Startups need to understand economics of running a startup

Startups need a Minimum viable product/service along with

1) Tactical guidance

2) Milestone based investments

3) Cashflow Management with balanced budgeting covering development, marketing, implementation, documentation, security, process, hardware, infrastructure.

4) Stable team composition

5) Market Linkages

6) Approach to give ROI (Return to Investors)

Valuation will happen in the journey. Many entrepreneurs begin focusing on raising investments covering huge burn rates.

Example
Rs10lacs = US$14000 roughly.
1) Startup spending Rs10lacs/month of which Rs5lacs is management overhead.

2) Startups spending Rs2lacs/month with Rs1.5lacs as marketing overhead

3) Startups spending Rs5crores/month on technical team with 10lacs/month on marketing.

If you observe all of above examples show imbalanced budgeting. Please revisit your budgets.

I have been helping many startups understand, reduce costs and also optimize profits through market linkages. Some startups understand it, some argue, some continue.. but nevertheless unless a balanced budget not planned, no startup can ever get good results.

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