Economics of your Startup


Usually entrepreneurs describe their products & services as they see them. It’s important to describe them from your customers’ point of view. Look the difference between features and benefits of your product/service, and think about them. You need to build features into your product so that you can sell the benefits. You also need to think hard and strategize on what after-sale services you will be giving? Some examples can be delivery, guarantee/warranty, service contracts, support, follow-up, and refund policy.


Identify your targeted customers, their characteristics, and their demographics. The description will be completely different depending on whether you plan to sell directly to customers/end users or to other businesses. If you are planning to sell a consumer product, but want to do it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end consumer and the middleman businesses to which you will sell.


You need to think and carefully answer the following questions for your startups. What products and companies will compete with you? Will they compete with you across the board, or just for certain products, certain customers, or in certain locations? Will you have important indirect competitors? How will your products or services compare with the competition?

You need to honestly think about your product/service weaknesses. Sometimes it is hard to analyze our own weaknesses. Better yet, get some disinterested strangers to assess you. This can be a real eye-opener. And remember that you cannot be all things to all people. In fact, trying to be causes many business failures because efforts become scattered and diluted. You want an honest assessment of your startup’s strong and weak points.

Write to us [] for a FREE Competitor Assessment Template that you can use to plan and structure your startup’s product/service marketing.

Niche & Strategy

Now that you have systematically analyzed your industry, your product, your customers, and the competition, you should have a clear picture of where your company fits into the world. Consistent with your niche, you can outline a strategy for your startup.


Develop your method of setting prices for your product/service. Does your pricing strategy fit with what was revealed in your competitive analysis? For most startups, having the lowest price is not a good policy. It robs you of needed profit margin; customers may not care as much about price as you think; and large competitors can under price you anyway. Usually you will do better to have average prices and compete on quality and service.

Sales Forecast

After you have laid down comprehensive information and plan for your startup in detail, it’s time to attach some numbers to your idea and prepare your sales forecast.  You may want to do two forecasts: 1) a “best guess”, which is what you really expect, and 2) a “worst case” low estimate that you are confident you can reach no matter what happens.

Do keep visiting our Blog for a specific post on Sales Forecast and a Free spreadsheet. 

Startup jugaadh #3 : Les miserables

All startup guys are miserable, well they ought to be. On the lines of the great agriculturists of our nation who till the land for the food we all enjoy, startup guys have a similar job to do. Take a certain input of uncertain quality and convert it into consumables for a definite mass. Its all got to do with a certain conservativeness that most successful entrepreneurs show, use very little of resources and maximize the outputs. [Well, that can also apply to colonist nations, but then that would be a different discussion all together] This of course ends up pushing the limits everything that make a human being human, the social aspect is stretched [Lesser time for friends & family] the financial aspect [Lot less money to spend],and  the brand aspect [Not working for a brand name company is considered bad in some cultures].

All in all, you basically try to be miserable making it look like something that will pay out in the longer term ! It is fair to rationalize it like that, “No pain, no gain”. This same approach is visible in Indian entrepreneurship, its called jugaadh. Lets say you have a broken cycle, in most countries with resources people will possibly reject that and buy something else. In our country, some scrap guy will pick it up refurbish it at his place and sell it for a premium. Now that is being really resourceful, it can be argued that this approach does not scale but it can be the start of something great [like airtel, hero cycles] if thought and done the right way.

The point is that we all want to enjoy the good things, but sometimes they take a back seat and you focus on one goal that may make your reality miserable but you future an interesting proposition. It is all to do with what you want to trade off in your present for your distant future. Best of luck to those who trade in this, add value to this world or you will be chucked out of this race for sure.

Startup Jugaad #2 : Alice in wonderland

Start-ups in today’s world are romanticized–have a look at the latest “Entrepreneur” magazine ad all over the telly and you are convinced a start-up the next big thing! The irony is that they have become motley commodities of varying quality and this has shifted the focus from what really creates value. Let me put this across as an example:

Student X has passed out of the Imperial College of Education [hypothetical IIT] and has not a job due to the current recession [at least a job that does not pay him a huge amount!]. So the alternative is to start his own start-up [based on some very vague idea he had]. Throw in some government grants and over-enthusiastic professors and we have a deadly cocktail of an “All fail” product.

