After last week’s article on ‘Why some starts up survive while most fail’, some of you had written to me to elaborate on point number 5, i.e:- Innovative promotional strategies used.

Well it is difficult to capture all this in an article as this topic would require an entire book, but still it got me thinking and I have made a list of three such instances that I feel really stood out.

Using College girls as demand generators - Karsan Bhai Patel is a tough competitor. Not only did he launch an Indian brand, Nirma to take on the likes of Hindustan Uni Lever (HUL) but he briefly overtook them. So much that HUL started a project called STING (Strategy to inhibit Nirma growth). Now in the early days the demand for Nirma was good but the retailers were wary to stock them which was partly because of the pressure applied by HUL sales mechanism.

Karsan Bhai started this novel scheme of asking college going girls to walk into retailers and ask for Nirma. If Nirma was not there they simplify left the shop without buying anything. If Nirma was present they bought it and then were refunded for their effort. This dramatically changed the situation with retailers as they started stocking Nirma due to the demand. Soon Nirma was a national brand and pushing HUL and Procter & Gamble into a three way fight.

Non Animal testing and the environment- Bodyshop may be a premium brand today, but when it started Anita Roddick the founder was really pushed all the way by mainstream cosmetic chains in the UK. She then decided to come up with a very daring promotional scheme where she openly declared that none of her products were tested on animals. To push it further she also gave a 30 % discount to all those who brought back empty bottles of BodyShop products in order to get a refill. Now this was long before the environment became a very hot topic and Al Gore became the first carbon billionaire. But the strategy worked and soon she had a set of loyal customers who became evangelists. The rest is history. Though BodyShop today is part of L’oreal they still continue to promote non animal testing and environment friendly practices.

You meet the nicest people on a Honda- Honda motors was an established name in Japan but hardly anyone knew them in the US. The Japanese ministry for Manufacturing had advised Honda to look at Indonesia but they had ambitions in the US. Knowing that GM and Ford would shut them down in they entered the US with cars, Honda entered the country with a moped called the ‘Super Cub’. It was supposed to be sports moped, which people could take to a golf course or to tennis club. The launch state was California, which normally has good weather throughout the year. The tag line was that ‘you would meet the nicest people on a Honda’.

The moped was sold through sports shops like SEARS. Honda gifted a Moped to all its employees and they were encouraged to drive to work in their mopeds. This soon created a buzz with many of the younger more sporty Californians wanting to buy one for themselves. The strategy worked and Honda soon became a familiar brand on the Californian roads. This paved the way in the 1980’s for the Honda invasion through their cars. Though Honda was not a start-up they used the start up mentality to get better of bigger rivals like Ford.

But again this is no way an exhaustive list there have been so many other innovative ideas for promotion. I would like to hear your views on the same.

If you have started a company and used very innovative strategies or have heard of someone doing so, please do leave a comment and that would really enhance the discussion.

Related posts:

1. Cost cutting : Different companies different methods
2. Where do Indian Start-ups stand in high flying 50 Tech Start-ups of the world?
3. Top Innovative Companies List [World & India]

For Small & Medium Enterprises (SMEs) who wish to create a niche for themselves in today’s competitive market, it is imperative to keep a track of their day-to-day transactions and financial events. Businesses where the accounts section is always at the backdrop & does not receive enough managerial efforts frequently face financial crunches.

If you are a start-up company and planning to make your entry into the corporate world, without enough knowledge about the technicalities of accounting, then the best way to get a hands-on experience & increase your familiarity with the same is “Accounting Outsourcing”.

Accounting Outsourcing not just helps you understand the intricacies & power of co-ordination of various financial segments, but also teaches you the tricks of managing financial records effectively, a task most companies tend to overlook.

Studies indicate that for companies to have a fully functional & powerful accounting section, nearly 40% of total cost is required, which accounts to a magnificent financial as well as human resource. This is where accounting outsourcing can be used as a powerful alternative tool, since it helps businesses in cutting these overhead costs by providing them with accounting solutions that are not just cost effective but also time effective. For companies to have an ascending accounts graph, it is important to establish proper control over the company’s financial events & cash flow.

