How can start-ups avoid layoffs through sustainable business management?
08 Dec 2022
How can start-ups avoid layoffs through sustainable business management?
Over the past ten years, the start-up ecosystem in India has grown quickly. Numerous initiatives have been started by the public and private sectors to give young entrepreneurs a place to work on creative ideas and projects. Particularly, the private sector has built a number of incubation facilities where business owners can employ services based on a pay-per-use approach or an equity-sharing model.
With a national count of over 71 unicorn start-ups in 2021, these measures have catapulted India into one of the start-up ecosystems with the fastest rate of growth in the world.
The government and private sectors' backing for new businesses has raised awareness of entrepreneurship. This is particularly common among engineering graduates who are credited with creating some of the most notable structures at co-working spaces around the country among undergraduates in their last years of study.
The overwhelming majority of business owners frequently find that the initial exhilaration of starting a new endeavour is fleeting. The numerous obstacles they must overcome in order to start or grow a firm diminish their enthusiasm. The creator acknowledges the extensive preparation required to turn a concept into a successful business.
To further navigate safely across choppy waves, the changing conditions in the external environment require a flexible company plan. Making a firm viable and sustainable is the largest difficulty an entrepreneur faces. When making long-term plans, there are a number of external circumstances, however, that are challenging to anticipate.
Some of the risky issues affecting finances and the business mode of start-up are:
Changes in technology
A business model's vulnerability to technology change must be understood by an entrepreneur. There are numerous instances of huge disruptions brought on by technological advancements. While some businesses adjust to these changes quickly, other start-ups have been forced to fold because revolutionary technology adoption has lagged. For instance, the $3 billion electronics company Jawbone in the USA was forced to cease operations in 2016.
Companies that put off implementing new business technologies are overtaken by rivals who pounce to seize the majority of the market. Such startups are compelled to reduce operating expenses. This leads to widespread layoffs, especially of knowledgeable former employees who are now obsolete.
The founders and management of a start-up should continuously experiment with and test a variety of cutting-edge technological platforms to make sure it can handle this problem. These ongoing experimentation with various tools position the business to effortlessly transition to a new and more capable platform as soon as it becomes available.
Government Regulations
One of the main reasons for downsizing at many start-ups has been changes in governmental laws. When a start-up uses a novel business model that the government wants to control, this happens. The prior business model is frequently rendered unprofitable by these rules, which leads to the firing of several people. For instance, Koinex was forced to close as a result of Indian government laws governing cryptocurrency trading.
Conclusion:
Entrepreneurs sometimes commit the error of predicting rapid growth for their companies without taking market risks into consideration. Many of the presumptions in a business plan are made under ideal circumstances without taking into account how the market, laws, investors' preferences, or rivals' actions might change. Entrepreneurs need to practise setting aside money for their business plan B, which would come into effect when any of these factors changed dramatically.