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In this presentation I have tried to share the various things that could cause a
setback in your business. I choose to use the word “setback” as it is a failure of
the process and not the business itself. Some of the things mentioned here could
be more relevant to India and the business environment here. Everything
mentioned in the presentation is my personal opinion, and I am no God, so if you
find something that you think is not true, write to me and help me correct myself.
- Harbinder Narula / mail@harbindernarula.com

© harbinder narula, 2014
Market Research Failure
•  Some startups do market research but get blinded to the market
feedback because of their undying passion for the idea that they have
come up with.
•  Customers today have easy access to information. You need to
create a compelling reason for them to buy your product. You have to
know your customers and figure out if your product is a “nice to have”
product or a “must have” product and then market accordingly.
•  Need to know if it is the right time to launch. Many startups who have
brilliant ideas fail as they may be too early for the market. At times, it
is not too bad to be the second entrant.

Business Model Failure
•  Most startups assume and often over-estimate the success of their
marketing. The numbers are based on their hopes than being based
on scientific principles and market realities.
•  It is important to work on “Cost Per Acquisition” and “Life Time Value”
of the customers in their business based on realistic parameters.
•  Many times, specially in case of businesses never launched in your
own country, you base on assumptions on other overseas markets
ignoring external environments present in the home country.

Poor Key Management Team
•  Co-Founder
–  It is extremely important yet very difficult to find a person with
complimentary skills who understands your business, shares the
same passion (if not more), sees in the same direction as you, is
as committed as you are and has the skills you require. Most of
the time, startups fail as Co-Founders fall apart.
•  Weak Management Team
–  Finding the management team is also as important as choosing
your co-founder. Many people may jump on board for not the right
reasons and without much relevant experience.

Not Hiring the Right Team
•  Hiring experienced and well reputed names for your startup verses
fresh talent with fire-in-the-belly is often a choice that becomes an
issue while kick-starting your business.
•  There is no right formula and answer to this. There are enough
examples of both the options succeeding as well as failing.
•  The challenge is to know your business and be very clear in setting
the teams expectations as well as managing your own expectations
on deliveries, roles, monies and equity (if involved) before you begin.

Failure to Retain Key Employees
•  It is a general belief, and mostly true, that in a startup one works
harder and paid lesser. Most employees in the stealth mode are
hoping that the company will grow exponentially very fast and they
will get rewarded handsomely. But, this often does not happen fast
enough. During this gestation period it becomes a major challenge to
retain the good people and keep them motivated. This is a major
reason for product developments falling apart.
•  Some companies during their startup stage focused on creating a
unique culture and develop a bond nurturing the feeling of
belongingness to be able to retain people. There is no right formula,
use the one that works for you.

Product Problems
•  There are usually two problems that happen related to the product,
and both these are contradictory, but both lead to failure.
1.  Failure to develop a product that meets the market need. Many
companies fail to achieve the Product / Market fit.
2.  Failure to launch on time because you only want to launch with a
perfect product. It may sometimes be wise to launch a product and
then make revisions based on market feedback than to just keep
working towards perfecting the product based on your own whims
and fancies.

Demanding Customers
•  During the startup stage, your customers know that you are small and
their business is extremely important for your growth and sometimes
even for your survival. They often become more demanding that they
would be with a company in a more mature stage of business cycle.
In fact, most likely they have chosen you for this reason.
•  This situation creates tremendous pressure on the founders and the
employees who may be directly working on such customers’ projects
and often breakdown.
•  Management team needs to create a balance that is sustainable.

Failure to Navigate Bureaucracy
•  In India, though we live in a digital age, has a lot of paper work, even
for something as simple as getting a mobile SIM card.
•  Starting a company is very easy, but only as long as you have a
Chartered Accountant helping you set up one.
•  Breaking into large corporate clients and government sector may
need a lot of lobbying. I recommend every startup entrepreneur to set
up a strong advisory board relevant to your business, and this may
not necessarily comprise friends & family. This board should be able
to advise you and open their network for your business.

Running Out of Cash
•  It is a key role of the CEO and CFO ( if you have one in the
beginning) to know at any point of time about how much cash is left in
the bank and whether or not it is enough for the company to reach
the next milestone.
•  It is important for the founding & management team to know that
valuations of a startup usually do not change with passage of time. It
is more likely to change with achievement of milestones set.
•  It is important for the management team to know when to hire and
when to spend on marketing, and never take these calls out of
frustration.

Scaling Costs a Lot
•  I have often found that it is not so difficult to start a business in India,
but it is very difficult to scale the business. This could be for various
reasons:
–  You need a lot of money to scale, whether it is to put feet on the ground, create
a reach through marketing, attracting the right talent, paying for the high real
estate costs etc.
–  Also, Cost of capital is often high and is not available easily.
•  Eco-system is still evolving. Unlike the silicon valley where some
founders of evolved companies have support startups because they
genuinely do not want to see a cool idea die for lack of support, in
India we hardly see such stories as it is mostly a pure financial
decision based on short term return expectations.

Family Support
•  Remember when you quit your job to become an entrepreneur, “you”
are doing a startup and not your family. Often lack of immediate
revenue due to long gestation periods become tough on family and
the entrepreneur gives up to financial pressures. You can avoid this
by making it a joint decision of your family before you make a
beginning. In todays age
•  In most middle class families, a good job is often considered a more
respectful professional choice and an accepted parameter of
success. In my opinion, I think entrepreneurship as a professional
choice becomes more difficult with every passing year and the best
time to begin is when you have nothing to lose.

mail@harbindernarula.com
www.harbindernarula.com
/harbindernarula
/harbinder
/harbinder
@harbindernarula
/harbindernarula.com

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