I attended Headstart even in Mumbai last Saturday. I was hoping to see really interesting startups but I was left pretty much wondering and thinking, why these guys start companies without even thinking about the future once. There were only couple of companies with proper business plan, rest of them lacked it. Many of the startups copied concepts from the international well established companies. I will list out some of the examples (without giving out the names obviously) of the so called startups with no plans ahead.
- There was were bunch of kids trying to start a website which will allow the users to setup websites in just few clicks. The concept was pretty good but their idea was broken, they decided to implement something social, where as a user will make template and share it with other users, so everyone can use it. I am not sure how practical it will be as the business model. Apart from this, they were not even ready for the alpha stage and they were having demo at the demo pit. In short, they were not “ready” yet.. They did not have clear picture of what they are going to do in the future. (And if they had, they could not convey it to me…)
- There was another team with the idea of making something on the basis of Getsatisfaction.com, again, no clear business plan, the voting manipulation wasn’t taken care of. The making money part wasn’t so promising at all.
- Another one was based on GetAFreelancer.com, again no proper business plan. There were no answers when I asked, there are plenty of other biggies providing same kind of services, why would people come to your site? Frankly, speaking, this guy was pretty much new to this and needed some boost, I gave him few ideas and if he works on those ideas, the things should work out for him.
- There were many others, from something like Google docs / MS live document sharing clone, to some educational portal with great idea in mind but no proper planning etc..
I am not going to list them one by one but if you notice, everyone had some kind of base idea ready, be it based on any international site or not, but none of them had proper process lined up. No business model. Infact many of these guys never thought of any business model. They were like, we will see when things work out..
From what I understand, their thinking might be like.. we will make a good product and sell it off to any company and earn some good bucks.. (Well, I might be wrong too) But I don’t think this is what business all about… You need absolutely planning and clear picture keeping the worst conditions in mind. You should have a backup plan ready.
And most importantly, the high focus should be on money, profit.. you are spending lot of time over the project.. and for what? Social service? Just to make your name? Don’t you want your daily bread and butter? Think about money.. make a proper business plan and then just into so called startup bandwagon. If you don’t have any plans ready, I don’t think you have any right to start any business..
I know I know.. there will be people with examples like Twitter, Facebook etc.. but they all have a proper business plan, it is just that it’s been kept under the wraps and they are waiting for the right time…
I think people should not simply get into the hype of “startup” and all.. they need to sit, get back to the basic and make a plan, think about the future and think about the worst conditions.
That’s it.
Oh Yea, I am not any so called “startup guru” or anything. I am just a businessman. I understand money, profits, loss along with the great ideas. That’s it. So these are the things which always run in my mind and thought of sharing with everyone, so atleast some of the guys planning to do something new can get tips from this topic.
I too agree without a proper business plan you are bound to fail.
@Deep
you got any tips on how to make a business plan. how all things should be included.
Thanks
See, I won’t be the right person or may be I should say, I won’t give ideas on how to setup a business plan coz I want you guys to work on it.. think from the user’s prospective, think what you can give it to the user and how you can make money out of it..
I admire thinking of people behind Google.. they know exactly how to run a business….
Actually you misunderstood me.
I was asking what all things should a ideal business plan contain.
stuff like revenue model etc. any resources?
Okay.. it should contain something like… what’s the current situation, how much do you need to put in.. be it money or time.. and in what time, you will be able to get something out of the business, what are the target slabs.. (like xx amount in 6 months etc..)
These are just few points.. there will be more factors too but all you need to do is, research around and keep digging the net..
last line says it all!
“research around and keep digging the net..”
😀
I agree to most of the points put up by you Deep, but don’t you think sometimes excessive planning acts against your growth. We spend a lot of time planning and making business models. But in the end come out with nothing.
One of my IIM’C friend asked me about what my business model is 4 months back (When I was starting) and I was like laughing. What Business Model man? I know what I am doing and I know the way. Plan in your brain, not on paper and presentations. Thats it!
