AMITY GLOBAL BUSINESS SCHOOL MUMBAI

RESEARCH PAPER ON

ISSUES THAT OCCUR DURING BUSINESS START-UPS

Submitted by – EKANSH Shahu

Enrollment number- A30206420053

Course- BBA (2020-2023)

Under the guidance of

Prof. Kitty Rana
 DECLARATION

I, EKANSH Shahu, of BBA 2020-2023, hereby declare that the project work entitled, “Issues

that occur during business start-ups” is solely done by me. The project work is a record of

an original work under the guidance of Prof. Kitty Rana, faculty member. This report has

been created as per the guidelines provided by the university. All the information and work

done has not been copied from any online/offline platform.

EKANSH SHAHU
A30206420053
 CERTIFICATE

This is to certify that the work incorporated in the research paper, “Issues that occur during

business start-ups” submitted by EKANSH Shahu carried out by the candidate under my

supervision. Such material as has been obtained from other sources has been duly

acknowledged in the report.

Name: Prof. Kitty Rana

Signature:

Date:
 ACKNOWLEDGEMENT

The research paper I worked, “Issues that occur during business start-ups” was a great

chance for learning and professional development. Therefore, I consider myself fortunate as I

was provided with an opportunity to do research about it.

I am using this opportunity to express my deepest gratitude and special thanks to my faculty

Guide Prof. Kitty Rana for providing me valuable guidance.

I would also like to thank Prof. Pankaj Shukla (Director) of Amity Global Business School,

Mumbai for giving me an opportunity to work on the topic, that has enhanced my knowledge

and has helped me developing interest in research work.

I am grateful to all the online references, book references, the people who responded to the

survey that was made and my faculty guide who helped me throughout in proper direction.
 ABSTRACT

A lot of businesses failed in the early years of start-ups in this period full of new ventures.

Knowing the obstacles or hurdles in company is one of the tactics for being a successful start-

up. So, what exactly is a business's demand for retaining and growing a new business?

Nowadays, any sector, large or little, must be aware of the challenges that arise during the

start-up phase of a firm. People must be future-ready while planning for a business's success,

and they must expand their studies on how to handle challenges in the company to serve it as

a benefit to the owner.

This article examines the challenges that arise during the early stages of a firm. The study's

findings provide helpful ways for dealing with the problems. It will be useful in preventing

failure in the early stages of a business since it provides recommendations for dealing with

difficulties and challenges that arise in the early stages of a firm.

 INTRODUCTION

THE PROBLEM AND ITS BACKGROUND

90% of entrepreneurs fail to establish a firm, according to Baumstein (2018). Most people fail because

of mistakes they might have avoided. Once a person is aware of his or her mistakes, he or she may

work toward success by avoiding them. Preventing them will free up your time to focus on activities

that add value. However, as the Small Business Administration (SBA) points out, they are likely to be

benefits "for the appropriate person." It will only know if you are one of them if you are a self-starter,

can cope with a variety of personalities, are excellent at making decisions, have great mental and

physical stamina, and are adept at planning and organising. It also backs up the concept of "survival

of the fittest," implying that failures, rejections, and ups and downs are all part of the process. Simply

enjoy resolving these challenges, and you'll be well on your path to achieving business success.

Starting a new business, on the other hand, may be both thrilling and terrifying. Because breaking into

the corporate sector isn't simple. It has been proved time and time again that the path ahead for start-

ups is not easy. There are several factors to consider while beginning a business, such as location,

size, workers, quality control, and so on. Because it seeks to address the issue, this research is

extremely dependable for the newbie entrepreneur "Why do so many businesses fail in the first

place?" in addition "What are the challenges that arise at the start-up of a business?"
 THEORETICAL FRAMEWORK

Start-ups operate in a unique environment marked by unfamiliarity and unpredictability. A

strong leader is essential in no situation more than in a new venture. The odds are stacked

against the leaders due to a lack of human resources, financial capital, and client access,

making leadership more important in some start-ups than in major corporations.

