Prateek Suri: The mistakes startups should avoid in 2021

According to the latest data provided by the United States Bureau of Labour Statistics, 20 percent of startups fold business during the first two years of operation, with 50 percent of them crumpling within five years.

So how do you successfully launch and run your startup in a period of business uncertainty and economic contraction occasioned by the Covid-19 pandemic?

While some businesses have managed to withstand the financial ravages in 2020, the year 2021 will be a defining year for enterprises established from 2019.

Measurable goals

Prateek Suri, a 31-year-old investor in the smart television market who founded his company six years ago, growing to claim a substantial market share from the likes of Samsung and LG, advises those who invested during the pandemic to identify measurable goals and doing proper research first.

 “For some startups, it has been a baptism of fire because investing during a global crisis needs more tenacity and deep market analysis because consumers change their preferences when their pockets are threatened by fear of the unknown,” he told the Nation.

However, he encourages people to shed off the fear of investing in 2021 and gather the courage to weather through the torrid business environment.

“The biggest mistake you can make is to be afraid of failure because of a pandemic. Failure is key to your success, it helps you learn to break the glass ceiling. 90 percent of life is about how you react after failure. Every step of failure is a great lesson towards success,” remarks Mr Suri, who is the founder and chief executive of Maser.

According to Deacon Hayes, financial expert and founder of Well Kept Wallet, startups begin to fail the moment they launch without a basic plan.

“A startup should map out a business plan, even if it is just one page. It should include how much it costs to operate, how much they anticipate selling, who would buy their product and why,” he says.

Mr Suri cautions entrepreneurs against starting a business without taking time to understand the market, as there's no way to know if you're on the right track unless you're constantly getting feedback from current or prospective customers.

 “It's important to recognise the size of your market, how your customer preferences are expected to change and what your competitors are doing. Building a great and unique product is okay but there is no guarantee it will turn into a successful business. Many businesses find themselves focusing on a market that's simply too small to build a big business in,” he states.

 Protect property

He adds that some businesses fail to follow the legal channels in registering their businesses which later bring them problems with the law and get closed. Also, failing to pick the right brand entity or protect your intellectual property can lead you to serious financial ramifications.

Krish Subramanian, co-founder and chief executive officer of Chargebee warns against partnering with the wrong people when starting a business.

 “A company's first set of investors will make or break it. These individuals place their confidence in the business's potential without having a proof of concept presented to them. Once businesses have undergone their seed funding, then they'll interact with investors who look at the business's growth and sustainability,” he says.

 Hiring employees too soon can also prove to be a costly mistake as the business gets into its first year, especially if they are full-timers.

 “Don’t hire a permanent staff when a part-timer who can work from home is available. It is easier to run a young business with contractual staff who are experienced. When the business stabilizes, don’t hire too many people, just hire the right people,” says Mr Suri.

 For most startups, the key reason they were forced to close shop was pricing their products either too low or too high.

 Freebies

“Many entrepreneurs start with the best of intentions and give things away for free. Be very careful with this, because you don't want to be known as a source of freebies. Ring the cash register first,” says James Chittenden, small business consultant, One Click Advisor. 

 Another source of failure, according to Mr Suri, is launching too soon when all processes are not ready, in a bid to beat some deadlines in getting products to the market.

 “Once you have launched into the public and you start getting clients, ensure that your systems and processes are in place, such as payment terms and process, contracts, communications,” he says.

 He adds that once you set up a proper book keeping system operated by trustworthy people, the next step should be creating a solid marketing plan that involves attracting potential buyers and converting them into paying customers.

“Always make your customers happy. How you treat your clients is critical in their decision to come back to purchase your product or service. If you treat them right, they will bring you even more customers without spending a cent.”

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