Most of the well educated guys these days lack “Baniya” mentality which I think is very important at least in some proportion to get success. Re-framing Deeps words “we will see when things work out.” to “lets work out, then we’ll see” might make the difference.
“Knowledge is Power and Ideas rule the world”. Having ideas but not knowing how to do will not help. Know the way (and ofcourse potential) first and then just do it. I think, thats what Deep means by saying – “research around and keep digging the net…” i.e. get the knowledge first then take the bull by the horns
Well, you said it Deep. A lot of startups just have that very idea, they don’t believe in the product/service, don’t have any inclination to run it for long, basically they don’t have much idea of things. They just see $$$$$ coming in from VCs or startups being bought up by other companies for a bucket load of cash! And thats what they plan to do, that they’ll build up some service or product, get some userbase, get some popularity on social scene & then maybe get some VC to invest or maybe another company with cash will buy them out. Just kinda like get rich quick scheme! 😉 What these people, especially now at current times, don’t get is VC funding is drying up, VCs are no longer throwing away $$$ at every startup like they were till a year back, even then they weren’t just throwing away the cash, getting VC funding was never a cake walk. And big companies are holding on to cash, they are no longer on mad shopping spree, times are tight. So if they are building a startup in these times they better have a solid business plan or they’ll have to shutter down in a very short time.
As for Twitter & Facebook etc., well ofcourse they have a business plan, VCs don’t invest unless you have a solid business plan because they invest money on which they expect to come back along with good returns, they don’t donate the money! Twitter & Facebook got the funding before slowdown hit the economies & they have a large userbase now, they might ride out the current times & get the revenues flowing in.
@Gaurish:
I’m no expert but you can search around & you will find a number of articles & resources to guide you on how to make a business plan & put it on paper, you’ll also find sample business plans to show you what goes in there. Basically you need to put in what are you creating (product/service), what will be its target userbase, how the cash will flow in (how you make money, revenue) & like Deep said, your short term & long term targets as well like when you think you will start making money, what’re your projections for 6 months, 1 year, 5 years etc.
Well said. 3 of my friends are already into making their own startup, without any clear picture how to run properly and make profit.
I will wait n watch, and continue enjoying freelancing for few years to come, as long as it pays good for coding 🙂
@Sharad – By business model I don’t mean to say make presentations and all.. I myself don’t do that but what I meant was, have a clear picture of what you are going to do in the future, what if plan A doesnt work, do you have plan B ready etc..
If you don’t do the planning from the start, you get held up in the middle thinking what to do next.. and if we think in the situation where we are stuck.. the things do not work as expected..
I echo the views Amit just posted above..
@Deep – Of course! I echo your views too. The only point I may contradict with, is having multiple plans – A, B …?
Why will the Plan A not work? IMO, that means we have not done our homework well. Didn’t you analyzed the power of your Plan A beforehand? When I say “Know the way (and ofcourse POTENTIAL)” I echo yours and Amits views of doing proper planning alongside the knowledge. Each pros and cons should analyzed before moving forward with any idea. But move forward only when you are sure to achieve what you decided. It should not be that if this doesn’t works out I have a different plan B ready.
It should be like, if my first effort doesn’t works out to achieve my Goal, I’ll make more efforts (in different ways) to achieve the same goal.
I may be misinterpreting you here by assuming that by Plan – B, you mean to say “Doing Something Else”. But if, by Plan B, you mean to say – adopt or change/modify your policies, to achieve the same SINGLE Goal you decided previously, I concur to it.
By Plan B, I meant, the goal remains same but a different approach to it. Many times, we do proper home work, proper research but due to some minor mistakes we messup the whole thing.. (or there any be any other circumstances too), so there should be a backup plan too.
The typical Startup Business Plan will help a new business look ahead and prepare for success, and it will help an existing business assess their past and plan their future.
