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Expanding your Business into the Indian Marketplace

Expanding your Business into the Indian Marketplace

Expanding your Business into the Indian Marketplace

  December 3, 2019
 

“Going global” are two words every entrepreneur wants to say about their business. For small startups and emerging businesses, expanding globally brings unprecedented challenges that will tax the entire organization from the top down. The business must continue operations in their home country, while somehow diverting resources to expanding without any interruptions. The costs are high, but the rewards in terms of revenue, global awareness, and business glory are delightfully sweet. Below are tips to expanding your business into the Indian marketplace, which will give you valuable insight into what to expect as your business expands.

Research Indian Culture: To be successful with the expansion you’ll need to know your audience inside and out. For expanding your business into India, this means understanding the nuances of the Indian culture. You need to perform a market segmentation analysis to determine how your product or service will fit into the local market. For instance, you need to know approximately 38% of the people in India live on less than $1/day. There are still obstacles with a social and cultural acceptance of Western products, and penetration into rural areas can be difficult because of slow infrastructure growth. This also means you need to perform a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats analysis). It’s vital you understand the customer because mistakes can be unforgiving.

Learn Regional Differences: It’s recommended to not think of India as a single entity comprised of a homogenous people like Australia. India’s constitution recognizes over 22 different languages, all with regional dialects and slang. It’s best to think of India as a collection of region states, each with their own customs and cultures which determine their perception of the world. Communication has greatly increased the similarities between the different regions, but there are still many differences the people of India recognize. It’s recommended to develop a plan for each specific region of India in relation to the market segment you choose to approach.

Select Indian Executives: We’re adding this because you may not want foreigners to run the Indian branch. It’s highly recommended to not launch a global expansion with only executives from the parent company leading the way. We recommend finding an executive who has a deep domain experience in the market to help build and mentor the leader who will operate in the Indian headquarters. Allowing your business to hit the ground running, quickly validate any assumptions, and push through any last-minute unforeseen obstacles.

Setup an Indian Headquarters: It’s highly inadvisable to build a local team from scratch since there are many unspoken rules and practices for somebody outside the country to understand. This means finding the appropriate partners and agents within each region who will best represent your company and provide insight into the hidden etiquettes and practices of the locality. By building a headquarters in India you’ll promote local brand knowledge, goodwill with the Indian government because you’re creating jobs for their citizens, and a deep understanding of the marketplace which will inevitably help with future product launches.

This information will put you on the right path towards tapping into the vast Indian market place. It won’t be easy, and you have serious work ahead in order to utilize the rising wealthy middle class, but the rewards will be well worth the effort.  If you believe your startup is poised to be the next Indian household name, reach out to us. At the Tandon Group we’ve partnered with and invested in dozens of companies over the last two decades and have met with massive success along the way. We’d love to be your partner for the road ahead.

Tandon GroupExpanding your Business into the Indian Marketplace

Selecting the Right Venture Capital Firm for your Startup

Expanding your Business into the Indian Marketplace

Selecting the Right Venture Capital Firm for your Startup

  November 26, 2019
 

When looking to raise funding, there are many factors you need to consider before choosing a venture capitalist partner. Many great startups have been thrown off course by choosing an investor for the money and not for the other assets they bring to the table. While capital is important, it’s only a small part of startup success. That being said, here’s a list of things you need to consider before choosing an investor (or group of investors):

