How important are processes for a startup?

Processes are important even in a startup. However, many entrepreneurs tend to begin operations without even the basic processes, with the assumption that as they learn the dynamics of the business, processes can be formed. In fact, many entrepreneurs feel that processes are too restrictive and are meant only for larger, complex organizations.

However, process need not be complex. Processes are nothing but a standardized way of doing a particular activity or handling a particular situation. In fact, rather than slowing down an organization, processes actually help the startup become more efficient as the basis of decision making is pre-decided as a process. Once some effort has been put into creating and defining processes, founders or leadership team then does not have to get involved in the day-to-day operational level decision making as these can be easily be delegated to the team and monitored through clear measurable goals, milestones and reviews.

In fact, it is at the beginning of the journey that entrepreneurs are likely to find some time to think through the processes. If the startup starts picking up speed and growing, it is always almost impossible to ‘make’ time to invest in processes as at a growth stage there are too many other tempting aspects of managing growth that seem more important.

When you company is growing is almost always the wrong time to plan for growth. You have to plan for growth to the next level when you are at a level below. Else, you will always be in the operational challenge of managing operations instead of driving growth.

Does having a good office help in the early stages of a company?

In my view, having a decent office does play a very important role in the early stages of a company.

Here are some of my observations on this subject: Working out of home in the initial phases does not help No matter how serious and committed you are to your venture, working out of a ‘non-office environment’ [i.e. home or Cafe Coffee Day type outlet] just cuts down on your productivity. It is not just about inadequate infrastructure and support system, an office environment and the people around you just add to the feeling of being a real company.

It is very difficult to recruit talent without a good office Perhaps rightly so, people create perceptions and first opinions about a company by looking at the office. In our case, we have been particularly lucky to have received the generous support of our ex-bosses who kindly accommodated us in their offices and thus allowed us to attract high-quality talent which perhaps otherwise would have been difficult to do.

Without an office, business plans tend to get restricted by space available Inadequate or no office space and working out of coffee shops does leave you vulnerable to taking decisions based on restrictions of space.

Facebook apps: How do you estimate the market potential?

Revenue projections for a Facebook app should be done like you would for any product, say a refrigerator, or service. Here are a few steps you could consider:
  • You need to first define your target audience, then estimate how many people from your target audience are already active on the platform [e.g. Facebook] and in the geography you are targeting [i.e. the markets you are addressing].
  • Once you have the number, you need to calculate the number of people you CAN reach through your media spends and the activities that are within your control ( e.g – ads in the press or online) and your distribution channels (e.g. if the product/app is bundled with another existing brand or sold through app stores, etc). Remember, just because your app is on Facebook does not  mean that your marketing & advertising channel should also be Facebook. E.g. you could put efforts on PR – get a few TV interviews, press articles, etc. – and you could probably reach a much larger audience with your limited budgets.
  • Then you make some assumptions on how many additional people in your target audience can be reached through means like PR, viral effect, etc.
  • Once you have these numbers, you make assumptions on the percentage of people who are likely to buy/download your app.
  • If your revenue is based on buying/subscriptions, you estimate how many people X how much per download. If your revenue is advertising, you estimate how many impressions, and use existing media rates to estimate your revenues.

Now, to extrapolate this to the future, you make various assumptions on the base target audience size. You can use various media reports on where the target audience numbers are likely to go on the platforms you choose to be on.