Due to attractive policies laid down by the government, India have recently opened doors for countless opportunities for startup entrepreneurs. (1) The number of startup have increased rapidly over the last few years. (2) Most entrepreneur starts business with idea and passion (3) but eventually forget leadership skills, (4) unable to analyze market, proper funding etc. (5)
However, most of the micro and small businesses today were facing challenges which results closing 90 percent of startup within 5 years. (6) Entrepreneurs suffers from innovation and improvise crisis. (7) Also, political uncertainty (8) and education structure (9) in India becomes one of the barriers for entrepreneurs.
Funding not easy for startups in India as they have to face lots of complicated process. Moreover, recent campaign Startup India, introduced by government in last year have still not disbursed in spite of Rs.10,000 crores sanctioned and managed by the Small Industrial Development Bank of India. (10) There was a sharp decline in registration of new companies of around 50% in 2016 as compared to 2015. (11)
Most of the Indian entrepreneurs were still not focused towards business to business (B2B) instead most of them concentrate on business to customer (B2C). (7) Most of startup failed to understand markets, customers and their buying habits. Also, startups were still under confusion about defining product/pricing strategy for their products. (12) Market/business research analysis were miles away from their business model.
We ask 42 micro and small startups who recently shut their companies due to financial crisis in last year. All of them were hit by the financial crises and was unable to fund sufficient capital to run the organization. 82% of them were running the organization for more than 3 years. 58% of them were employing more than 52 employees each. However, all of them only anticipate profits but they don’t have any strategies for rainy days.
Most of them said that the employees had over reacted on emergency situations instead if they communicate properly, the present situation may be averse. This may be due to the flaws in business model or internal organization structure. Moreover, around 64% had no prior experience in managing stress business situation prior to demonetization.
Anticipating adequate cash flow for business is important as most of the startups are over dependence on single customers. The recent ups and downs in financial market at Indian economy recently made it clear that startups in India fails towards changes in environment and adapting technology. Startups also try to restrict employees to provide responsibility and authority among themselves and practicing inadequate management.
The startups ecosystem is limited to cities as the situation in sub-urban and rural are worst. Moreover, only few of the middle-class families and societies in India are psychologically ready and welcome startups. The basic rule of thumb in starting up business is to have enough liquid cash for at least first six months with a good return on investment strategy.
In spite of hurdles, recent research suggests around 83 percent of Indian workforce would like to be an entrepreneur and out of them 56 percent suggested on leaving present job for their own business. Moreover, around 76 percent of workforce would like to work for startups while 69 percent prefers in working for small or medium organizations. (13)
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