In the above case, we see lots of Alices getting lost in Wonderlands [intricate ones at that!]. Lacking a strong intermediate incubation cell, the above is a blatant waste of time, money and energy for the system at large. In all honesty, most of the ICE students should attempt to bootstrap and spark out something that is self sustaining and, more importantly, a learning lesson. My experience has taught me that good mentoring is essential to succeeding in a very competitive environment. It is not enough to just plan well and execute better. Direction is sometimes more key than the perfection one achieves during implementation.

Its clear with time that the process is sometimes as critical as the end result; neglect any one of these and you may not be in a position to enjoy the fruits of your hard work.

Marketing Plan for Your Startup


Even when you have brilliant product and/or service, your startup cannot succeed without effective marketing. And this begins with systematic research and careful planning. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the market planning process as your opportunity to uncover data and to question your marketing efforts. Your time & efforts will be well spent.

There are two kinds of market research: primary and secondary. Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in  libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies. There are more online sources than you could possibly use. Trade associations and trade publications often have excellent industry-specific data.

Primary research means gathering your own data. For example, you could do your own young crowd count at a proposed café, use the yellow pages to identify competitors, and do surveys or focus-group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research themselves. In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important sales projection.

Write to us [] for a FREE Marketing Plan Template that you can use to plan and structure your startup’s product/service marketing.

Managing Finances of your Startup

Unless your rich dad is bankrolling your entire startup without concern for what and how you spend, you need to keep your expenditures under control, and plan your finances well right from the day zero. This is one of the most important Mantra to make your startup successful, especially for the Bootstrappers.

An alarmingly high percentage of startup closures are due to poor financial management. If your business is not going to be profitable, it won’t survive. You need to have a sound financial budget for projected expenses, startup costs, sales, revenue, profits, etc. Financial management is actually not too difficult if you are using the right set of tools, but is one of the most important factors for success of any startup.

You need to spend time on thinking about the optimal financial management in the current planning process of your startup, which will make it ready to take advantage of opportunities as they come together. I will recommend that as the founder of your startup,  it will be in your best interest to learn and be comfortable with numbers. Believe me, no part of financial management is rocket science, and you can easily learn to understand how each aspect of your financial plan affects your startup, which will allow you to quickly find optimal solutions to increase profitability.

Write to us [] for a FREE Financial Management spreadsheet that you can use to plan and structure your startup’s financial cost projections.

Startup Speak: GREEN GOLD

Entrepreneur: Mr. Kamlesh Hotchandani

Startup: GREEN GOLD | Year Founded: 2009 | E-mail:

After 10 years of experience in service industries, my Sindhi soul still craved for a worthwhile business idea. While searching for potential businesses I came across Bamboo House India and from there the concept took off to be India’s largest supplier of green products.

Experience as a Startup was initially filled with a lot of excitement simply because you have some funds and you are settling things. My phase of excitement lasted for 4 months when I had invested all my initial money. From the 5th month onwards, dryness started to creep in and I started to look out for a low cost model of doing business. My first retail outlet had a monthly expenditure of about 12k which I managed to bring it down to 5.5k per month by relocating to a smaller place.

I also changed my business model from a retail outlet to channel development. I did this to utilize existing market resources. Building good will as a retail outlet takes time. Therefore I thought it will be best to utilize the good will of existing retailers. There were retailers interested to buy green furniture from me and in return I offered them monopoly within their local market. Now I make one dealer per Mumbai suburban station. I also promote my products through interior designers.

I must mention that entrepreneurship is a rough road. I do not recommend anyone to walk alone on it. You must a team of passionate people to drive through this road less travelled. It is easy to get de-motivated and give up. I would have done better if I had a team. Currently I am searching for freelance training jobs to financially support my business and may be my family.

 Frankly, I don’t know if I am going to survive as an entrepreneur but I will always have a satisfaction that I tried and failed, anytime better than not trying. 

Startup Jugaad #1: The A-team

I would count as a Lean startup guy ! Start cheap and iterate real quick. So to help so many fellow entrepreneurs out there, a new series of blog posts on how you can glue together your merry band of men[or women] to create something new.

