Chennai: Startups in India have been the focus off-late with the ‘Startup India’ scheme, announced by Prime Minister Modi, giving a huge impetus to the industry.
The move by Modi in 2016 that committed $1.5 billion in funding and tax breaks to propel high-tech startups in the country, fuelled the rate at which startups came into being.
The move was expected to double Indias new startups to 11,500 over the following five years and is well on track to achieving the goal. However, the bad news is that most startups in India do not cross the first two year mark, shutting shop before becoming established companies.
This where the franchise industry comes into play as most startups today are ready to sit back and let the experts do the hard work.
In this context, News Today spoke with Iyyappan Rajendran who is the founder and CEO of Strategizer Franchise Consulting Services. The Chennai-based firm is four years old now and they focus on marketing, branding and business development of firms in need.
According to Rajendran, franchising is not selling products but ideas. “The industry will well on its way to contribute to the GDP of the country. Aroud 10 million jobs will be created by the industry,” he said.
Speaking about why startups more often than not fail, Rajendran said, “People need to have an action plan for two years from the day they come into existence. They need to get the location right, do the market survey and choose the target audience and product before choosing their brand. If these are not followed, failure is imminent.”
Rajendran said Chennai being a conservative market, has an advantage over other metros as people do not throw their money down the drain. “It is good, for you can avoid failures.”
Another problem that entrepreneurs face, according to the expert in the franchise business is that if entrepreneurs own a property, they seldom think about market feasibility. “Owning a property will help one sustain but not last forever. For that one needs to have a property at a prime location,” he said.
“International brands find it easy to survive in the market which in the past three years has seen many national brands vanish altogether,” he added.
Does that mean startups cannot survive in cities, Rajendran thinks that is not the case. “Entrepreneurs can turn their focus on tier-II cities that are growing fast and haven’t achieved saturation. Tier-II cities are experiencing other products only now. There is huge scope in such places,” Rajendran said.
In order for startups to survive, Rajendran says innovation is the key. “We need innovation in product, services, design and in delivering a message. Only then can a business sustain and survive.”
| In India… |
| Franchising industry in India clocked an annual growth rate of 30 per cent with a market size of $7.2 billion. It is the second fastest growing industry in the country. In the US, 45 per cent sales come from franchised business and India is yet to reach that point. |