A recently done survey of start-up businesses looking for dependable accounting outsourcing service providers indicated that, the best person to identify these providers for the company is the financial coordinator of the company. This is because the financial coordinator is the key person to actually help business owners in understanding the terminologies of accounting. So, no matter whether you are familiar or not with the aspects of accounting, you can always trust your reliable & cost-effective accounting outsourcing service provider for looking after the finances of your organization.

In order to maintain an uncomplicated accounting system in your company, it is essential that you keep the terms & procedures simple & easy. The professionals of accounting outsourcing firms are trained to categorize all sections of accounting, to make them as simple as possible. The financial reports generated by these professionals with the help of new accounting strategies & modifications of existing ones are so accurate, that you can easily rely on them for important business decisions.

While every company has an accounting section, not all of them have the ability to utilize them well enough to generate desired results. Accounting outsourcing is a great option for all such companies, because it not just helps simplify the accounting tasks but also leverages unique accounting capabilities overseen by field experts, thereby bringing a stability to the finances of the company.

[The above concept is shared with us by Pooja Kumar of SME JOINUP. To get assistance in accounting outsourcing, email on contact@smejoinup.com]

No related posts.

In the 1950’s 8 employees of the famed Shockley Semiconductor got into dispute with William Shockley. The employees left and formed Fairchild Semi-conductors. The process repeated many time over with these former employees forming more than 65 companies in less than 20 years. This phenomenon was referred to as the ‘Silicon Startups’ and the location for these companies the Stanford Industrial Park remains the hot bed of the startups in the world.

A similar phenomenon was born in Bangalore when Narayana Murthy started Infosys and thus was born the Indian technology story.

But startups have a very low success rate. For the Information technology sector for example the success rate is close to 38% (Some opine it is less than 10%). This data is from 2005 and appears in the monthly labor review for the US. Globally, this percentage is even lower.

So how does one avoid failure while starting a company? Or why do some startups survive while others fail. Based on my experience of starting a business and running it successfully I have come across five point formula that I feel can help in avoiding common traps for failure.

1. Select the right Industry

Most entrepreneurs make the fundamental mistake of venturing into industries that they are not familiar with. It is very important when you start a business that you are aware of the industry life cycles and business processes. Also the industry selection should depend on the growth stage of the economy of the geography where the business is present.

A good example of this was Infosys that was started just at the start of the technology outsourcing boom. The founders had experience in the industry earlier. The result was phenomenal. I remember this medical colleague of mine who out of enthusiasm opened a fashion boutique. It closed in exactly 6 months.

2. Focus on the financial model

Again another big area of confusion is the finances. Most people would like to start a business with their own savings. Though the thought is noble, often savings disappear soon and one has to start looking for other sources for funding. I think the model should be one where the cash flows start almost immediately and the break-even happens within 12 months. The longer the time for break even the more chances that the business would fail. Also it is best to avoid very heavy investment upfront. Using a rented accommodation or using a home office is a better alternative. Also if the equipment can be leased than bought, it might help reduce the up-front investment burden as well.

3. Be Flexible

Often the business model you had in mind is not the one that presents the most opportunity. So once you realize that there is a better model it’s time to move to it. A good case in point is Naukri. A meeting with Sanjeev Bikchandani revealed that he started Naukri.com as off shoot of his initial venture, which was to create a HR database for recruiters to shortlist relevant candidates. As the launch of his new venture coincided with the growth of the internet, he soon changed the business model to become one of the largest job portals in the country.

4. Add Business value

Often value added services are more profitable than the original product or service. Staying with Naukri.com, once they realized that there was a market for creating resumes and candidates often found it challenging to create compelling resumes, He immediate started value added services which provides resume writing and covering letter among other services.

5. Innovative Promotion

A start up needs very innovative ways to promote itself. Often a startup falls into the traditional promotion trap spending vital money on routes like online advertising or print medium. To beat the clutter a good start up thinks out of the box. The best example of this is Google, which never spent much on promotion except using word of mouth. It is best to remember that the search engine market of that time was dominated by players like Alta Vista, Excite and Ask Jeeves. What differentiated Google were the loyal core followers they had who spread the name by references.