This article focuses on how people network, create teams which go on to solve problems [and form startups in the process]. My first startup kwippy [a micro-blogging venture] started when I was working at slideshare, exciting times when twitter was brand new and micro-blogging had just started. My A-team was a group of slideshare guys [Lets call the other players M, K, S] who were interested in creating something new to let out all the workplace frustrations. That was how it started for me, and well we did [for sometime ;)] ! Lets outline the various ways people get together or you can get together with people who can be a part of your startup team

  • I do not have numbers, but your office place is probably the best place to recruit for you team ! Nothing validates someone more than their workplace performance ! Though you need to be careful not to rub your employers the wrong way.
  • Next in line is family, if you have talented people in your house then please go ahead and start working on it asap. Why waste time if it is all right at your doorsteps.
  • Meetups and conference, it will all come down to networking. So if the above 2 options do not seem to work, start mailing up people whom you want to work with !
  • Wait for something to happen ! I have seen this approach work as well, lets call it the destiny approach. Some people wait out their lifetimes, some get luckier before it all ends.

So now you have 4 easy ways of creating you super startup team, so now comes what you want to build. That is less of an issue if you have the right team, as ideas are cheap. So get some social capital and get that train moving !

Evaluate Your Startup Idea

For an idea to become a profitable business opportunity, it should be evaluated, both within your current group and experts. I am writing about five major questions to ask while evaluating your business idea, though there can be several more addressing wide array of concerns in order to create a foolproof plan.

1. Targeted Market Segment

You need to identify important problems of the consumers that your business intends to target, and think about the value they will gain. It is important to focus on customer’s needs rather than the attributes of the product/service planned. The market need has to be carefully assessed. “Is there a market segment that you can target by offering clear and compelling benefits at a price the targeted customer is willing to pay?” The answer to this question will help you identify the market segment you are trying to enter. The segment may be described in terms of demographic, geographic, or lifestyle factors.

2. Business Model

You have to clearly identify how you intend to solve the customer’s problem. This will include a detailed product description and overview of how it is going to be produced and delivered to the target customers. Think about developing and employing superior organizational processes, capabilities and resources as compared to your competitors. Your business model will clearly identify the economic viability and the profitability of your startup.

3. Market Size

Ponder over your market size and share. Think about who will buy your products beyond your family and close friends. You have to figure out a way to convince your target customers to buy your product. Also figure out a way if you can reach out to a different segment of customers at the same time. This will also help you realise the kind of investment you require to run your startup, and then you have to plan for raising finance.

4. Maintaining Niche and Protecting your Business

You will have to constantly think about how are you going to protect your business from other existing businesses in your domain and possible new entrants. There has to be some differentiating strength that gives you an advantage. business strangths can be as varied as low-cost structure, superior and/or innovative product quality, dedicated channel, or proprietary elements such as patents, copyrights etc. Also focus on building relationship within your domain. the number and quality of contacts up and down the value chain is an important determinant of eventual business success.

5. What’s in for you?

The business should make it worth to be you part of it. it should be a startup you are proud running.Any startup that gives you back your money within three years is good. if it can within one year, its brilliant.

We at Stratessence regularly sit with budding entrepreneurs over coffee and evaluate their business ideas. If you are interested to have an informal chat session with us [sometimes it runs for 3 hours, few mugs of coffee, and several sheets of paper used], write to us at . And yes, we don’t charge you anything!

Startup DNA : Do you have it in you?

We all talk about startups and how they foster innovation. We discuss how a team comes together and creates value out of nothing giving back immense rewards to the end users and investors whenever successful. But is there a startup gene ? Are some people more tuned to starting new [and successful] venture as compared to other people. Here, we cannot provide any empirical data regarding this, but we can surely outline certain traits in any successful serial entrepreneur.

High risk appetite

One interesting example is Niki Lauda, who is one of the greatest living F1 racer. He drove F1 in an era when driver safety was not the top most priority, he went on to build 2 airlines ! This can be said about a lot of drivers who have gone on to lead very successful business careers.

Open to new ideas

Richard Branson is the easiest example here, someone who has his finger in nearly everything that you can think of ! He now runs an F1 team with uses the best of CFD technology to minimize wind tunnel testing leading to cheaper car development. Now that is someone who is willing to listen and tread where others will not dare to.

