Opinion: Four lessons that can make your startup take-off

One would agree that starting a business is the greatest learning experience you can get (even if you are not successful in it).

I started by entrepreneurial journey with my school friend in 2015, leaving my lucrative job. The startup I created, a platform that connected people over skills and hobbies, became the eighth company in India to be backed by Facebook and was a winner of several national level competitions. The concept was well received as we were quick to gain traction but unable to scale further due to certain constraints, and hence decided to discontinue operations in 2017.

In this article, I am highlighting lessons I learnt during my start up years and sharing some personal views and tips that other aspiring entrepreneurs can benefit from.

Lesson 1: Have a well-defined monetisation strategy or business model from beginning

The first and the most important lesson is to have a clear monetisation strategy from the very beginning. The major problem with startup founders is that they are too optimistic about how easy it will be to acquire 'paying customers'. They assume that because they will build/offer an interesting website, mobile application, product or service, customers will come and they will build traction. And once traction is built, there concept will be easily monetised.

That doesn't necessarily happen in real if the monetisation strategy is not thought through during initial stages (or revenue projections are too optimistic) and worst the cost of acquiring the customer (CAC) becomes much higher that their lifetime value (LTV).

What founders must clearly understand first is that whether their product is a Vitamin (nice to have) or an Aspirin (must have) in the market they intend to serve. Second, if there is a scalable way to acquire customers and lastly if one can then monetize those customers at a significantly higher level than the cost of acquisition.

Tip: Do a POC on a small sample of target audience first. Check not if they will use your product, but if they will 'pay X amount' for the same (move from assumptions to estimations). Make sure the CAC is less that the LTV for this exercise.

Lesson 2: Focus on customer research and get feedback on prototypes

Customer is at the heart of any business and the founder must listen to all customer feedbacks, reviews/ratings and reasons for churn seriously. I would suggest while you are in development stage of the product, get a feedback on the prototype by a sample of target audience. Not every product or company is Apple, that customers don't know what they will want.

One of most appreciated and acclaimed product features for my mobile application came from discussions and research with my target audience during concept stage - ones my team never thought about in beginning. In fact, we also reached out to a couple of potential angel investors and industry experts in my network for feedbacks during concept stage. This ensured positive reviews and low churn among customers.

Best thing is to build or evolve the product sitting amongst your potential customers. That will give founders (along with customers leads pre-launch) very useful insights about their actual target customers right location or launch timing or if the product has a compelling enough value proposition and if market size of people that have pain and have funds is large enough.

Tip: Run your product prototype with atleast 5 customers daily by either cold calls or personal interviews. Also, reach out to 2 potential investors and an industry expert in your network for insights during development stages. Keep your product vision clear but be open to suggestions on product features.

Lesson 3: Be frugal

By being frugal I do not only mean working out of garage offices or keeping bean bags instead of office furniture, but being wise with operations, hiring or marketing budgets. A major reason why startups fail is because they run out of cash.

Our first marketing campaign was a Facebook ad for which we believed we needed a good experienced designer. However, as we were running tight on budgets we decided to delay hiring and do it ourselves – downloaded free stock images from web and ran a vanilla ad campaign (without any design). To our surprise the campaign did exceptionally well and was one of our best performing campaigns on Facebook (with regards to CAC costing half as compared to the average life time CAC we ever achieved).

Many of the highest engaging blogs and posts we ran were done by interns with whom we negotiated to pay only based on content performance. This way even interns delivered quality work.

This is extremely critical especially if you are bootstrapping. Even for funded companies, when they run out of funds before achieving the next agreed milestone, subsequent funding becomes difficult. Or even if they do raise, valuation will be significantly lower. The best of entrepreneurs spend only on essentials and do more with less.

Tip: Be sure if or when you really need to hire somebody or buy an expensive tool. Test if you can get results from what costs you zero money. Again, understand must haves and good to haves.

Lesson 4: Build Team smartly

"Talent wins games but teamwork and intelligence wins championships" - Michael Jordon

Founder's vision and hard work are critical especially in the early stages for growth. However, team's alignment to founder's vision and their skill composition are of utmost importance for the company's long-term success. Having a perfect team is about sharing a single clear vision, passion to address customer pain point and balancing strengths-weaknesses among each other.

One wrong hiring cost our team delay of three months in product launch. This was huge considering our monthly burn rate and stiff investment scenario in the market.

Smart founders will build strong teams below them – people who are strong on strategy and even better at execution. This helps to build a sustainable and profitable venture. If the team is poor at execution, it will lead to product not getting built correctly or on time, and the go-to market execution will be poorly implemented.

Tip: Remember Guy Kawasaki from 'The Art of Start': B players hire A players and A players hire A+ players. Seek also for an aligned vision and speak frequently to your employees to keep them motivated.

Bonus lesson: Stress management

One of the most important personal lesson that start-up taught me was about managing stress. We all feel stress, and there is no escaping it and at times it affects our efficiency at work. I no way claim to master stress but the understanding about the subject has been useful for me. My two theories for dealing with stress:

• Let me begin with the Gestalt Theory in psychology which states that "the whole is other than the sum of its parts". One of the ramification of this theory is that stress, in actual, is only perceived more by people - it appears bigger in itself, as a whole. It can be broken down into specific elements or problems, which are simpler to address individually.

Thus, if you do feel stressed or are faced with a problem, write the reasons down until you can’t break them further. Then, prioritize and address them individually.

• Second, the core reason for most of the negative emotions like anger, anxiety, fear, lack of confidence, embarrassment etc. is due to confusion or simply the lack of information (about outcomes, about future, about another person, or being underprepared etc.). Thus, seeking more clarity or information, having clear communications, or doing more research on events/topics in personal or professional aspects could help avoid these negative emotions from coming in.

Tip: Remember the Quote by Tim Ferriss: "When you get specific with your fears, you rob them of their power".

(Disclaimer: The opinions expressed above are the personal views of the authors and do not reflect the views of ZMCL)