Developing and maintaining a new successful company enterprise involves not just vision

and financial capability, but also the ability to inspire people to turn that vision and capability

into reality. This necessitates the start-up leader being fearless, optimistic, truthful, righteous,

and forward-thinking, as well as assisting workers in their development as leaders. While

traditional traits associated with a successful leader, including as intellect, decision-making,

courage, and vision, are always vital to success, they don't cover the entire spectrum of what

start-up leadership needs. Add proactiveness, inventiveness, and risk taking.

It is not enough to devise a corporate strategy or to put it into action; start-up leadership

needs both. Recognizing and acting on opportunities is critical for success. In difficult times,

a strong feeling of curiosity is the motivating factor. In a start-up, crises are usually

unavoidable; but a leader must be able to recognise and manage them, with recovery plans

and lessons learned in place. It is not enough to just gather data; you must go beyond its

surface value and evaluate it for strategic gain.

Getting things done via other people or organising the actions of individuals toward common

aims, according to a 1999 study. People at the heart of management. It indicates that nothing

happens in company management without people. Management theory, on the other hand, is

made up of "perspectives" or "descriptions of the links between organisational traits."

 LITERATURE REVIEW

The start-up process covers a period that is hard to specify. The onset and the end of the

process are not well defined and are delineated differently in the descriptive literature. The

process of creating a new venture is consistently characterized as a complex event in which

varied planning and preparation activities are necessary and in which decisions need to be

taken. The lifecycle of the start-up companies includes three main stages, which are

bootstrapping stage, seed stage, and creation stage. There are four categories of challenges

faced by start-up companies, namely financial challenges, human resource management,

support mechanisms and environmental elements.

Mr. Sharma, (2013), made a study on women entrepreneurs in India. She concluded that

women entrepreneurs face many problems like social barriers, legal aspects, lack of

education, family support etc. She also explained the various factors like pull and push

factors affecting entrepreneurship. According to her women have the probable and firmness

in setting up the enterprise and fighting against all odds. Foreign exchange regulations are to

be in tune with investor needs, so that the best does not register outside India. Global

investors demand a benign tax certainty regime so that they remained invested for the long

term. The most important challenges faced by new entrepreneurs include developing the

vision and business idea, raising capital for start-up, assembling a business team, finding

good employees, finding good customers, dealing with competition, unforeseen business

challenges and expenses, keeping up with industrial changes and trends, lack of support,

negative mindset, lack of marketing facilities, lack of infrastructural facilities etc. so it is

necessary to overcome these challenges in order to conduct an efficient business.

Issues and Challenges of Start-ups Some of the major issues and challenges are

discussed below:

1. Financial resources

Availability of finance is critical for the start-ups and is always a problem to get enough.
Several finance options ranging from family members, friends, loans, grants, angel
funding, venture capitalists, crowd funding etc are available. The requirement starts
increasing as the business progresses. Scaling of business requires timely infusion of
capital. Proper cash management is critical for the success of the start-ups
2. Revenue generation
Several start-ups fail due to poor revenue generation as the business grows. As the
operations increase, expenses grow with reduced revenues forcing start-ups to
concentrate on the funding aspect, thus, diluting the focus on the fundamentals of
business. Hence, revenue generation is critical, warranting efficient management of burn
rate which in common parlance is the rate at which start-ups spend money in the initial
stages. The challenge is not to generate enough capital but also to expand and sustain the
growth.
3. Team members
Start-ups normally start with a team consisting of trusted members with complementary
skill sets. Usually, each member is specialized in a specific area of operations.
Assembling a good team is the first major requirement, failure to have one sometimes
could break the start-up

4. Supporting infrastructure

There are several support mechanisms that play a significant role in the lifecycle of start-
ups which include incubators, science and technology parks, business development
centres etc. Lack of access to such support mechanisms increases the risk of failure.