  • Availability: Knowing how many companies a firm is currently invested in can give you a better idea of how much time they’re going to be able to devote to you and your business. Ask the venture capitalist directly how much time they anticipate devoting to your startup each month. You don’t want to get into a situation where you have either an overbearing investor or one who isn’t involved whatsoever in the operations of the company. Most startups need to find a “happy medium” where they get the advice they need but also have the freedom to operate the business in the same manner that brought them success up until now.
  • Connections: Most startups don’t raise capital just one time. Partnering with a venture capital firm that can introduce you to future funding options is something you want to think about from the outset. Look into their funding history and see what their past funding rounds have been like. How were they structured? Who did they bring on-board for additional capital? A semi-celebrity venture capitalist might have more overall connections but a lesser-known investor might have more relevant connections in your industry. A great question to ask while meeting with investors is, “who do you know that can help us grow this company faster?”
  • Cultural Fit: Do you have the same values, ethics, and morals as the venture capitalist you’re speaking with? If there’s a clash of fundamental beliefs between you and your funding partner(s) there will inevitably be larger problems down the road. Decisions can become extremely difficult when you put yourself in the shoes of your investor. There’s a tendency for all investors to be more shortsighted than company founders. Short-term focus on ROI can sometimes mean the death of a promising startup. If Facebook had started charging customers for access or started advertising sooner, we might not be talking about them as a global superpower like we do today.
  • Integrity: Over the last few weeks, there have been widespread stories about sexual harassment and gender inequality in the venture capitalist community. While it’s disheartening to see this kind of behavior, it’s also a part of human nature. There are always going to the unethical and untrustworthy people conducting business in the world. It’s important that you do background research about each individual that manages a venture capitalist firm. Do they have a history of unprofessional behavior? Taking the time to do this could save your startup from an embarrassing scandal or expensive legal trouble in the future.
  • Intelligence: Emotional intelligence is harder to quantify than other factors on this list but it’s just as important as the rest. You should do your best to find out how a particular venture capitalist firm handled emotional situations in the past. Whether it’s replacing executives, firing ineffective employees, or any other event that causes high tension, a venture capitalist’s ability to communicate and understand the situation is paramount. The most effective course of action for a startup is to talk with previous company founders and get their opinion on the firm’s emotional intelligence.
  • Knowledge: Almost all venture capital firms have their areas of expertise. Usually, it’s a certain industry or group of industries. For example, at Tandon Group we specialize in the EMS, IT, healthcare, defense, and consumer industries. We feel that we have the highest chance of success when we stick to our domain of expertise. Other VC firms might specialize in industries like fintech, cryptocurrency, or any other number of specialized industries. While knowledge of the industry is extremely important, it’s only the starting point for finding your ideal venture capital partner.
  • Location: It’s common practice for venture capital firms to set up funds that are specifically used for different geographical areas across the globe. Make sure you do your research to ensure you’re talking to someone who’s interested in investing where your startup is headquartered. This isn’t always a deal-breaker but many investors feel more comfortable when they invest in companies that operate where they’re familiar. As an example, the Tandon Group has offices in San Jose, California, and Mumbai, India. While we’re open to investment pitches from all across the globe, we put a special precedent on companies that are headquartered in either of our locations. It gives us the ability to provide guidance and work directly with company founders.
  • Performance: It’s a common saying that success breeds success. That being said, how much success has the venture capital firm you’re considering seen in the past? Some firms prefer a widespread approach, investing in many companies, hoping for a few big successes. Other venture capitalist companies take a more exclusive approach,  working hand-in-hand with each company they invest in. Either way, these firms are going to have past successes and failures. It’s in your best interest to know about them. At Tandon Group we’re proud to say we have a large portfolio of successful investments and one of the largest mergers and acquisition deals in Indian consumer internet history.

If you’re a startup founder looking for funding, the Tandon group is always open to hearing promising investment opportunities. If you work in any of our areas of expertise (mentioned at the beginning of this article) you can contact us to discuss potential investments. If you’re already apart of a successful startup and you’re looking to expand your business offerings to the Indian market we’re also interested in speaking with you. We have 40+ years of business expertise in the Indian market and are perhaps the best company to partner with if you’re looking to grow there.

Tandon GroupSelecting the Right Venture Capital Firm for your Startup

India is Now the Second Largest Smartphone Consumer

Expanding your Business into the Indian Marketplace

India is Now the Second Largest Smartphone Consumer

  November 19, 2019
 

How did India become the second-largest smartphone user in the world, second only to China? The answer, simply put, is widespread access to economically priced smartphones and cheap internet plans. Indians can now purchase decent mobile devices for just $20, which means that even the estimated 200 million Indian citizens who live without electricity can connect online. In the year 2000, India had just 10 million internet users, according to CNN. That number skyrocketed to 462 million by 2017. [1]

What caused such a monumental leap? First and foremost, there was a constant decline in smartphone prices, fueled by fierce competition among mobile developers. In 2016, an Indian company called Ringing Bells launched the Freedom 251, dubbed the “world’s cheapest smartphone”. With a 4-inch display screen and a design reminiscent of an iPhone 4, the device costs just $3.60. The website selling the phones crashed on opening day due to demand. However, the country’s best selling devices are mid-range units priced at around 4,000 rupees, or about $60, still low by US standards. [2]

