Earlier I have written on the importance of Ideation and Validation as the two consecutive steps in the entire process of forming a startup. Whereas both Ideation and Validation are important, they are relatively easier to accomplish. Execution is the last mile which you should run to achieve your dreams.
Talking from the India’s perspective (given the India’s favorable economic state clubbed with many demographic dividends that it has as its strengths), there are entrepreneurial opportunities in almost every sector. Hence it is easier to identify and nail down an opportunity area. Also, if you are attentive, you will immediately notice that there are abundant entrepreneurial opportunities not only for product-based startups but for services-based startups also. Service-based startups are easier to set-up when compared to the product startups if you compare the initial investment and the duration it takes to get the ROI. Services startups require lesser investment and yield ROI sooner. As an entrepreneur you may find it easier to Ideate and Validate than Execute and if it happens to be in services area, it is even easier.
Coming back to the main point, Execution! Let me delve deeper into the Execution stage in order understand why it is the most critical and difficult step – both for service-based and product-based startups. Execution in general is the stage where typically maximum startups fail. The reality check sets in here. It is the trickiest part and tests your skills in multi-dimensions.
The execution stage can be looked at as the stage when you are in possession of the most viable product (by product here I mean either service or product) ready to sell to the initial target customers. The execution stage lets you enter into the main stream and brings you out of your earlier ‘stealth mode’. Through the execution you have to start building traction which fetches you revenues and you have to bring sales to a critical level where your startup can sustain with all the operating costs being covered by the revenues. In the Execution you will most likely have to do the following things:
Register Your Company:
If you have not yet done this then you must decide on the company structure and get it registered. You and your co-founders must decide upon the most viable company structure – whether it will be a LLP (limited liability partnership) or a Private Limited. Deciding upon the company structure and registering it will save you a lot of hassles later as once you are in the market and start selling, there will be many other things that will need your focus, time and energy. So as a first step of execution, you must ensure that you are over with all the legal processes.
Expand Your Founding Team:
Now that you are ready to sell, you are actually “in-business”. Your initial team of 2 or 3 founders may not be sufficient. You may have to judge the need and recruit more people. But please note that you should not over hire. It may back fire. If you over-hire then the redundant salaries will drain your invested seed capital faster.
Only Focus Should Be To Sell and To Control Costs:
Once your company is registered and the team is in place, your only focus should be to capture customers and increase the repeat customers. Your efforts should be to control costs as well so that the increasing revenues start reflecting profits as soon as possible. There will have to be the following simultaneous efforts from the founders and the team in the initial execution stage, wrapped around the core of selling and controlling costs:
- Incorporate customer feedback as much as possible so that the best market fit is ensured.
- Avoid splurging in expensive team building activities at the same time do ensure that the team’s morale is high and that they are able to put in their best performance. In fact, try and recruit highly motivated and emotionally mature people so as to avoid spending on team building activities. This will save costs to a great extent. Look for people who are self-motivated and have self-starter approach. Identifying the right people will be the key and the right kind of employees will actually be your biggest asset apart from your business idea.
- Think of strategies to build stickiness around your business. This will ensure that the customers will come back to use your product or service. The stickiness in your business model will also ensure in automatic positioning of your product or service and hence in gaining the mindshare. Market share will follow as a consequence.
If these things function smoothly, most likely your startup will survive and will give you a good valuation. It may make a very strong case for raising external investment and subsequently focus on expanding and penetrating deeper into the market.
|About Mridula: Mridula is a freelance writer. She writes on Entrepreneurship and has worked for a start-up in the past. To know more check out her profile at LinkedIn/Mridula Velagapudi|