Planning to set-up a product based start-up, not sure if you could get enough funds!!! Well this situation is not uncommon to most of us. In recent years, entrepreneurs have come up with a crafty solution to it. Most of the product-based start-ups roll out 3rd party support services to ensure cash flow, with which they support their product based start-ups. This concept looks viable superficially, but we at TricksWork would discourage such practices. But why so??
1)Product based start-up needs a dedicated team
Product based start-up needs a 24*7 dedicated team, a robust R&D and an able management. Moment we roll out support service to sustain; the dedication of the team is divided, R&D takes a back seat and management is overburdened.
2)Support Services have their own deadlines
If you provide 3rd party service support; you must adhere to given deadline. You might start with a dedicated team for you product based start-up and a separate team for support services. But if deadlines are not met, you will have to put your entire team to task. Hence the flow is badly hampered and your employees are overburdened.
3) Failed product and poor service
You are caught in tussle between support services and product based start-up. Each have their own needs. And as an start-up it is not feasible to maintain adequate expertise and resources simultaneously for both. So compromise with one to push another and you end up with a failed product and a unsatisfactory service.
4)Lack of Vision
This would also indicate a lack of vision and confidence in your start-up and hence funds would be hard to come by. When you yourself are not convinced about viability of your product, how can you convince others?
You would be so busy meeting deadlines and optimizing your resources that your product would slip down the priority list and hence you would never realize the full market potential of your product. You will mess thing up.
So, if you are planning to set-up a product based start-up. A support service to sustain your start-up is a bad idea, get rid of it. The next big question that crops up – how do we support our start-up?
6)If you are not getting enough funds, you have not spent enough time
Today, funds are easy to get. If you have an idea, a prototype – that can create the difference. You will get as much as you want. So if you are not getting enough funds, it clearly means ; either your idea is not viable or you have not spent enough time on it. Go back, start with basics and make sure you cover these aspects before you approach any VC for funds-
- Value Proposition: Your product must be adding a value ; i.e; it must be solving a real life problem. So if you are launching a product, first be convinced that your product makes life easier in some way.
- Target Consumer: You must be clear as to what consumer base you are targeting-urban or rural, youth or old etc.
- Delivery Channels: You should primarily focus on two delivery channels- a)Product Distribution Channels b)Advertisement Channels Product Distribution channel is easy to figure out but the real problem is to sync it with your advertisement channels. This vaguely means, can your advertisement channel create enough demand to compliment you Distribution channel and vice-versa. And most critical of all, do you have right advertisement channel to target your consumers.
- Pricing Model: You should have a clear understanding of your revenue streams. Pricing today is much more than just figuring out expenses and deciding cost per unit of your product. Today, you have to give incentives to you buyers to buy more, to buy frequently and to recommend the product to others. For all these, an apt pricing mechanism is very crucial.
Once you have figured out these, you are pretty much ready to deliver your product to consumers. But your start-up vision is still half baked. you ought to include
- Competitive Edge: You must identify who your competitors are and why would consumers prefer you over existing solutions in the market. In the nutshell, your business must have an USP (Unique Selling Proposition).
- Growth Options: You must have a clear vision of what your company would look like 10 years down the line. If you want to make it big, you should start early. You should create enough room to accommodate future expansions and growth.
If you have a vision and a product which objectively satisfies all the above requirement, your start-up will never be short of funds. Stay tuned to TricksWork for our next post on 6 points that can make any start-up successful.