In 2016, India’s most wealthy man, Mukesh Ambani, launched an initiative that would cause wireless usage data to soar to unprecedented numbers in just one year. The founder of Reliance, India’s largest company, Ambani unveiled a new network called Jio, aiming to provide 4G data services all across India. Remarkably, Reliance designated a whopping 20 billion dollars toward the project, building 45,000 mobile towers in just 6 months. Then, in an effort to jump-start the network and entice more consumers to come online, Jio offered 6 months of free 4G data service. Subsequently, the number of Jio subscribers increased by 10 in just one year, to an ~160 million in December 2017.

Number One in Mobile Data: In just one year, India went from 155th place in the list of countries with the most mobile data usage to number one. The mobile consumption revolution will do much more than simply allow more Indians to create Facebook profiles and connect with each other on WhatsApp. Mobile phone use will influence many other sectors, including the digital commerce market, and digital payments. Businesses small and large will be able to reach more consumers through online advertising and pull in larger profits through Internet sales. The digital payments sector is expected to climb to $500 billion by 2020. [3]

Number One in App Downloads: India is also now the world leader in app downloads, generating $2.7 billion in global app revenues. According to the State of App Marketing in India report, India had over 1 billion app installs, 4 billion apps open, 950 apps, $400 million in-app revenue, and 40 million retargeting conversions from January 2017 to January 2018. However, there’s room for improvement in India’s app longevity rate: it’s estimated that 32% of installed apps are deleted with 30 days. [4]

Effects of the Mobile Revolution

The mobile consumer revolution in India could also have a dramatic effect on India’s population in the education, social, and medical fields. Educational apps marketed to children have the potential to foment literacy and encourage learning. Language learning apps may help Indians communicate with others and succeed in both university and business settings. Healthcare apps, now growing in popularity in India, allow consumers to compare the prices of medicine. This is extremely helpful in a country in which citizens must shoulder most of their own healthcare costs. Many hope to see new innovations in technology arise from India’s smartphone boom, which could be shared with the rest of the world, and subsequently help millions of Indians achieve greater financial stability.

Smartphone Manufacturing in India

According to our company Syrma Technology, India’s smartphone market has drastically changed over the past few years. While most phones are currently only assembled in India and not manufactured, government initiatives, such as the National Policy on Electronics, have encouraged global manufacturers to produce phones in India. These incentives include new de-licensing and deregulation measures to eliminate red tape and other bureaucratic roadblocks to increase speed and transparency for foreign-based companies looking to invest. As a result, there was a sharp increase in the total number of smartphone manufacturing facilities in India, which reached almost 50, with a total output of 180 million units, this year.

Companies, like Foxconn and Wistron, have already set up manufacturing and assembling plants in India. Apple is even manufacturing older iPhones in India, and Samsung recently created the world’s largest smartphone assembly plant in the country. By 2020, this new factory will double Samsung’s current smartphone manufacturing capacity of 67 million to 120 million. Other smartphone companies, like Lava and Micromax, have also been making phones in India. Nokia will soon manufacture phone components in India as well.

Looking for angel investment? Contact Tandon Group at info@tandongroup.com to be considered as a candidate for our investment portfolio.

Tandon GroupIndia is Now the Second Largest Smartphone Consumer

Early Origins of Tandon Group’s Manufacturing Excellence

Expanding your Business into the Indian Marketplace

Early Origins of Tandon Group’s Manufacturing Excellence

  October 15, 2019
 

Before fledging Tandon Magnetics could gain prominence as an exporter of key components IBM would incorporate into their pioneering floppy disk drives, founder M.L. (Manny) Tandon was faced with two significant challenges. The first early problem was sustaining stable, dedicated workforce.

During the mid-1970s, entry-level assembly workers, males in particular, among India’s handful of electronics manufacturers were quick to hop from town to city in search of other career options. After noticing the costs associated with the high turnover, namely constant training of replacements, were gnawing at his bottom line, Manny turned to what at that time was considered a radical solution–avoiding hiring men in favor of a mostly female workforce.

