DOs and DONTs for start-ups

Want to start your own business and be your own boss but don’t know what it’ll take? Professor S Venkatraman tells you

Want to start your own business and be your own boss but don’t know what it’ll take? Professor S Venkatraman, Professor of Business Administration at Darden Graduate School of Business Administration, University of Virginia spells out what successful entrepreneurs do differently

Things that successful entrepreneurs do

• Bias for action – Many people continue to do research but don’t take the necessary action to either develop a product, try to make a sale, or rectify problems faced by a client and through that process, discover a business
• Bias for asking – Entrepreneurs are not ashamed to ask people for what they need be it resources or money. They boldly approach new clients and ask for contracts. They don’t hesitate
• Bootstrapping or Jugaad – This is a very important principle because when you start something your uncertainty is very high, so you need to manage what you have carefully until you can generate revenue. This further has eight hierarchical principles:
• Do not buy new what you can buy used Do not buy used what you can lease or rent Do not lease or rent what you can borrow Do not borrow what you can beg for Do not beg what you can scavenge Do not scavenge what you can get for free Do not take for free what other will pay you for Do not take payment for what others will bid for. You can always do better.
• Principle of affordable loss - When entrepreneurs start a business, they ensure that it isn’t a fatal loss. Second chances abound
• Use surprises – Surprises are inevitable with new ventures. Good entrepreneurs use these
• Pivot when faced with surprises – Entrepreneurs are capable of changing their original aim
• Leverage partnerships - Successful entrepreneurs don’t try to do everything on their own
• Shape and create opportunity – They don’t take actions on the basis of future predictions

What does a good Start-up ecosystem need?

• If entrepreneurs fail, they will be able to secure a job without any stigma attached to their failure. In India, Bengaluru has a good safety net
• People are interested in investing in strangers. Entrepreneurs who rely only on their family and friends are usually less capable of growing. Bengaluru and Hyderabad have good ecosystems in this regard. Silicon Valley has a good ecosystem because institutions allow people to invest in strangers
• Vibrant areas where new information and knowledge are created are usually the neighbourhoods of large companies or universities
• When an idea takes off and has to scale up, managers with experience in scaling up must be sought out
• Entrepreneurs should be encouraged and valued by all the stakeholders involved
• Presence of growth capital, which typically come from venture capitalists and private equity is crucial