Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
The two roads are symbolic of the confusion we all face when making a decision in life. Likewise, starting a business might be perplexing–is it the right decision? Will I succeed? Do I have what it takes to be an entrepreneur?
Estimates of startups around the world vary significantly but a good guess might be that there are 200+ Million startups in the world with 50+ Million springing up every year! There are about 1300+ unicorns in the world. But only 2 in 5 startups are profitable; the rest break even or lose money. According to these statistics, the odds are heavily stacked against someone starting up!
Indeed, starting a business is exciting, but you need a lot more than just a rock-solid idea and capability. A startup need not be a unicorn to be successful, and it is debatable if all the unicorns are necessarily adding value. Are you cut out to be a startup entrepreneur? That is a question that only you can answer for yourself. But there are some pointers that you can take cues from.
Age: Age might seem bizarre, especially when you read headlines of a 22-year-old running a booming billion-dollar company. Studies have shown that most successful startups have founders with an average age of 45 when they started the company. Generally, a 50-year-old is almost twice as likely to create a successful company as a 30-year-old.
The reasons for such data include experience in execution, stability in relationships/lifestyle, leadership abilities, and deeper domain expertise. On the flip side, experience comes with baggage that can hurt an agile startup’s running. I have had great exits from some college dropouts, but if you are young, you need to be able to fill some of the gaps that experience brings to the table. There is no wrong time to start up, but yes, you might want to ask yourself–are you in it for the long haul, and what are the various distractions that might pull you off the track?
And for those who believe it is too old to start something, remember Colonel Harland Sanders started KFC at the age of 62!
Determination: Startup founders go through the roller coasters that the slickest edge-of-the-seat thrillers might fail to provide. You not only need to push yourself but also your team and the extended family. Are you one of those determined to fight out the large competition whose marketing spend is 10x your entire budget, or the investors knocking on your doors asking for an exit, or the disgruntled uncle you are asking to reduce the equity holding? You should be willing to be responsible for all the failures (and success) and adapt in an unstructured environment. It is about getting up each day and enjoying what you are building!
Money Matters: Okay, you have a business idea, but do you have significant time and have some early backers or savings to implement the idea? Once you are clear about being hands-on with the startup, make sure you do a simple calculation on how much money would be required and where will you get it from before you can raise money from the angels (or the sharks!). Well, you can spin plates around and arrange the fund to at least kickstart basic operations (one of the roller coaster moments!). Another important question is are you scared of the risks involved in running a startup, leading to loss of money?
Failure can be a Stepping Stone: It is crucial to understand that failure is part of the startup process and the challenges during the journey would be multiple. But the question is–are you game? You learn from your mistakes and know what works every time you fail–learning is monumental. And this learning can help you in your next career move. You can take a job where your valuable experience and knowledge is needed. Failing is not the end of the world–pivot and explore new opportunities.
Is your Idea Really Good?: Nowadays, having an unnoticeable idea is almost impossible. But a business idea should solve a genuine problem. Most of the founders I meet focus more on product development than the core problem. Is your idea able to solve the challenges of the target audience? Is your proposed product or solution unique and easily accessible? If yes to both questions, then you have a good idea. Otherwise, step back, dive deep into the underserved opportunity, and develop a problem-solving solution. But remember, an idea is still worth a dime if you do not follow it up with the execution.
It is not About the Money: If you are starting up, because you see the pot of gold at the end of the rainbow – I would advise you to hold your horses. The reason you should be running a startup is because you clearly see a gap/problem and you believe you have a valuable solution for which people will be ready to pay. Once you are sure of the value add – the pot of gold will be closer than you can imagine!
Simple Exercise of Market Sizing (Bottom-up): Market sizing is an essential metric many entrepreneurs don’t consider deeply enough. It asks a lot of questions that are critical to the growth/success – but it is essential this is done bottom-up. How many customers can you get into the sales funnel, how many will convert and hence what can be your revenues in year 3? It is all about making informed decisions before starting a business. A calculated risk is better than a blind one!
Not an Overnight Journey: In an earlier article , I had talked about the delayed IPOs for startups. So, fasten your seat belts for a long haul wherein you are making difficult choices on a daily basis – Are you ready to bid adieu to movie plans, Sunday brunches, full nights of sleep, or make difficult choices in your startup journey?