Indian culture frowned upon young unmarried women leaving their households–or even independently taking nearby jobs on their own. But Manny recognized an opportunity to capitalize upon an untapped pool of industrial talent. Besides delivering a strong work ethic and long–term company loyalty, the all–female production floor proved to offer another distinct advantage–superior manual dexterity necessary for high-precision electronics assembly–such as meticulously winding wire around the donut-shaped core of a magnetic bobbin.

Expanding your Business into the Indian Marketplace

Quality…and Quantity?

While Tandon Magnetics’ female assembly workers consistently delivered top quality results, the next issue soon arose­­how could production output ramp up to meet IBM’s rising demand as he original PC gained popularity around the world?

At a time when industrial automation in India factories was rare, Manny looked at novel alternatives to standard coil wrapping machines of the day­­, which were sophisticated equipment typically retailing as high as $10,000 apiece. He soon developed a relatively simple solution: adapting a household sewing machine–a pedal­-operated appliance most of his female workers were already quite familiar with.

Mounting the sewing machine motor on a wooden block, he added a few enhancements, including an automatic counter to ensure the correct number of windings, as well as attaching a microscope to help the operator precisely wrap the smallest coils. After the handmade prototype proved an instant success, 100 more machines were installed throughout the assembly floor­­–at an estimated cost of about $5 each.

Thanks to lower overhead costs and skilled, efficient manpower­­–or, more exactly, womanpower– Tandon Magnetics would provide IBM with top quality PC components ­­at volumes up to 60,000 units per day–at prices competitors simply couldn’t match.

Expanding your Business into the Indian Marketplace

A Prosperous Legacy

Nearly four decades later, the early success of Tandon Magnetics has evolved into a core specialty at the Tandon Group’s Syrma Technology, providing world class electronics design and manufacturing services to global OEMs. High-­precision equipment based upon those original revamped sewing machine remains a cornerstone of Syrma’s 100,000 square foot state-­of-­the-­art flagship facility in Chennai.

Expanding your Business into the Indian Marketplace

Tandon GroupEarly Origins of Tandon Group’s Manufacturing Excellence

Checklist for Raising Startup Capital

Expanding your Business into the Indian Marketplace

Checklist for Raising Startup Capital

  September 4, 2019
 

Raising capital for the first time can seem daunting. If no one on your founding team has done it before, you’re bound to make mistakes. The only thing you can do to calm your nerves and feel more confident is get as prepared as possible. Luckily, most VC’s and angels have similar needs when it comes to the information they want to see before making an investment.

Here is a list of items we like to see at the Tandon Group before we consider investing in a company. While some startups will have more concrete information for each item on this checklist, you simply need to do your best to flush out your company’s position on each of these items:

  • Company Overview: Your overview should be an overarching description of your entire business. It’s usually best to complete this part of your preparation after you’ve gone over the rest of this checklist. The company overview will be a shortened version of the main points contained here.
  • Physical Location: Where is your company located? How many locations do you have? Where do you plan to open new locations? Is your team all “under one roof” or remotely based? Basically, spell out where and how your company is operating.
  • Founding Team: Most investors are looking to invest in a team of founders. While this isn’t a definitive rule, it’s usually a best practice to find someone who has complementary skills to your own. If you’re a coder or an engineer, you should find a business savvy co-founder (or vice versa).
  • Product Demo: At the very minimum, if you’re not a seasoned entrepreneur with past successes, you need to have something to show an investor. It doesn’t have to be as complicated as your final product but it needs to capture the essence of what you’re trying to do. Ideally, it proves your concept viable.
  • Addressable Market: You don’t want to go into an investment meeting saying that your addressable market is the entire world. You need to have a specific target audience, at least for your initial marketing efforts. Who is most likely to use your service? What’s their age, gender, interest, demographics, etc?
  • Problem/Solution: This goes hand-in-hand with your addressable market. Now that you know who you’re serving, what specific problem, need, or desire are you going to solve? The number one mistake we see entrepreneurs make is they create a product or service that no one actually needs or wants.
  • Business Model: How are you going to make money? You can start a business and not immediately monetize your user base but, eventually, you’re going to need a way to make it sustainable. Your product demo should align with your business model to show how you’re going to generate revenues and profits.
  • Competition: There’s a common saying, “business is cut-throat.” Your competitors are trying to steal your customers, take away your market share, and put you out of business. It’s in your company’s best interest to know exactly who all of your competitors are, where they operate, and how they operate.
  • Financials/Projections: You should always be able to show where you’ve spent every dollar and where you generated every cent of revenue from the beginning of your company’s existence. It’s simply bad accounting if you don’t have records of all the money you’ve spent and made so far.
  • Legal Information: How is your company legally formed? Is it an LLC, corporation, partnership or some other legal business entity? In most cases, you need to have this already setup before you go to any sort of investor because you’re not even going to be able to open a business bank account without having a company formed.
  • Past Funding: If you’ve raised money in the past this is going to be one of the first things investors are going to want to know. What was the last funding round valued at? How much equity was exchanged for what amount of money? What kind of shares and what sort of control do the previous investors have? These are all questions you going to need to make sure you have answers to.
  • Future Vision: Where do you envision taking this company? While most companies will need to pivot and change course multiple times during their lifetime, you should always have some sort of vision that you’re aiming to attain. A compelling vision aligns your employees, your investors, and your goals- so that everyone is on the same page.

