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The Startup Owner’s Manual [Review]

guest — Mon, 21 May 2012 04:23:26 +0000

The Startup Owner’s Manual is the latest book by Steve Blank and Bob Dorf. It has been taking the business and startup world by storm. I read it only recently and realized how much you are losing by running your startup without reading and implementing this book.

These have been lot of gushing praise about this book, but one quote about this book in particular was apt.

"What Kent Beck and company did for agile software development, Steve Blank has done for the startup community."

If you don’t know Kent Beck, he was one of the first people to document design patterns, which allowed developers to talk about code at a higher level of abstraction. The startup owner’s manual documents the design patterns in early stage businesses. Kent Beck’s book is a seminal work in software development and I have no doubt that The Startup Owner’s manual is also going to be a game changer.

The book claims that it is "The Step-By-Step Guide for Building a Great Company". It lives up to it’s tagline. The book is highly prescriptive. It will tell you in detail what you should do on day 1 of your startup and what you should do once step X is done. (Most books in it genre have been descriptive, describing successful businesses and inferring what worked. The Startup Owner’s manual doesn’t pull punches. It is opinionated, it tells you exactly what you should be doing and when.)

Steve Blank is entrepreneur who started 8 companies, now is a professor at Stanford. He first wrote about customer development methodology in his book The Four Steps to the Epiphany, which is credited with jumpstarting the lean startup movement. This books builds on the ideas proposed in The Four Steps to the Epiphany, and provides more detailed and step-by-step guideline on how to go about doing customer development.

The book preface says "Don’t read too much at a time" and say "… this book has more in common with a car repair manual than your favorite page turner." Good points as this book is fairly dense and if you try reading too much at one do you will probably not get much out of the book. Thankfully the book is well organized in various time phase a startup is.

Depending on the phase your startup is you can choose what you should be reading.

A bit about customer development

Customer Development is a methodology of finding product-customer fit. It says your first ideas about who your customers are going to be, why they by, what channels they buy from are wrong. Only by talking to customers and trying them to buy you Minimal Viable product would you be able to find a customer for your product. You have to get out of building to talk to customers, you have to pivot your product to fit what the customer wants. This book tell you how to do customer development via customer discovery and customer validation.

Most startups would be happy to get the Director of Sales at Oracle to join their company as sales. The book tells you why this is a bad idea. "A startup is not a miniature version of a large company." A person who has experience only at a large company would like to grow big fast. Startup owner’s manual advises against scaling until you have achieved a product-market fit. The book is full of advice and how-to like this.

The book is divided in these sections.

A startup is not a small version of a large company.
The customer development model.
Introduction to customer discovery
State your business model hypothesis
Get out of the building: Do People care
Get out of the building: Test the solutions
Introduction to customer validation
Get ready to sell
Get out of the building and sell
Company positioning
Proceed or Pivot.

Each of these chapters deal with specific times of a startup lifecycle and tell you what you should be doing in that stage in a detailed how-to way.

Some caveats

The book is highly prescriptive and suited for US markets. Apply your common sense before applying everything suggested here.
The book is big 500+ pages, give it time and read chapters which affect you.

Links to Books

[This is a guest post by Shabda Raaj of Agiliq. Their blog talks about many technical topics such as build web and mobile apps.]

[Note: Book links are affiliate links]

Critical Clauses in Shareholders’ agreement – A brief overview

Nirupama Krishnaswami — Mon, 14 May 2012 11:33:02 +0000

[Editor’s Note: We at trak.in, have been getting requests from our readers to cover legal aspects involved during company formation, mergers, Copyright / Trademark issues, equity investments etc. Therefore, we are starting a series where these issues will be covered]

A Shareholders’ Agreement between shareholders of a private limited company is a contract that details the various provisions that will govern each of the shareholders who are party to the agreement vis-à-vis the Company and the shares held by each such shareholder and also the provisions that will govern the management of the Company as agreed to by the parties to the agreement. It may be noted that in case of a public limited company, there may be enforceability issues with certain provisions of the shareholders’ agreement.

Under Indian law and based on the judicial pronouncements of Indian courts in respect of Shareholders’ Agreements, it may be noted that in order for the Shareholders’ Agreement to be binding on all Shareholders of a company and also on the company itself, many provisions o of the Shareholders’ Agreement would have to be also incorporated in the Articles of Association of the Company and the Articles must be amended to remove any inconsistencies with the provisions of the Shareholders’ Agreement.

Some of the critical clauses in a typical Shareholders’ Agreement between shareholders of a private limited company would be:

1. Representations and warranties from the Company and its Promoters

Any investor who invests in a company would insist on certain representations and warranties being made by the Company and its promoters about the financial position of the company, compliance with laws by the company, litigations and claims against the company, assets of the company, liabilities of the company, status of the shares that are to be issued to/purchase by the investor and so on. The language of each representation and warranty should be carefully reviewed and if necessary, negotiated. Any exceptions to such representations and warranties must also be clearly captured. Promoters may make certain representations and warranties on a “best of their knowledge and belief” basis.