These are some of the parameters that a good start up should look at. But by no means is this a comprehensive list.

So, I would like to hear from you, what are the other critical factors that help a startup survive? How can a new company differentiate. All comments & suggestions are welcome.

Related posts:

1. Startup ecosystem and the fate of non-IT startups
2. Indian Startups: Easier said than done!
3. Startups are like “2012″!

While many are in the rush to turn their offices from physical to virtual, there are some of us who may still be bound by an office with a real address. But in order to make the most of your office, the best way is to go paperless. Here are some tools you should use not only to digitize your documents but also make them easily searchable and available when you need them.

[This tools may be more suitable to tech oriented offices, but may be useful to others as well]

Freshbooks

As an invoicing solution, Freshbooks an extremely popular web based software used by small businesses and freelancing agencies to generate automatic invoices. All you need to do is access your billing on Freshbooks with your login and password. You can also use Freshbooks to generate reports and track your expenses and costs.

Invoices are sent securely and clients can choose to pay the bills through PayPal, Verisign and other payment gateways. Now you can forget about painful tracking your company’s work hours, bookkeeping and sending projects estimates and quotes to clients. Let Freshbooks do it for you, the paperless way.

To get Freshbooks, click here.

CardMunch

Did you ever imagine a few years back that your card holders and folders are going to go into trash? If you’re armed with this super app from LinkedIn, visiting cards for you are going to become history. CardMunch allows you to take pictures of visiting cards from your phone. It converts the information from the visiting card and feeds it into the memory of your contact list.

Once CardMunch had loaded a new contact on your phone, you can sync up with them on LinkedIn in just one touch. What’s more, you’ll also be able to see your common connections with a contact while you’re on the go. And yes, don’t forget to chuck that visiting card in the bin.

If your phone does not support Cardmunch, you can search on the web for similar software for your Phone OS – They surely are incredibly useful!

To get CardMunch, click here.

Shoeboxed

Are you sick and tired of keeping a record of all your receipts, vouchers and invoices that you have to send back to the head office for re-imbursement? Are all the small chits, casual notes and folders of vendor slips causing your office to look like a paper jungle? Then Shoeboxed is an answer to your worries.

Once scanned into the system, your receipts, business cards and miscellaneous data will get indexed into the Shoeboxed system, allowing you to generate expense reports and integrate them into your Gmail or Microsoft Office applications. Additionally, Shoeboxed is of great help when you file your tax returns online or when you want visiting cards to be directly exported to your CRM.

To get Shoeboxed, click here.

Basecamp

Are you managing a project which has over a hundred variables, mobile team members and fluctuating resources? If this is the case, how many scans and print outs are you going to manually manage? With Basecamp, you can simultaneously obtain an overview of all the projects alongside the details of one particular project. From pulling out specific emails, getting an overview of deadlines to meet, tracking specific project milestone, centralizing client discussions, working with multiple languages and much more, Basecamp will prove to be a useful tool not only to get towards a paperless office but also an uncluttered hard disk! Take a free trial before signing up for the paid version for features.

To get Basecamp, click here.

Lifelock

Here is an application that will literally help you cut down on the volume of paper in your office. If you are harrowed with unwanted catalogs, mailers, newsletters and promotional letter in your post, choose Lifelock to get rid of it all. Lifelock will ensure that you are removed from every unwanted subscription and mailing list, thus protecting you from identity theft.

In addition to credit fraud, Lifelock will help you detect when your identity is being misused by wireless services, utility companies, bank loan departments and other third parties that fall in Lifelock’s network.

To get Lifelock, click here.

Do you have any other tools that you use to make your office paperless? Share it with us!

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Starting a startup is becoming easier and easier nowadays, with cloud computing eliminating the need for a physical server farm. But what hasn’t become easier, is relocating your startup to Silicon Valley if an entrepreneur from outside the US tries to do so. As usual, technology has progressed far faster than immigration legislation.