5. Creating awareness in markets

Start-ups fail due to lack of attention to limitations in the markets. The environment for a
start-up is usually more difficult than for an established firm due to uniqueness of the
product. The situation is more difficult for a new product as the start-up must build
everything from scratch.
6. Exceed customer expectations

The next most important challenge is gauging the market need for the product, existing
trends, etc. Innovation plays an important role, since, that the start-up must fine-tune the
product offerings to suit the market demands Also, the entrepreneur should have thorough
domain knowledge to counter competition with appropriate strategies. Due to new
technologies that are emerging, the challenge to provide over and above an earlier
innovation is pertinent.
7. Tenacity of founders of start-ups
must be tough when the going gets tough. The journey of starting a venture is fraught
with delays, setbacks, and problems without adequate solutions. The entrepreneur
needs to be persistent, persuasive, and should never give up till he/she achieves
desired results.
8. Regulations
Starting a business requires several permissions from government agencies. Although
there is a perceptible change, it is still a challenge to register a company. Regulations
pertaining to labour laws, intellectual property rights, dispute resolution etc. are rigorous
in India.
9. Lack of mentorship:
Lack of proper guidance and mentorship is one of the biggest problems that exist in the
Indian start-up ecosystem. Most of start-ups have brilliant ideas and/or products, but
have little or no industry, business, and market experience to get the products to the
market. It is a proven example that a brilliant idea works only if executed promptly
(Mittal, 2014). Lack of adequate guidance is the biggest challenge which could bring a
potentially good idea to an end.
10. Lack of a good branding strategy
Absence of an effective branding strategy is another issue that prevents start-ups from
flourishing at a faster pace. Hemant Arora, Business Head-Branded Content, Times
Network opines that branding demands paramount attention as it gives an identity and
occupies a space in the consumer minds.
 Government Initiatives
There are numerous government and semi-governmental initiatives to assist
start-ups.

1. Start-Up India
This initiative provides three-year tax and compliance breaks intended for cutting
government regulations and red tapism.

2. Mudra Yojana
Through this scheme, start-ups get loans from the banks to set up, grow and
stabilize their businesses.

3. SETU (Self-Employment and Talent Utilization)

Fund Government has allotted Rs 1,000 Cr to create opportunities for self-
employment and new jobs mainly in technology-driven domains.

4. E-Biz Portal
Government launched e-biz portal that integrates 14 regulatory permissions and
licenses at one source to enable faster clearances and improve the ease of doing
business in India.

5. Royalty Tax Indian

government has reduced the royalty tax paid by businesses and start-up firms from
25per cent to 10 per cent
 Conclusion

The current economic scenario in India is on expansion mode. The Indian government is

increasingly showing greater enthusiasm to increase the GDP rate of growth from grass root

levels with introduction of liberal policies and initiatives for entrepreneurs like ‘Make in

India’, ‘Start-up India’, MUDRA etc. ‘Make in India’ is great opportunity for the Indian start-

ups. With government going full hog on developing entrepreneurs, it could arrest brain drain

and provide an environment to improve availability of local talent for hiring by start-up firms.

The start-up arena has lot of challenges ranging from finance to human resources and from

launch to sustaining the growth with tenacity. Being a country with large population, the

plethora of opportunities available are many for start-ups offering products and services

ranging from food, retail, and hygiene to solar and IT applications for day-to-day problems

which could be delivered at affordable prices. It is not out of place to mention that some of

these start-ups would become unicorns and may become world renowned businesses by

expanding into other developing and underdeveloped countries.

 REFRENCES

1 Anand Paramjit. Opportunities for Start-ups in India, Acerate Management Consultant (P) Ltd, The
Entrepreneur, 2016.
2 Chaudhary, Varnan. The Biggest Roadblocks Faced by Start-ups in India, 2015.
3 Chaykhana Rohit. Principal Founder, White Unicorn Ventures, Challenges and opportunities for
Indian start-ups; Key points to note, 2017.
4 Derek Wasiak. Key Challenges, Opportunities for Tech Start-ups in Emerging Markets,
Moneycontrol.com, 2016.