Excellent post Deep, something I have been thinking over the past few weeks. Myself and one of my other friend wanted to develop a Web Service on a Niche and our obvious plan was to take that into a Staru, but I wasn’t ready… not ready to jump into the Start-up Bandwagon just like bunch of other sites and services out there.
I clearly wanted to see if we had good prospects to take our business service out and make it a success among people. Obviously our end plan was to make money/profits for time and work we have invested. On the other side we weren’t too interested in getting funding or being acquired by other biggies and our main interest wasn’t making quick money but a service that we were passionate bout and a service that could be useful to people which could infact make us money!
I was working full time and decent tech/web knowledge and my friend just completed his MBA and had proper knowledge of Business and niche we wanted to work on as he had been working on the scene for a while now.
We spoke about possible investment that’s to be made, the action of business, the progress and time until when we can start money coming in. It wasn’t soon from what we saw but again we were sure we can do it perfect if things were planned properly.
Again, we never jumped in to being yet another start-up but carefully analyze the start-up scene in India, the competitions our niche might face (present and future) and chat with few people in start-up scene who could provide us valuable insights and risks. I follow Pluggd.in – very active blog on Indian Start-ups and the site also has a Start-up Directory where you can see 100’s of links to start-up sites.
I spent my time visiting most of them and you wouldn’t believe what feedback I had after checking the site and services they had to offer. 5% of sites were down or not updated or never cared after… 25% to 30% had worst UI and called themselves a successful start-up and rest had their service running which mostly were based on already successful international websites, well in other words a clone of those services.
What surprised me more was.. I could find hardly 5 to 10 sites that had clear goal both in terms of business and end user experience (includes some of the huge ecommerce sites run by big brands). Like you had pointed, most start-ups currently want to make money while VC’s shine. I am not against these start-ups but very few had proper goal and rest would either be working on international clients missing a great opportunity in local market.
The other factor was obviously the market itself, the internet is huge in India but I still question the ability to market your service to individuals which can make you profits. The Internet Industry (ecommerce, Mobile Commerce & Start-up) is huge and has amazing potential, only a few realize it in terms of clear business plans to make the cash flowing in their registers.
Thanks for your feedback from the event, was interesting to read and so were the comments that followed it.
Cheers
I really don’t agree with “From what I understand, their thinking might be like.. we will make a good product and sell it off to any company and earn some good bucks.”
The good thing about startups is that they *can* change their plans as and when they want. Make use of or change technology on whenever they *feel* the need.
Though i must say i wasnt really satisfied with the products at headstart. but hey i liked Vericar.
Good Post! Unfortunately the young kids today look at “Startup” as a badge. If they were slated to earn 30,000 in a job; launching a “Startup” besides doing consulting nay social media or SEO, bit of programming or networking or whatever earns you the same amount it is excellent, forgetting along the way that Discipline & Focus is what your Startup will require more than anything else.
@unitechy – Yes, I too don’t agree with that statement if we consider all the startups in mind, but the statement was made keeping in mind the startups I came across in headstart.. I might be wrong too but in most cases what I said is right.. (from what I have understood from my experience)
Also about changing the plan, the plan change can happen with anyone. Anyone can change their plans anytime, be it a startup or enterprise.. I have seen huge companies changing the plans half way because the earlier plan did not work.. Same applies to the technology..
I have met few startup guys, talked to them about their plans… most of them eye for VC funding and selling it off.. I am talking about very well experienced guys too here..
Regards,
Deep
@Vinay – I don’t know how I missed replying to your comments.. thanks for sharing your experience.. We know each other since our Digit / Go4i days.. and have been seeing drastic changes in your, obviously the good ones.. good going.. all the best 🙂
You are spot on man! There is unnecessary craze about the ‘startup’ thing. The zeal to start something new must be appreciated. But it needs proper planning and execution – which you have explained very well.