2. Composition of Board of directors of the company and other management related matters

The shareholders may agree on the maximum number of directors on the Board, the number of nominee directors from each party, who will be the chairman of the Board meeting, quorum for board meeting, whether chairman will have casting vote and other such matters pertaining to the Board. Matters that require unanimous consent of the directors and matters on which a party’s nominee director shall have veto rights will also be addressed in this clause. By virtue of this provision, a shareholder may get control of the Board and the decisions of the Company that are taken at the Board level may also be steered through veto rights.

3. Lock-in/first right of refusal/tag along/drag along

A lock in clause impose restrictions on alienation/sale of shares held in the company by either party without prior approval of other party for a certain period of time. A First right of refusal clause makes it obligatory on a shareholders who wants to sell his shareholding, to first offer his shares to the other shareholder who is party to the Shareholders’ Agreement on the same terms and condition on which he proposes to sell it to a third party. If the Shareholders’ Agreement has a drag along clause then in the event that one shareholder wishes to sell his shares to a third party, then he can require the other shareholder who is party to the Shareholders’ Agreement to also sell his shares to the same third party on the same terms and conditions. A tag along clause gives a shareholder the right to insist that his shares also be sold to a third party to whom the other shareholder proposes to sell his shares, on the same terms and conditions.

3. Restriction further issue of shares, any anti dilution rights, Pre-emptive rights

By these clauses, the Company’s right to issue further shares or raise further capital can be curtailed. Further, pursuant to an anti dilution right, in case the company issues shares to any other person at a price lower than the price at which a shareholder who is party to the Shareholders’ Agreement was issued shares, then the shareholder who is party to the Shareholders’ Agreement has the right to receive such additional shares (at no cost to him) so as to reduce the price per share held by him to the same price as that at which shares were issued to the other person. A pre-emptive right obligates the Company to offer any future shares that may be issued, first to the Shareholder (on a pro rate basis) before offering it to any other party and may allow the shareholder to continue maintaining its shareholding percentage in the Company.

4. Management of the Company

The Shareholders’ Agreement can have clauses on who will manage the Company on a day to day basis, how the MD will be appointed and whether company can change or appoint an MD without concurrence of both parties.

5. Threshold Shareholding

The Shareholders’ agreement can also specify a minimum shareholding that a party must have in order to have all the special rights specified in the shareholders agreement.

6. Matters requiring consent of both parties

The Shareholders’ agreement can also specify matters that will require the consent of both parties in general meeting (eg. change in capital structure of the Company, fresh issue of capital, amendment of memorandum and articles of the Company, change in auditors etc.).

7. Indemnification

The Shareholders’ Agreement may require one of the parties (usually the founders or promoters) and/or the Company to indemnify the investing shareholder against any breach of representations and warranties.

8. Non-compete

Usually promoters/founders will be required to undertake that they will not directly or indirectly engage in or be employed by any party, to carry on similar business as the Company. The period of non-compete is usually a matter of negotiation.

9. Information rights

Usually any investing shareholder will insist on certain financial information being made available to such shareholder periodically by the Company, including balance sheets and profit and loss accounts.

The above are only indicative clauses that may be contained in a shareholders’ agreement. It would be advisable to seek the opinion of your legal counsel in respect of any shareholders’ agreement that you may be intending to execute.

Entrepreneurs Rejoice – Startup Tax (GAAR) decision deferred

Arun Prabhudesai — Tue, 08 May 2012 04:49:32 +0000

This is sure to bring smile on the faces of entrepreneurs. The General Anti-Avoidance Rules (GAAR) which threatened to affect the VC’s, angel investors the most has been deferred by Government for a year.

In the Finance bill, it was announced that Funding of startups could be one of the heads classified as an income and was taxable under (GAAR). GAAR was intended to be introduced from April 1, 2011, but there were lot of gray areas as well as fierce opposition from Industry bodies.

Finance Minister, Pranab Mukherjee, in his speech to the Parliament yesterday proposed to exempt angel investments from the purview of the proposed share premium tax. He said:

It has been proposed in the Finance Bill that any consideration received by a closely held company in excess of the fair market value of its shares would be taxable. Considering the concerns raised by ‘angel’ investors who invest in start-up companies, I propose to provide an enabling provision in the Income Tax Act for exemption to a notified class of investors.

This is sure to come as a major boost to entrepreneurial space which threatened angel investments in India!

[source]

Linkedin Acquires Slideshare for USD 119 Million!