If you follow the checklist above, your chances of raising capital for your startup will greatly increase. If you’re a startup founder looking to raise capital, Tandon Group wants to meet you. We have over 40+ years of startup experience and have invested in startups from many different sectors.

We’ve had numerous successful exits/acquisitions and would love for your company to be the next one. Reach out to us and we’ll get back to you with more information about setting up a meeting.

Tandon GroupChecklist for Raising Startup Capital

Global Perspective Helps Founders Solve Local Problems

Expanding your Business into the Indian Marketplace

Global Perspective Helps Founders Solve Local Problems

  July 23, 2019
 

When Manohar Lal Tandon formed Tandon Magnetics, the manufacturing arm of Tandon Computers, in 1979, he was determined to improve the lives of many in India. After studying and working in the United States for several years, he returned to India and used the knowledge, expertise and experience he cultivated in the U.S. to make the local market better. Founders who are open to new ideas, solutions and challenging the status quo open their companies up to new opportunities, exactly what Manohar was able to do with Tandon Magnetics, and later, Tandon Group.

Changing Business as Usual in 1970s India

Combining a global perspective with a deep understanding of local needs is just as powerful for modern-day startups in India as it was for Manohar at dawn of the personal computing age in the 1970s. As Manohar grew one of the most influential manufacturing companies in India at the time, the company helped solve local issues related to the economy, workforce, and leadership at the time including:

  • Encouraging the creation of “tax-free zones” throughout India, which increased production and foreign investment that ultimately has driven India into the top 10 of the world’s biggest economies
  • Becoming the largest employer of women in the tech sector from 1984 to 2000
  • Adopting IBM’s “open door” leadership policy at Tandon Magnetics, which was uncommon for Indian companies in the 1970s

 Partnering with Today’s Problem-Solving Startups

Today, India has the third largest startup ecosystem behind Silicon Valley and the United Kingdom. As a major participant in India’s startup environment, Tandon Group continues to help solve local problems as the company provides financial and managerial assistance to modern-day startups in India working to improve the country’s education, employment, finance, healthcare, and transportation challenges. Successful startups include:

  • Providing a progressive workplace for women and improving India’s economy (Syrma)
  • Helping healthcare providers preserve reimbursements from patient care and maximize collections from unpaid claims with technology (Infinx)
  • Saving people time by providing on-demand transportation and lifestyle services (GOJEK)
  • Changing the way education is delivered and consumed in India (Genius)
  • Revolutionizing the mobile economy in India by making it easier to pay for everyday items and tasks (FreeCharge)

If you’re a startup looking for resources to help you succeed, Tandon Group has provided numerous startups with business advice and funding support for more than four decades. 

To learn more about our company, please contact us.

