- Don’t solve a market problem: A lot of businesses lose sight of being consumer-centric and focus on what they want to provide, rather than what consumers desire. The best way to approach establishing your startup is to first brainstorm about what problems consumers face in your industry and conduct thorough research, and second, solve it. Think about what your skills are ( and thus which industry you would have a comparative advantage in) and then identify problems people face in that particular industry. For example, if you enjoy cooking and baking maybe you can think about starting a business that provides gluten-free meals for people with those respective dietary requirements, as it can be quite hard to find such food in ordinary restaurants and takeout places.
- Lax budgeting: The most important thing for a business in its starting stages is liquidity. Most businesses are forced to cease operations because they burn out all their cash before initial profits start rolling in. Thus it is important to be thrifty and go over budgets with a fine tooth-comb, trying to cut unnecessary costs and make sure that there is a comfortable cash reserve always that can be used to handle day-to-day operations. Ideally, the business must be cash- forward, meaning that you receive contracted services before you have to pay for them, and asset-light, meaning that you are not leveraged with high fixed costs such as machinery and rent that eat into the revenue stream and lead to lower profit margins. There is a special advantage to internet business on both counts- the former is possible through a cashless and secure payment transfer before the product is dispatched, the internet-based model means that the latter is also satisfied and there is no need for real office space.
- Neglecting to outsource: Successful businesses are usually lean, meaning that they freelance and outsource whenever it is possible and profitable to do so, rather than trying to do it inhouse. In this way, they avoid diseconomies of scale such as coordination problems arising from multiple big in-house departments. Outsourcing and collaborating with experts in their fields allows a business to grow with fresh perspectives and ensures that your business does not stagnate.
These three tips for success ensure that your business is built on a robust framework and is likely to succeed. We at Ecom Consulting embody these three lessons- identifying a relevant market problem, advocating careful budgeting and encouraging outsourcing wherever relevant to ensure that your business reaches up to its maximum potential.
Written by Bhavi Shah