Importance of Staying On: What start-ups in big cities can learn from businesses in Middle India

Between starting and growing, entrepreneurs often confront a crucial, rather non-glamorous phase called STAYING. It does not get as much prominence in entrepreneur and investor talk as starting, raising [funds] or exiting, but it’s perhaps the most important and the most difficult phase of all. Young people starting businesses in our big cities need to learn what entrepreneurs in Middle India already practice.

Ravi Kiran
Published: 25, May 2012

As a child, I used to wonder where mosquitoes in winter hide, why fish keep swimming, how birds learn to fly and other such 'un-natural' occurrences. After a career in marketing & communications for over 20 years, building and running businesses of excellent sizes and in many a geography, hiring and training dozens of successful managers, I continue to be aggressively curious about beings and things. In 2011, I co-founded Friends of Ambition, a Business Growth Platform for Middle India. It works with growth-minded businesses in Middle India and helps them professionalize their operations, build internal capability and become agile. Our focus on Middle India [a.k.a Tier 2 towns] stems from a strong conviction that the next several decades of explosive business growth in India will come from that geography. As I often find myself in cities and towns I might have only heard of just a few months ago, meet business owners there and hear their stories, dreams and challenges, I feel a sense of elation and sadness, sometimes simultaneously. This blog is a chronicle of my experiences in Middle India - mostly gleaned from real life encounters with business owners, their influencers and well wishers.

I meet two very different kinds of entrepreneurs and firms these days.

In Middle India, I meet promoters who have built a business over a decade or longer to come to a sustainable mid-scale position, very often in partnership with family members or extended family members and sometimes all alone. Their business today has a turnover of multiple of tens of crore rupees and has created dozens of jobs. The promoter has a decent life, has a nice house and a few cars, and is actively involved in some sort of a local association.

In big cities, I meet people who have an idea or have just started a business, quite often straight out of college or after a few years of working. These people want to build a business, along with some friends from college or ex-colleagues and are often looking for some seed funding to get started and build some traction in business. Many of them have a sincere goal of solving a customer pain, building a scalable business and creating value for the team and for the society.

There’s no doubt that we need both types of businesses and entrepreneurs, but there’s a statistic that I often hear with respect to start-ups [mostly in big cities] that gets me thinking – that over 95% starts-ups shut shop within 30 months of starting. Now, I am not sure where this number came from and whether this is a researched and verified statistic, or even whether this is accurate, but the fact that many people seem to believe in it, is good enough from the point of view of food for thought. While I haven’t heard a similar statistic in Middle India, something tells me the number is much smaller.

What is it that makes start-up promoters in big cities [which is perhaps where our new age start-up activity is concentrated] shut down a business they started with some much dreams in their eyes only a few quarters, sometimes, months ago?

While there may be many reasons [including that’s the nature of business, I am told], I cannot help but contrast the two types of entrepreneurs on one dimension of promoter approach to the enterprise.

The three most exciting events in the big-city start-up promoter’s life appears to be starting-up, raising funds and exiting. This is what a lot of start-up and VC media write about and a lot of people in the start-up ecosystem talk about. Many start-ups look at the Silicon Valley as a role model and fondly refer to it simply as ‘the valley’. They have been tutored to make ‘elevator pitches’, think of various types of the ‘addressable market’, create a ‘plan B’, learn to time a ‘pivot’ and provide ‘exit options’ for the investors. I am sure these are all important dimensions in business and every entrepreneur must learn about them, but sometimes I feel they are not tutored some other business basics.

One of those basics is developing an ability to ‘stay’ in business, something I find in much better supply in the entrepreneur in Middle India. The fact is starting, raising [funds] and exiting may appear glamorous and worthy of story material, but staying requires a different kind of attitude and skill. It’s a mindset and a 'heartset' thing, if you will.

Is it possible that the entrepreneur in Middle India and his counterpart in the big city enter business for different reasons and against different contexts? Is it that they have different support systems? Is it that they are burdened with different performance pressures, probably because of infusion of outside risk capital? Is it because when one of the founders of a business, often a friend, walks out, the others lose interest and get dejected? Or is it because the formal job market acts as a failure cushion that encourages the big city entrepreneur to both start and stop?

Whatever the reason, I feel our entrepreneurs need to learn that starting and exiting are events, while staying is a process. Events are usually exciting, processes can be drab. But it’s the staying that builds a business, no matter how important the events may be. Staying has to deal with getting customers, creating value for them, getting paid that value, hiring smart people, training and growing them and allowing them to excel, developing and managing the vendor partners, keeping an eye on rivals and how well they are creating value for the customers and many such rather ‘boring’ things. These are not start-up issues, they are business issues. A start-up cannot remain a start-up forever; it has to become a ‘business’ sooner or later.

Many young people I meet hold ‘serial entrepreneurs’ in high regard, and want to become one themselves. This means often they are thinking of exiting even before they have created a robust, sustainable business. Sometimes they sell their business to another, quite often some simply walk out, apparently out of a disagreement with other founders on the ‘strategic vision for the company’. Anyone who has exited a fledgling promoter driven business can put ‘serial entrepreneur’ status on his bio and let’s face it, it does sound quite cool to wear that label. Unfortunately, many real serial entrepreneurs I know of, have first become successful entrepreneurs, built sustainability, built teams, a strong financial base and then have decided to start something else. Moral of the story: you need to be successful first, and then try to serialise your success. Serialising ‘starting’ is not an accomplishment.

Maybe one of the other reasons why young promoters find it easy to move out of a business in our big cities or shut it down completely is our vastly amplified willingness to tolerate and indeed encourage failure? It is difficult to argue about failure’s role in teaching us important lessons in life and business, but have we come to glamorize failure and make it look cool on the bio? Are our young people thinking ‘if you don’t fail how you can call yourself an entrepreneur’? If it is true, and I hope it is not, are they being casual about business and is that why they find it difficult to stay?

My colleague Suhail Kazmi often tells us something his former boss Yes Bank’s founder and CEO Rana Kapoor used to tell his team, “Failure isn’t an option”. An entrepreneur in Jaipur, who runs a ‘modest 60 Cr’ turnover business, and who I met last year told me he tasted success by taking himself and his business to ‘a point of no return’, by selling or mortgaging, ‘everything I had’, persuading his wife to drop a meal a day, getting his younger child, a daughter, to wear re-stitched clothes of her elder brother, and making many other sacrifices, so they can all survive a bit longer and give the business a chance. That’s staying.

From Shashank Garg of InfoCepts in Nagpur, Sujoy Gupta of Samraat Group in Nashik to Harish Babu of Impresario in Kochi and dozens of other entrepreneurs in Middle India my partners and I come across, we hear of an intention and an aggressive goal to grow and create value for customers and employees, not to exit.

These are people who are building to build, not to sell. That makes them stay.

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