04-05-2024
5 decisions many a start-up entrepreneur miss …
by Rajesh Nair
In a recent interview a popular management behavioural scientist commented that the happiest moment in the lives of entrepreneurs is the time when they start their businesses. The start-up phase is the ‘romantic’ era of their lives. A phase when there is bliss in their minds, smile on their lips and the optimistic zest – Nothing can go wrong tonight – not on my watch!
As a keen entrepreneurship observer myself, I see them undoubtedly confident during these days. While I applaud and enjoy the vicarious pleasure, I also lament when I see them repeating the same bloopers like many of their predecessors and perhaps many of their successors. So, here are the five questions, which I think are common pitfalls and can often trigger doom or at least big temporary setbacks …
Revenue Decisions: Every idea is a great idea if it has potential to add value to a potential customer and has someone ready to pay for it. It requires looking beyond the excitement of the idea and making sure that you moot and debate endlessly, the multiple revenue models and more importantly demark a clear sustainable long term monetization of your idea.
Relationship Decisions -This is especially important for ventures which have more than one founder. A team of friends from college, a spouses’ team, a team of siblings often forget to delineate how their relationships will pan out into roles and responsibilities in the organizations. It is not always as easy as cherry picking CXO titles for each other. One must take into cognizance what skills and competencies do each of them bring onto the table.
Role Decisions – Taking the relationship decisions forward, a key concern for the start-ups should be how to delegate and distribute work as they grow. Organization structure is not a corporate jargon but a great tool and logical mechanism on how you can allocate work across and avoid the ‘I can do it all’ trap of the founder. Ability to delegate will give you a platform to grow.
Remuneration Decisions – This is a clincher. How much salary should you pay yourself? How much should each co-founder get? And how much salary should you pay to the others? Sometimes, this decision is governed more by the inflow of money than anything else. There are no formulas but the thumb rule is that stock options, bonuses and hikes have to be aligned and pegged to the growth trajectory and road map of the organisations.
Returns Decisions -As you grow your start-ups, the focus should also be on revenue and returns management and not just revenue generation. There are important questions related to expansion , capital plough back , expenses or just pure saving for the rainy day – that need to be taken and addressed. Finance is not just grouchy boring numbers but the lifeline of your organisation.
Answering these questions don’t by themselves guarantee a sustainable economic structure, but will ensure that you don’t fall prey to some ‘top of the tree’ glitches !