Tandon GroupGlobal Perspective Helps Founders Solve Local Problems

U.S Tech Giants & their Indian Counterparts

Expanding your Business into the Indian Marketplace

U.S Tech Giants & their Indian Counterparts

  June 30, 2019
 

In the United States, the media religiously covers American businesses, partially because of national favor and partially because of the sheer economic size of established U.S. tech giants. Not to be outdone, India has quickly mobilized their workforce to compete with these tech giants who are working their way into India. They’ve steadily accomplished their goal with impressive results, such as the number of households with a disposable income of more than $10,000 has leapt from around 2.5 million in 1990 to nearly 50 million in 2015. Thanks to this massive growth, India has developed their own tech giants who are quickly rivaling U.S. firms. [1]

Ola vs. Uber

These two giants have been battling head-to-head for years now. Both companies have been battling in the court trenches with Ola fighting accusations of creating false accounts and cancelling them on their drivers. Uber itself is currently facing massive harassment charges which caused the CEO to exit the company ungracefully. Let’s start with Uber, which recently posted a $6.5 billion net revenue for 2016. They currently have over 40 million monthly active users and are operating in 450 cities. They also posted 160,000 Uber drivers and have close to 87% of the ride hailing market. Ola for itself is currently in 102 cities and has nearly 70% of the Indian market. They’ve posted impressive stats of 450,000 drivers with 5.9 million monthly active users. Ola says they generated $4.21 billion in revenue in 2015.

 Flipkart vs. Amazon

It’s the battle of ecommerce, and there are only two horses in the race for first. Each is posting mind-blowing numbers, and each are looking to outdo one another. Let’s begin with Flipkart, which is currently in rumors of merging with Snapdeal, and is positioned to move Amazon India out of their home market. Flipkart has 100 million registered users and currently controls roughly 43% of the Indian ecommerce market. They recently said they have 100,000 sellars and are doing roughly 8 million shipments monthly. Flipkart is valued at $11.6 billion and it is unknown what their revenues are currently.

On the other side is Amazon who is tough to beat. They currently have 304 million registered users, or roughly the entire population of the United States, and control 43% of the online retail sales in the U.S. Amazon had $136 Billion in 2016 net sales with $857 million in profit. Here’s something which will make every Amazon investor smile: In 2016, Amazon made just over ⅓ of total sales for black friday. In other words, Amazon is in a league of its own for ecommerce companies.

Paytm vs. PayPal

The mobile payment giants are next in line as these two firms face off to attract users into their sphere. PayPal was founded in 1998 in the U.S by the infamous “PayPal Mafia” which included the likes of Elon Musk, Reid Hoffman, etc. Paytm was founded in 2010 and has grown at lightning quick pace compared to PayPal, which is mainly due to the boom in spending India is currently going through, and the ability to raise capital so quickly. Let’s look at the statistics. We’ll start with Paythm, which currently has over 200 million registered users, 80 million of which are active monthly sending transactions. They’re accepted by 850,000 offline merchants, not to mention the additional million plus online merchants who use Paytm.

They posted 1 billion in transactions just last year, and account for 26% of all digital transactions in India and, in the cut-throat field of online wallets, this is impressive to say the least. PayPal on the other hand only has 169 million registered users, by has processed 4 billion in transactions in 2016. This is due to the overall wealth of the United States, and PayPal cannot complain because they had a net income of $384 million in 2016. Add to these numbers the fact that PayPal has 16 million merchant accounts and processes 18% of all ecommerce transactions.

Are you next?

These three technology giants are just the beginning of a long competition between the United States and India for tech supremacy. As the world becomes more globalized, from increased internet usage and improved communication, we’ll begin to see greater competition for market share. Luckily, each country has a savvy population who prefers to use their native companies, but only time will tell if this continues to stay the same.

If you’re a startup founder looking for resources to help you succeed, Tandon Group has provided numerous startups with business advice and funding support for more than four decades.

To learn more about our company, please contact us.

Tandon GroupU.S Tech Giants & their Indian Counterparts

Should Startups Focus on Growth or Profitability?

Expanding your Business into the Indian Marketplace

Should Startups Focus on Growth or Profitability?

  May 23, 2019
 

This question has been asked in every major business on the planet. From concrete manufacturing companies in the 1950s to PayPal in the 1990s, and now the Facebook and Uber empires of today. They created a great product, have started to gain traction, recently got funding, and now they must ask, does the company focus on growth, or profitability? A point needs to be made from the outset: It’s mathematically impossible to maximize growth and profitability at exactly the same time. You’re either doing one or the other, and often it’s these decisions which will ultimately determine the success of your company.