Indeed, if an Indian entrepreneur wants to move their startup to Silicon Valley in order to benefit from the abundance of capital, or perhaps to achieve a successful exit (Google has been acquiring a company about every two weeks for the past years), they will have a hard time doing so. At the moment, there is no Startup Visa.

While a bill was introduced in March 2011, the U.S. Congress hasn’t made any progress on it (and with the upcoming elections, it’s unlikely that any progress will be made). Business (B-1) or tourist (B-2) visas for Indian citizens are valid for 10 years, but they don’t allow for income to be earned. H-1B and L-1 visas require an employer. The E-2 investor visa is available only to “Treaty” countries, which include Albania and Kosovo, but not India. And the EB-5 visa requires an investment of $1,000,000.

Now let’s remember that Silicon Valley is in California, very close to its Pacific coast (about 45 minutes by car). Here’s a map. Note that on the map, in the ocean, there is a line that mirrors the coastline, and forms a partial circle around an island. That line is 12 nautical miles from shore (22 kilometers, or 30 minutes by ferry) and is the limit of the United States territorial waters. Outside this line, the U.S. has no jurisdiction.

What if a large ship were anchored in a spot beyond this line? The ship would be outside U.S. jurisdiction, where immigration laws don’t apply. At the same time, the ship would be close enough to shore that travelling to Silicon Valley would take about an hour and a half (ferry + disembarking + car travel).

An entrepreneur from India could live and work on that ship, and use their business / tourist visa to come to Silicon Valley for events or to meet investors. Partners from the mainland could come to the ship at any time as well, since they’d be U.S. residents.

The idea isn’t new – creating permanent communities on the ocean is called “seasteading”. This could well be a feasible & easier way for Indian Entrepreneurs wanting to move Silicon Valley!

What do you think? Will this idea sink or swim?

[The article is written by Dan Dascalescu, CIO of startup in Silicon Valley, Blueseed, that works on creating a seastead (or “shipstead”) especially for startup entrepreneurs. You can check out the most frequently asked questions ]

Related posts:

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2. 150+ lessons learned and insights from 15 Silicon Valley Entrepreneurs [Free Book]
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Arun’s Note: I got this email in my inbox today from an entrepreneur detailing out his frustrations regarding the how ecommerce startups are at mercy of Indian Payment Gateway providers – This is not the first time I have heard and more or less most early stage startups are experiencing this kind of frustration! I am reproducing his mail verbatim which gives a detail account of his experiences!

Internet Payment Gateways in India have been a complete let down (from my experience) who are now working akin to governmental agencies! And I am not the first one. Even today’s biggest successes like flipkart.com had to face them in their early start-up stage.

While internet start-ups are mushrooming by the day, there is a dearth in the supply of internet payment gateways in India who are now dictating their own terms. It’s also ironic to note that getting a VC or angel investor is easy now in India! But the basics like internet payment gateway is a hell-ride experience!

And here is what I learnt from my experience:

My site launched last year, still in its start-up stage, was doing 6 digit business per month via online sales. Our refund ratio was <1%, and charge-backs 0%, which, by industry standards is pretty good. While we are also ethical in running our business and comply to all statutory requirements sets by payment gateways.

However, trouble began when our existing payment gateway provider (India’s 2^nd largest Internet payment gateway provider) ‘suddenly’ discovered that we do not fit in their accepted business models and disconnected the gateway to our site without prior notice. 

Beaten and bruised, we approached other payment gateways and here is what we got from them:

Now, do let me know if I missed out contacting any Indian payment gateway!

So I have a few questions here which doubt the basic intention of these ‘private players’ or ‘aggregators’?

• Are they too busy to respond to potential customers?
• Do they intentionally do not respond because we are start-ups or because their coffers are filled?
• When banks are directly approving payment gateways, why are private players shying away? Are they worried about their image? Or want to please their loyal customers by not accepting competitors?
• When banks have outsourced the job of payment gateway processing to private players, why are they acting monopolistic?

