Page 45 - Banking Finance August 2022

ARTICLE

replicating global startups, rather than creating their their hiring processes with utmost care, create
own startup models. In this regard, it is suggested alternative working methods such as work on a
that Indian startups should try to avoid emulating project basis model with expert professionals etc.
existing successful global startup ideas in India
(ix) Ignoring customers - Quite often startup founders
without proper research and understanding of the
have too many things to handle and, in the process,
Indian market.
customers may not even feature in their list of
(ii) Lack of funds- As discussed earlier, most of the priorities. But, when startups are committed to being
startups raise funds from friends & relatives which are customer-centric, their decision-making becomes
not sustainable and cheaper. Therefore, it is easy, their focus gets narrowed down and their
suggested that lending institutions have to be more popularity increases from a word of mouth.
friendly to startups by simplifying procedures and
provide loans on soft terms. Conclusion:
(iii) Lack of focus- The failure is certain when too many Currently, startups are witnessing a golden chapter in the
items of products /services are taken up right at the history of Indian entrepreneurship. In this respect, the
beginning itself. In this context, it is suggested to focus Government acts as a catalyst and bring together the
on only one item of product/service to start with and, synergies of the private sector with the aim of innovating
after gaining sufficient experience in the line, the for India and the world. With hundreds of innovative
other products/services shall be thought of. youngsters choosing to pursue the path of entrepreneurship
(iv) Lack of demand- Entrepreneurs are suggested to instead of joining the multinational corporations and
gain an in-depth understanding of who their government ventures, the business world has witnessed an
customers are and what they feel about their explosion of ground-breaking startups providing solutions to
product/service. Similarly, they should look for new the real problems at a mass level since 2016.
customers via word of mouth before jumping into
creating expensive marketing plans. More While startups experience ample business opportunities in
importantly, it is necessary to establish a relationship the coming days, the Government's initiatives are praise
with the customers. worthy in providing all possible help in respect of non-
financial aspects of promotion and development of startups,
(v) Lack of leadership- Having a good idea is far less
much needs to be done on the part of banks which meet
important than knowing how to lead a brand, a
just 36 per cent of credit needs. There seems to be some
company, and a team. Lack of vision and strong
hesitancy on the part of banks due to their perception of
leadership is another common reason why startups
high risk being associated with lending to startups. But,
fail. Here, it is suggested that entrepreneurs shall
there are good many success stories due to liberal credit
develop a fair understanding of leadership qualities
provided by banks.
through education and training. Also, at the initial
stage, it is a good idea to find a mentor to help the
Added to this, startups provide employment to youths
entrepreneurs to develop leadership skills.
mostly in smaller towns which is one of the priorities of the
(vi) Lack of agility- One of the reasons is not being
Government. In addition, credit guarantee cover is now
adaptive and agile in order to progress. Startups are
raised up to Rs. 5 lakhs. Hence, it is suggested that banks
advised to ensure agility within the organization by
have to create a pool of trained officers to finance startups
practicing continuous learning, having a fluid
and adopt professional approaches in credit appraisal,
workforce, research and development and be willing
follow-up and recovery. Thus, realizing the growing
to let their ideas to change.
importance of startups in the coming years, banks have to
(vii) Lack of business model- The startups should look for change their mindset and be liberal in providing timely and
a foolproof business model carefully to sustain and credit adequate credit to startups. Towards this end, .banks
profit. have a long way to go to be startups friendly.
(viii) Lack of talent & competency- Most times startups
are cash strapped and cannot afford to hire experts. References:
Therefore, the entrepreneurs are suggested to plan Various Sources.
BANKING FINANCE | AUGUST | 2022 | 45