High efficiency

Time and its usage is paramount in the success of any organization, one needs to work on multiple things and yet manage to achieve optimal results in all of them. It is a challenge, which all successful entrepreneurs seem to be enabled for.


Well not everyone is Steve Jobs, compromises are made far to often than most entrepreneurs want to admit later when they succeed. Compromise is a strong word indeed, but highlights the fact that somethings like personal life or alternatively health does take a backseat when one is driven to push all limits.

These were some clear traits that came out when I have got the opportunity to work with some really smart people ! What has your experience been, do comment here.

6 Unexpected Startup Lessons

Guest Post by: Lisa Hodges

I was hesitant to write another in a long string of “_ Number of ideas for your startup” posts, but then I decided that I am always hungry for more.  Hopefully there are some new insights that will be useful for you if you can anticipate them.
1.    How to handle and (more importantly) work with your competitors.
Depending on your business (especially if it’s service-based), your relationship with competitors will be much more nuanced than a simple to-the-death competition.  Learning from them is a source of free advice, since they are already established players in the field.  Also, differentiating yourself from their offerings is a great way to hone your ESP.  Many service firms are also open to sharing projects, outsourcing portions of them, profit sharing, knowledge sharing, etc.  Don’t count out these rare opportunities for business.
Many of our initial clients were considered too small or outside of the range of several of our competing firms, so they were passed on to us.  During the crucial first six months, these “leftovers” brought in needed money, developed our client base, and allowed us to  smooth the kinks in our client processes.

2.    Unexpected legal hassles.
I trusted that the advisers we had hired (on recommendations from others) were up to date on complicated issues, such as foreign-national partnership rights and sales tax registration.  Misinformation from them led to a lot of trouble down the road.  Always double check with a second opinion, and better yet, learn the laws yourself to avoid this.

3.    How a partnership will affect your friendship.
I cannot stress this enough.  First, you will be spending more time with this person than with your family members or friends.  Moreover, this time will be spent under extreme duress with financial and personal ambitions on the line.  I learned a lot about myself in those situations, and not all of it was good.  The same will be true for both you and your partner.
You can’t prevent all conflict, but what you CAN control are expectations and vision at the beginning of your venture.  Ideally, you and your partner should have the same goals and vision for the company.  Lay these out explicitly on paper- defining these through conversation can hide underlying misunderstandings.  Even if you both have different motivations for entering into the entrepreneurship, the end-goals should match.
Also, you should have complementary skill-sets.  This will help you avoid grudges over who plays which role.  These roles should also be clearly defined on paper.  When things get tense during a stretched financial period, these definitions are a great way to determine who the ultimate decision lies with.

4.    The company will change directions.
The first challenge is learning when it is time to change directions, and the second is communicating that clearly.  This is important both for you and for your customers.
Joint Leap started out as a typical web development company for NGO’s and SME’s.  We were afraid to limit ourselves to just NGO’s, and we thought web development and social media would be sufficient offerings.  It turns out we were really good at working with NGO’s, and focusing on them became our strength. Also, the value of what we could offer stretched far beyond website building.
If you are good at listening to your customers, they’ll tell you when you should change directions.

5.    Hybrid structures mean underlying conflicting motivations.
If you are planning to start a hybrid (part non- and part for-profit entities) you probably think you understand this already, but it will come up more often than you think. The way nonprofits and companies make decisions is very different, which makes it hard to determine the basis on which you make decisions.  We decided early on that the nonprofit would never sacrifice its values or decisions for the business, which was often a challenge.  Everything from hiring to deciding which projects to take on became subject to both a business and a moral debate.

6.    Your role when the company is getting started will be drastically different from your role when the company is established.
When you’re starting up a company, all of your energy goes into that.  Your stated role can be what you want, but in reality you’re selling all the time, marketing all the time, and working out all the essential business processes.  As much as I might have complained about having to complete all the menial tasks (running down the street in 100+ degree weather only to desperately search for the Hindi words for “6 copies please?”), there is a certain high you get from doing everything yourself.  Every decision is major, every day a challenge.
When the company became better established, I shifted to doing marketing and sales as well as filling a gap in our organization by taking on some project management.  Definitely less sexy.

The time comes when you have to make a decision- stay and accept your new role, or decide it’s time to move on.