Questions to Consider

First ask this question: “When should my company start worrying about making money?” This isn’t simple to answer because there are many subtle distinctions which need to be made for a right answer to appear. Are you a business-to-business (B2B) company? What is the economy like? Are you a first mover? Have you already achieved funding and is it easy to get additional funding? What are your personal goals with this business- are you trying to run a global company or a niche money-making side business?

Based on the above, if your company is business to consumer (B2C) than it’s smart to focus purely on growth. Reason being is the consumer behaviour is notoriously fickle while corporate behavior is relatively static. This means a B2C company needs to pour money into advertising spending while locking down their user base. Let’s look at Facebook as a case study.

When Facebook initially started they didn’t have a clear revenue model but the executives did know they had something groundbreaking on their hands. They reasoned it was critical to gain the user’s first, in massive spending sprees for growth, and would figure out the revenue model second. Thus, the Facebook advertising platform was born, and out of it a multi-billion dollar revenue stream.

Money for Growth

Let’s look at this problem from a different angle. We already asked if there was easy access to capital, either in the form of private equity or venture capital. Now, let’s assume you decide to pursue an investment from a private equity fund. If you do this they’ll most likely lay down the business with debt in long or short-term loans. Now, if you’re a tech company it’s not smart to go down this route, because tech companies generally need to focus on user growth. However, if you’re company is building a physical product, then going through a private equity firm might make sense.

Rules of Thumb

If you’re a technology company that requires user interaction for viability, than obtaining users should be your primary goal because the greater volume of users you have, the greater amount of time people will spend using your product. Thus, it’s in your interest to focus on rapid growth from the outset with plans to weather unprofitability. Eventually you’ll have to monetize but it can be unwise if done too soon or before critical mass adoption.

Second, if your company is developing physical products which are capital intensive and growth is achievable, but at a slower rate than profitability will be your best option. Reason being is that your company’s main goal will be reducing costs of production for goods sold, which inevitably leads to greater margins. Your massive growth will come from an initial public offering (IPO) which infuses the company with liquid capital which can then be used for greater growth down the line.

If you’re a startup looking for resources to help you succeed, Tandon Group has provided numerous startups with business advice and funding support for over four decades.

To learn more about our company, please contact us.

Tandon GroupShould Startups Focus on Growth or Profitability?

How Startups Can Generate Low Cost Leads

Expanding your Business into the Indian Marketplace

How Startups Can Generate Low Cost Leads

  April 13, 2019
 

It’s the age old problem of business: How can my company or startup generate leads to bring in new clients without breaking the bank? If you’re a startup founder, or a marketing manager, we’re positive you’ve asked this question many times, and we’re sure you have the same problem many other startup founders have also. You’re on a shoestring budget, and running a major advertising campaign won’t work for you. Luckily, companies have solved this problem before, and if you follow these three tips below you’ll have a starting point for your lead generation machine.

1. Build a Social Media & Blog Presence

Having a solid social media presence from Facebook fans to Twitter followers is a great way to generate leads. There are a couple ways to build your online sphere of influence. First, start doing massive amounts of keyword research which follows the search queries your customers ask, and create a list of the top 30-40 searches you can find. You’ll need this because one way to build trust with potential customers is by creating a blog where you answer these questions with in-depth analysis. Doing this will leverage your company as the authority figures in the space.

Second, create infographics which visually explain the search queries you researched, which is also a great idea for generating B2B leads. The brain processes visual content 60,000 times faster than text, and in a fast paced world this means quicker understanding by your audience.

Third, set up Google Alerts, which notifes you anytime a person online is asking questions related to your startups field of expertise. You can then go and manually answer questions with a comment or post. This is a hidden growth hacker tactic which will improve your website’s SEO presence with the amount of backlinks you build over time. In addition to this, answer questions on Quora. You’ll not believe the amazing response you’ll receive by providing well thought out answers to a person’s problem.

2. Retarget, Retarget, Retarget

If you don’t know what this is then you need to learn about it right now. It’s slowly becoming the most effective advertising method on the internet to generate leads. Retargeting works by keeping track of people who visit your site and displaying your retargeting ads to them as they visit other sites online. It converts window-shoppers into buyers. Generally, 2% of shoppers convert on the first visit to an online store. Retargeting brings back the other 98%.