Arun Prabhudesai — Fri, 04 May 2012 03:33:02 +0000

I am extremely happy to hear this – Linkedin has acquired Slideshare for a cool USD 119 million ( Roughly 630 crore at today’s rate). By any means this is one of the biggest startup success stories. Hearty congratulations to Rashmi Sinha, Amit Ranjan & entire team of Slideshare.

The blog post published by Linkedin does not offer much detail, however Rashmi’s post clearly mentions the strategic fit between Linkedin & Slideshare. Also, Slideshare may not be completely merged with Linkedin from Branding perspective. Here is what Rashmi says in her blog post:

So, what does this news mean for you – our dear users? I want to address the question that often comes up with acquisitions. People often worry whether the service they use is going to go away. If not today, then tomorrow. I want to assure you, that will not happen here. The SlideShare you have come to know and love will remain a place where you can continue to upload, share, and find presentations that help you grow professionally.

What does this mean for SlideShare the company? I will continue to run SlideShare and our team will continue to do what we’ve been doing, which is to develop new features and make the site even better. Over time you will see some integrations that take advantage of the great fit between SlideShare and LinkedIn.

You could ask why did we agree to sell? For one, I firmly believe that SlideShare will grow faster with LinkedIn. Second, I have watched as LinkedIn has grown from being a place to share your resume to a much richer site, where you go to keep up with what your professional network is doing and sharing. We like the path they are on, and are excited to join them on this journey.

This acquisition is probably one of the biggest successes in Indian startup Industry – I am sure this will provide a great fillip to entire Indian Startup Ecosystem.

5 famous Startup Incubation Centers in India

Kaushambi — Tue, 27 Mar 2012 15:57:00 +0000

Startup Incubation holds significant importance in a country like India where entrepreneurs by the score are launching new setups and changing the game of business by minutes. For the uninitiated, business incubation programs or centers provide support functions, mentorship and resources to individual entrepreneurs or entrepreneurial setups. This enables them to get all the expert advice and technical guidance that they need to survive for a longer time, unlike most other entrepreneurial ventures that fizzle out within a few months of their launch.

Almost every other prestigious B-school today houses an incubation center so that great ideas can be nurtured from their very source. Currently there are about 100 incubation centers supported by the ISBA which is the apex Indian professional body supporting business incubators. Private incubators are a handful, but gradually growing. These numbers are expected to double within the next two years. Let’s take a look at some of the good business incubation centers in India.

Innovation and Entrepreneurship (SINE), IIT Mumbai,

If you’ve heard of Webaroo, Bhugol GIS and SMSGupshup.com, then you must know that these ventures came into existence because they were nurtured and incubated by SINE – the tech incubator housed at IIT Bombay. ThinkLABS Technosolutions, an educational robotics venture, Myzus Technologies and Elnfinitus are amongst some of the famous businesses that SINE has incubated. These startups have been successful in raising venture capital investment after incubation of upto Rs. 3 crore from the market.

Established in 2004, SINE can incubate an average of 15 companies at a time and has an infrastructure spread over 10,000 sq.ft. They still haven’t opened up to external business incubation because ideas from within IIT just don’t stop flowing! To know more, visit their website.

Technopark Technology Business Incubator (T-TBI), Kerala

Established in 2006 with the support of the Government of Kerala, T-TBI offers fully furnished working spaces spread over 15,000 sq.ft, expert opinions and guidance from the industry, marketing and legal management consultancy and financial assistance.

T-TBI has till date successfully incubated about 60 companies and has had a 92 percent success rate. In early 2011, T-TBI was chosen as the world’s best software incubating company and the first Indian organization to have achieved this status. To know more, visit their website.

Indian Angel Network (IAN)

IAN in an equity based business incubator center that gives priority to ventures in the areas of healthcare, gaming and animation cloud computing, retail, mobile VAS, media and entertainment, alternative energy, education and clean technology. It has been established with the support of the National Science & Technology Entrepreneurship Development Board and the Department of Science & Technology of the Government of India.

In addition to the regular functions of a business incubator, the IAN incubator helps startups to get seed funding and pre angel funding through its tie-up with Small Industries Development Bank of India. The IAN also has strategic alliances with DST supported incubators, corporate, R&D labs and many industry associations.

The IAN incubator is particularly famous for the activities it organizes – from its ‘Open Saturdays’ to angel investors meet to workshops for training entrepreneurs. To know more, visit their website.

Centre for Innovation, Incubation and Entrepreneurship (CIIE), IIM Ahmedabad

A business incubator housed at India’s prime business school simply cannot be left out of the list. Having started incubation initiatives since 2007, CIIE has an interesting perspective on why it doesn’t provide physical space for business incubation. They want entrepreneurs to build their ideas from wherever they are stationed, so that the local economy benefits from its growth.

