From the Launchpad - Abhaya Poudel

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From the Launchpad - Abhaya Poudel

 

Growth of the entrepreneurial ecosystem

The number of small businesses in the market has grown in the past five years as many graduates have started exploring small-business opportunities instead of working for large corporations. But business grads have to understand that becoming a successful entrepreneur requires that you put in considerable amount of time and deal with many uncertainties. However, it cannot be expected that all startups will succeed. Survival of the fittest is always in play in the startup world, and only those that are able to adapt and excel amidst the changing conditions will succeed. The entrepreneurial ecosystem in Nepal is in its infancy. However, ecosystems of the sort we are seeing here do not emerge everywhere, and the fact that it has in Nepal shows that the overall conditions are favourable for startups. The task right now for the startup community is to make the soil fertile for more startups.

Business incubators

Not everyone who owns a business has an entrepreneurial mindset to make the business boom. Incubator organisations, which foster entrepreneurship, can help in this regard. An incubator is where an entrepreneur can acquire technical skills and market knowledge and develop an understanding of appropriate organisational structures, strategies and systems. The personnel who run incubators maintain an ongoing involvement in the ecosystem, investing their experience as mentors, investors and serial entrepreneurs. They understand the needs of entrepreneurial businesses and can help startups get past stumbling blocks. These organisations are often willing to offer their support to startups at no charge with the expectation that long-term business relationships between the incubator and the startups will emerge in due course. The business plan they create together keeps the entrepreneurs focused—and the entrepreneurs and the incubator need to share an open loop of feedback and insights.

 

Rolling out your idea

Failing to create a detailed business plan while investing in a great startup idea is where many entrepreneurs go wrong. New ventures must be exposed early to the rigours of the market to ensure that entrepreneurs develop toughness and resourcefulness. Their ideas can be very raw, and they might need to be tweaked in order to create the intended outcomes. And instead of trying to work on too many ideas at once, new entrepreneurs should first try to focus on working with one idea at a time. That said, once you’ve developed the right strategies for implementing an idea, you should be willing to take risks to capitalise on the opportunity.

Scaling up

When startups need to scale up, many take a short break to reconsider how they should do things, while others get back in the game quickly. When a business has to scale up, its employees must be ready to handle the change. Meaning, they must all have internalised the new working philosophy the company will be adhering to. One way for an entrepreneur to test for his company’s readiness to adapt to the change would be to step away from managing their business for a while and see if it still operates smoothly. What this means is you need to have created a stable internal control system—which can function by itself without your needing to oversee everything. Because as your business scales up, you’ll be involved in many new challenges that the process brings.

Staying on the cutting edge

You’ll need to constantly innovate as you grow. And even as you innovate, you need to create methods to implement the strategies born of your innovative ideas related to management, branding, marketing and so on. It can take a lot of time and effort to build a vibrant, sustainable business, and without new strategies and ideas, you cannot survive in the market in the long run. You have to innovate also because you’ll inevitably have competition, and if you’re not prepared for them, you might soon find yourself out of business.

Financial-system soundness

For startups, cash is key. Entrepreneurs of course want to spend on revenue-generating activities rather than just incurring costs. But unless they set up robust financial systems early on, it will be hard for them to achieve the cost/benefit ratio they are shooting for. Many firms that want to invest in startups do tend to look for startups with such sound systems as one criterion—besides just the team’s vision, makeup and the team’s central idea. After a startup gets the investment they want, they’ll then need to be extra careful about taking financial decisions. In order to reassure investors that their investments were worth it, proper and regular analyses of aspects such as management for identifying the business’ growth rate must take place.

Policy influence

It is difficult to mention any challenges for startups that have arisen through direct government interference. However, the government can provide the required infrastructure and policy support to help grow the entrepreneurial ecosystem. But if startups start depending on the government too much, bad things happen. That said, the ability of a country to nurture the growth of the startup ecosystem plays a huge role in ensuring that more people start thinking about becoming entrepreneurs.

 

The importance of a healthy ecosystem

It’s difficult for startups to succeed in a milieu where entrepreneurs are not valued for what they do. But entrepreneurs can create an ecosystem in which they support each other and provide positive feedback for what’s being done. An ecosystem in which failure is viewed negatively and in which financial success is resented is not a healthy one. Many of today’s entrepreneurs grew up in a society where they were not encouraged to become businessmen. If they came up with creative ideas, they were not encouraged to follow through on them. Despite this, Nepali entrepreneurs have created their own ecosystem, which is remarkable.

The basics to internalise

Entrepreneurship is not as mysterious and daunting as a lot of people think it to be. That said, an idea can only get you so far. You'll need to not only flesh out your idea, but also have a deep understanding of the various aspects of running a business. Your startup should be ready to scale up when you have a proven product and a proven business model, and expand to new geographies and markets. One of the keys to succeed in business is to ask for help from a mentor who already knows the ropes. A mentor can be very helpful in streamlining business processes for productivity, visibility, and compliance. Remember, a path of slow and steady growth is much more sustainable–and scalable–in the long run. Being patient helps you avoid business traps.

*First Published by the author in M&S VMAG

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Guest Monday, 11 December 2017