returns by simply pursuing a professional career at a corporate job.
What difficult questions should you be asking yourself before setting out on your entrepreneurial journey?
Young individuals looking to set out on their entrepreneurial journey are therefore faced with the following conundrum: ‘How do I ensure that I am right in pursuing my entrepreneurial idea and accepting the personal and professional risks that come with it (including for e.g. sacrificing my current job)?’. And this is an extremely difficult question to answer. There are, however, several frameworks that one may apply to think about the conundrum and one such framework that has stood the test of time and has been adopted by several successful entrepreneurs is the ‘Real, Win, Worth-it’ framework created by Dominick M. Schrello. In my version of the framework, any individual or a group of individuals looking to ‘start up’ should challenge their innovative, entrepreneurial idea by applying the following 3 lenses:
Is it real? You may conceive of a revolutionary new offering (technology or product/service idea) but have you already created a prototype or a sample (or do you have a clear path to creating one)? i.e. is your offering real?
Can you win with it? If you have indeed been able to create a novel offering, then the question pivots around being able to ‘win’ with it in the market – i.e. Is it something that addresses a customer need? Will a customer be willing to use your offering? Does it address a need that is not being addressed by other providers in the market? Questions that often require extensive market research, competitive landscape analysis and potential customer surveys to truly quantify.
Is it worth it? You may be able to create a novel offering that a customer is willing to use but does it make financial sense to provide it to the market? Is the customer willing to pay the price you are seeking? Is the price you seek sufficient to create a viable business and cover all the costs incurred in providing the offering to your end customers? With time, do the returns or profits from your business allow you to pay back to the initial investors and if so, are you able to pay back at a rate that is commensurate with the financial risk assumed by the investors? (for e.g. is the rate better than a risk-free rate that a fixed deposit might have offered them?). Robust financial analysis is crucial not only to make sure that your business is profitable but also to tell a compelling story to the market and potential investors – an absolute must to scale/grow any business.
The importance of being honest with yourself
It is also important for budding entrepreneurs to be honest with themselves. An entrepreneur should recognize the importance of objectively screening ideas using the afore-described framework and if he/she is unable to do so for being deeply vested (and/or being emotionally passionate about the idea) then he/she should seek external opinions of professionals, investors, potential customers, and the wider entrepreneurial community.
The other key thing to remember is that conceiving a terrific idea that passes the scrutiny of the aforementioned framework does not guarantee success – it merely removes a few variables from the overall equation and potentially minimises the chances of failure. We also know that it is ok to fail (several successful entrepreneurs have faced massive failures with their initial ideas/ventures) as long as one recognises a failure early, learns from it and moves on. A number of very good and honest efforts will eventually move those odds of success in one’s favour.
So go ahead India, be bold, be honest with yourself and start up!
Comments