Here’s a quick way to make the most of your retargeted ads. First, segment your website visitors by preference. Next, create customized ads for each group of people. Finally, and most importantly, put the ads up in a positive way which means don’t stalk your website visitors. Only show the ad up to 12 times in a 30 day period. People can get intimidated if you immediately follow them around constantly blasting them with advertisements for something they just viewed.

3. Partner with Affiliates & Joint Venture Partners

Affiliate marketing, sometimes known as performance marketing, can be one of the most effective tools for promotion on the internet. An affiliate program lets you use a talented and savvy sales force that’s only paid when they sell a product. You decide how much the commissions will be for those sales, and your company only pays out when you get paid. This does mean you’ll not receive the full profit on your sales because you’ll need to deduct the commision from your payout, but it also means you’re not spending any money on advertising because there are other smart people willing to promote your startup!

Working in tandem with another entrepreneur is another strategy which can be used to leverage low cost leads. A joint venture (JV) is when two firms/people unite to achieve a marketplace goal that neither could achieve alone. This works best when you partner with a company/person in a similar but non-competitive marketplace. Your JV partner would ideally be targeting or have customers who are identical to the ones you’re looking to market to. It’s a low cost strategy which will quickly boost both of your reputations.

To learn more about our company, please contact us

Tandon GroupHow Startups Can Generate Low Cost Leads

Entrepreneur’s Checklist for Hiring New Employees

Expanding your Business into the Indian Marketplace

Entrepreneur’s Checklist for Hiring New Employees

  March 6, 2019
 

Startups that succeed start lean and it’s a mindset you need to have because the wrong employee is incredibly expensive. The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of the individual’s first year potential earning. If you’re a startup with little to no sustainable income then a wrong employee ranges from disastrous to fatal. Not only does a wrong hire waste productivity, it can actually cause surrounding employees to lose effectiveness. [1]

Below is a good checklist for hiring new employees:

1. Make your job description clear: Often the determining factor when hiring the wrong employee is an unclear job description. It’s crucial you’re crystal clear about what exactly the job entails, with a detailed description of how the employee is expected to perform. In addition, you must know exactly what type of person fits the job description well. Every employee is just as important as your technology.

2. Keep record of potential employees: You need to track each candidate, including their strengths, weaknesses, expectations and interview notes. Throughout the hiring process this information becomes valuable when you begin to cross names off your list.

3. Run background checks: It’s highly recommended you run a background check on every employee. Ensure you have a consistent policy in place so every employee knows what is being checked. For instance, as the founder you’ll want to run a background check that reviews criminal records, driving records, and any watch lists. It’s also recommended to run a check of credentials and/or credit score.

4. Know your EIN: Once you’re ready to hire employees you will need an Employer Identification Number (EIN) from the IRS. An EIN is required to pay business taxes based on the number of employees you have. You only need 1 EIN number which covers the entire business.

5. Have your taxes in order: Every business in the U.S. must keep records of their taxes. Each business is required to withhold money from every employee’s paycheck to ensure taxes are paid correctly. There are two forms which must be completed: W-4 and W-2. The W-4 form is used for every employee and it must fill out before they begin work. This provides you with the correct information for taxes. The W-2 form is sent to the employee and IRS. It shows all taxable income including retirement contributions and benefits.

6. Have a proper payroll system: There are two options for this. Do payroll internally or outsource to a company like Workday or ADP. Either way, make sure you’re addressing your business’s payroll needs.

7. Obtain business insurance: All businesses with employees are required to have workers compensation insurance. You can do this through a couple of ways, the most common are to have a broker, self-insure, or through your state’s Workers Comp Insurance Program. Many startup founders neglect to buy insurance until it’s too late, and they’re forced to pay out of pocket for issues which will eventually happen. Don’t let that happen to you.

8. Keep a file on every employee: It’s vital to keep information on file for all employees. This provides the company with a barrier for any problems which could or could not occur. For instance, some of the data you’ll want to keep is full name, address, emergency contact, a copy of signed contract, and any reprimands or accolades within the company.

This checklist provides you with all the necessary steps to onboard a new employee. Your staff are crucial to the company’s success. Nobody can run a business in a vacuum, and now you’ll know what to look for and what to avoid. Good people are difficult to find, but if you’re at this stage then luckily you already know what you’re doing.

To learn more about our company, please contact us.

Tandon GroupEntrepreneur’s Checklist for Hiring New Employees