From the time it started, CIIE has incubated more than 50 companies, only a handful of which were owned by IIM students. CIIE has been incubating businesses in the areas of internet and mobile technology, clean technology, social sector startups and healthcare.

From mentoring clinics to art exhibitions from global warming initiatives to social enterprise funds, CIIE has evolved as a prestigious business incubation centre in India. Some of the CIIE’s incubatees are Colored.by, Biosense, Boond, Croak.it, Flick2Know, Ideophone, amongst a host of others. To know more, visit their website.

AngelPrime

AngelPrime was launched recently in 2011 in Bengaluru by well known names in the Indian tech industry like Bala Parathasarathy, Shripati Acharya and Sanjay Swamy. The areas that AngelPrime aims to incubate in are mobile payments, e-commerce and smartphone / tablet apps. It has already begun incubating a mobile payments company and a smartphone and tablet startup.

Unlike the CIIE, AngelPrime believes in incubating their ventures at their office space so that they can be closely monitored. AngelPrime has an edge in its services because the founders bring their previous corporate networks and experiences into incubating new ventures. To know more, visit their website.

Business incubators play a large role in reducing the gap between new products / services in stages of ideation to their commercial rollout. It also provides an equal platform to all entrepreneurs so that they can create products and services that will benefit all sections of the society.

Latest news about Business Incubators in India:

India’s first public-private partnership (PPP) telecom business incubator called Startup Village is being set up in collaboration by The National Science and Technology Entrepreneurship Development Board (NSTEDB), Department of Science and Technology (DST), Technopark and MobME Wireless, reported ET.
The Ministry of Science and Technology cleared a proposal for setting up a Rs. 36 crore biotechnology business incubation center at the University of Pune called the The Science and Technology (Scitech) Park.
The Hubli-Dharwad Municipal Corporation in the North Karnataka region is planning to open an incubation center at the Aryabhata IT Park in Hubli to attract and hone entrepreneurs in the IT sector from Hubli and Dharwad.
In 2012-13, The Ministry of Science and Technology has proposed to set up a Nano Park near the Bengaluru International Airport (BIA). This will host a nano-incubation center, science and technology-based business incubator, physical infrastructure and other support systems.

8 Categories of Angel Investors

guest — Tue, 28 Feb 2012 04:54:18 +0000

In today’s competitive business world, there are times when you run out of capital funds. The easiest and most convenient source of funding during such times, are the angel investors. This however doesn’t mean that you accept cash from any angel investor. Choosing the right kind of angel investor is also an important consideration.

While there are several kinds of angel investors, they can widely be categorized as –

Return on Investment (ROI) Angels

One thing about ROI angels is that, they invest only when the market is doing well. This is because; such investors are mainly concerned with the financial rewards they will be able to reap given the high-risk investments they make. For the ROI angels each investment is like another significant addition to their already diversified portfolio.

Corporate Angels

These angels are most often former business executives who have either been replaced from large corporations downsized or taken voluntary retirement. While these investors seem to be making investments only for the sake of profitability, they are actually looking for a paid & secured position in the company they are investing in.

High -Tech Angels

Though these investors are less in experience, the investments made by them in modern technology is quite significant. These investors value profitability as much as they value the exhilaration of introducing a novel technology in the market.

Entrepreneurial Angels

These are successful investors who have their own brilliant businesses, which provide them with a steady flow of income for making high-risk investments in start-up companies. While they make all efforts to help entrepreneurs launch their start-ups, they do not actively get involved in the operations of the company.

Core Angels

These are investors with extensive business experience, who have accumulated enormous amount of wealth over extended period of time. One important fact about these investors is that, they usually tend to make high-risk investments in spite of their losses, which adds-up to their diversified portfolio. Core Angels not just make capital investments but also useful knowledge investments.

Professional Angels

Being professionally employed as lawyers, physicians, etc, these angels make investments into companies of their fields. At times, they may invest in several companies simultaneously. Professional angels are extremely valuable for initial capital investments.

Micromanagement Angels

These are considered to be the most serious types of investors. While most of them are born with a silver spoon, most others acquire their wealth through sheer hardwork. These investors usually seek a board position & tend to implicate the business strategies they have incorporated in their own companies into the companies they are investing in.

[This article has been contributed by www.smegetmoney.com – an initiative of SME Networks Pvt Ltd.]

How some start-ups used innovative methods to promote themselves?

Dr Vikram Venkateswaran — Mon, 23 Jan 2012 06:30:26 +0000

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.

Accounting Outsourcing for Startups/SMEs – Answer to Weak Financial Management

guest — Wed, 18 Jan 2012 08:07:04 +0000

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]

Why some startups survive while most fail?

Dr Vikram Venkateswaran — Wed, 18 Jan 2012 04:09:16 +0000

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.