These circumstances leave a very wide gap of questions unanswered:

• What is the future for start-ups if they are meted out such treatment?
• Why is it so difficult to convince these private players to accept your business model who have no time to listen to you?
• Where will start-ups go if they are meted our such treatment?
• What can a start-up do when they face such a situation? When their only source to accept payments is denied without valid reason?
• Are not these start-ups being nipped in the bud by such egoistic private players?

I am sure I am just one of those untold stories of start-ups who had such experience with Indian payment gateways.

———————-

Prima-Facie, this person is not the only one from whom I have heard these travails in regards with Indian payment gateways. There are many out there facing similar issues

Note:  I did little research on the person who sent me this mail, and looks like his startup is one of the recent start-ups who are into online match-making / dating sites. I browsed through it and it looks clean. I am not sure why any payment gateway would find them risky!

Related posts:

1. desiwiki:The wiki for Indian Startups
2. Hottest Indian Startups Review: Vakow
3. What I watch for in Indian Web2.0 Startups

For the uninitiated, bootstrapping a startup basically means commencing your business with whatever you have in your pocket (which generally is very little) – no venture capital, no angel investing, no bank loans or external financial aid. [Wikipedia meaning here]

A successfully bootstrapped business would mean surviving purely on profits out of sales, a steady cash flow or already existing internal monetary resources. Most successful bootstrapping ideas of famous entrepreneurs come out in the public domain when they publish their how-to success books.

Most of these ideas can range from smart to whacky to unthinkable – to say the least. Here are some tips that may help you in successfully bootstrapping your startup.

Avoid long term fixed costs

If you’re thinking of starting out with a rented office in a commercial complex, you’re probably not born to be an entrepreneur. Even if it is an office space that you receive for free, you will eventually start running up unseen recurring expenses on it very soon.

Depending on the service or product your company offers, work with the most limited resources you can. Scrap those snacks and coffees, use public transport instead of taxis, work out of home, buy professional software with joint funds from a friend, be your own Man Friday and finish the job of 5 people yourself, do another part time/ freelancing job to fund your core startup and so on.

Create win-win barter situations with human resources

When you were in school, how did you get your homework done the illegit style from friends? "Hey, why don’t you finish my science assignment while I make sure I get you a date with that girl you have a crush on?"

The same applies to successfully bootstrap a business. With paucity of funds, you’re not going to be able to hire professionals or experts. So, you might as well start striking relationships from your existing contact base. Get your website built from that long lost friend who used to learn computer graphics or get an ex-factory employee to advice you on how to repair a piece of machinery in your value chain in return for a cup of coffee. Think simple and find creative & cost effective ways of getting work done!

Increase your Plowback ratio

No, we’re not going to discuss the formulae of plowback ratios as used in accounting. All we’re talking about is not taking away any money OUT of your business, whether it is in the form of salary, frills and expenses or variable costs.

Pumping your profits or a steady cash flow back into your business might keep you from earning a single penny for yourself for a few months, but it will be worth the wait. As backup you must plan an exit strategy, how much money you’d have to pay to various vendors and how much funds you may need to stay afloat for the next 6 months. One of the most important tips to successfully bootstrapping your startup is to not get your savings account into negative balance!

Freebies and free marketing

Why do big multinationals make young teenage marketers spend an entire day in the middle of a mall and hand out freebies of their products like noodle packs or face cream sachets?

That’s because nothing works like physical word of mouth, viral campaigns or creating a buzz on social media. We understand that as a startup trying to bootstrap successfully, you can’t set aside budgets to give out a million freebies at the mall. But planning a small marketing stint at your neighborhood would be a great start. Think of friends wearing bright coloured tee shirts shouting your product or emailing your community about a free first time trial of your service.

Make extended friends and family guinea pigs

Testing the waters, observing the markets or getting first hand product reviews – call it what you will. Getting uninterrupted, honest reviews of your product or service from friends and family is the best way for bootstrapping business to avoid heavy costs on product failure on market release.

Why do restaurants have soft launches for their promoters’ friends? Why do Hollywood movies have private screenings before release? The same concept applies. Be ready to face some brash truth about how much your friends would pay for your product or service, what changes they suggest, any features they would like to tweak and so on. You will find these tips highly valuable in hindsight when your product / service offering becomes successful.

These are just some of basic tips for bootstrapping your startup. However, there are 100s of more creative ways that you can employ. The most important factor that you should remember is that every penny you spend from your pocket should give you maximum mileage and should be spent on making your startup successful and nothing else!

Related posts:

1. 11 Fundamental principles for successfully bootstrapping your startup!
2. Event: Kickstart.in Startup Saturday
3. Focus- how it effects any startup?

I just came across a very interesting infographic created by folks at  My Smart Price giving  insights on startups job scene in India. As expected – most of the startups lack Marketing & Sales people – that’s their biggest demand.

I can tell you from my personal experience that finding a good marketing / sales person for a startup is like trying to find a needle in a haystack. There is no dearth of below average Marketing / Sales guys, but a good guys are just too rare.

On the technology front PHP has the biggest demand, While Microsoft Technologies seem like a absolute No No for startups. Not a single job has been put for MS technologies.

Indian Startup Job Scene [Infographic]

As far as geography goes, maximum startups jobs come from Bangalore followed by Mumbai & Delhi. Pune beats Hyderabad & Chennai in the startup job scene as well!

Note: The infographic has been made  based on data crawled from various Indian job boards. The list can be found on their blog post.

Related posts:

1. Why no Indian startup were seen at TC50?
2. Half of Indian Internet users use it only through Mobile [Infographic]
3. The new mantra of PR: Marketing through blogging and Social Networking

Whether you are in India or anywhere on the globe, raising entrepreneurial finance is quite a challenge since you have to make individuals or institutions believe in your idea, project, business and vision.

Here are 5 things to keep in mind while raising entrepreneurial finance.

Tap your trade creditors

One of the costs in any entrepreneurial finance is the cost of inputs which can be in the form of services, supplies, raw materials or even finished products. These costs can represent a large portion of the initial finance.

Have you thought of negotiating good credit terms with your trade creditors? Traders are generally happy to give even start-ups credit in lieu of repeat business. So tap your trade creditors and ask for longer credit periods to cut down your entrepreneurial finance requirements.

Prepare a fool proof funding proposal

It doesn’t matter whether you are looking to raise entrepreneurial finance from your bank, financial institution, private investor or a Venture Capitalist, you will need a strong funding proposal.

Your funding proposal outlines the details of your business plan, the vital numbers and forecasts of performance and financial viability. Remember folks, your financiers are looking to invest in a solid business plan so don’t leave any stone unturned when you draft your funding proposal. If you are unable to answer any queries during your presentation to your prospective financiers, you can kiss your dream of raising entrepreneurial finance goodbye.

Be careful of the terms with an Angel Investor

In the day and age of technology, Angel Investors have gained popularity as rich sources of raising entrepreneurial finance. However, what you, as an entrepreneur need to be careful about are the terms of credit with an Angel Investor because this line of credit comes in the form of debt or equity. Debt is costly in the short term, while equity will reduce your share of revenue in the future. Depending on your forecasts and needs, make sure that you manage these terms prior to signing your life away.

Have a clean credit history

Your credit history is going to play a big role when you are looking to raise entrepreneurial finance, especially from the banking sector. So if you’ve been defaulting on your credit card or loan repayments, chances of you being able to raise entrepreneurial finance from your bank are slim. There are many ways to better your credit history and your past dealings with the bank and we suggest you start putting them into practice if you are looking to raise entrepreneurial finance in the near future.

Look for personal collaterals

Before you read on, be warned that using personal collateral is usually every entrepreneur’s last resort when it comes to raising entrepreneurial finance. If you have exhausted all possible sources for capital required to get your start-up business off the ground but still fall short by a tiny bit, personal collaterals might be your saviour. Although using personal collaterals are not your best option, it is always handy to keep the paperwork of your assets up to date, should the need arise to use them as collateral security for your entrepreneurial finance.

If you are you ready with a fabulous business idea and with the know-how to implement it, bank on your business plan and keep the above tips in mind on your journey to raise entrepreneurial finance.

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