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Trushant Ugalmugale

Cash-Flow Issue in the Ad Industry in India & impact on Start-Ups

538 310 Trushant Ugalmugale

For any startup, the two most important things are Scale & Cash-Flow, unfortunately many a times both part ways during its growth journey. When you come across casual attitude towards vendor payments or large cycle on clearance of bills, this journey of Scale and Cash-Flow together ends very soon. It’s no surprise why an alarming percentage of startups fail; although there are numerous reasons, Cash-Flow is one of the biggest killer in the startups. Having involved with different industries over a decade and half, I come to realize that the this is a generic problem that prevails in most of the industry sectors in India, and has its dents in small as well as big companies.

Speaking of the Ad Industry in India, the problem is no different. Fierce competition in the leading agencies is resulting in heavy discounting in the media fees and extended payment terms with the Advertisers. With the top agencies trying to win or retain customers through these means of providing additional benefits, a severe problem of cash flow and lean margins is trickling downstream on the networks, publishers and other smaller agencies that support in delivery. This is resulting in many smaller players resorting to volume discount deals with bigger agencies, invoice discounting financing methods and other unprofessional ways like kick-backs & manipulated deliveries to keep up the scale and required cashflow for sustenance. Ultimately this is again eating up their gross margins and leading to the same vicious cycle. Many others have started focusing on other geo markets which have a more stable & reliable payment cycle standards. The end result? – Loss of value to the Advertisers. This is because not every dollar spent by the Advertiser is utilized in bringing a value add to their brand.

Ad Industry in India, and especially big agencies, need to re-evaluate the end-to-end picture today and it will be clear that this industry (as some of the leading consultants have already described) is turning into a “loser’s game” for all parties. Fair Pricing, Fair & Reliable Payment Terms and equally Fair Business Policies by the upper layers in this value chain only can help the industry to grow and sustain in the long term while at the same time providing optimal ROI to the Advertisers & Brands.

Coming back to startups, I think that while Scale is undeniably important, it is equally necessary to keep a bird’s eye view on the cashflow at all times. For this, if the industry at large is not stable with reasonable payment cycles then we need to look at other geo or parallel industry options sooner than later. While there as options like Receivables Discounting, it is more of a short term good and a long-term harm.

Startup Founders & team must spend most time in Innovating and Implementing new ideas that solve real-life problems, but unfortunately factors affecting an unhealthy cashflow are keeping them busy in looking for ways to sustain. I feel it is a moral responsibility of big players to drive the market discipline in terms of reasonable, timely and reliable payment cycle and maintain sanctity of the business ecosystem.

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THE INSIDERS’ GUIDE TO A SUCCESSFUL STARTUP

The Insiders’ Guide to a Successful Startup

599 400 Trushant Ugalmugale

What it takes to be a successful startup

Just a couple of years ago it was difficult for a guy to get married if he worked for a startup – founders were the worst hit! Fortunately, now Indian startup ecosystem is witnessing a hyper-growth phase. Let me share the Insiders’ Guide to a Successful Startup with you. The year 2014 saw the largest ever Venture Capital infusion in the Indian startup ecosystem with India ranking the fourth largest hub in the world with over 3000+ startups in the country, and the story continues… The feel-good factor shatters when we see the statistics – over 90% of startups, in general, have failed.

There must be some core ingredients that work in favor of successful emerging companies. So, what are the magic ingredients of a successful startup?

People, Process and Product, “The 3Ps”, are the basic necessities of any organization. But more importantly, in my view, there are four important elements that go a long way in building a successful company: Dream, Courage, Energy, and Attitude.

Dream, not of an individual; but rather of a team! It’s the vision that keeps a startup motivated and the synergy of a high-class team towards achieving that dream is the heart of a successful startup.

Courage to accept risks is the backbone. It is this courage that helps to go beyond the normal flow, thread unexplored areas and build something that creates an additional value to the ecosystem. Risks are inherent to the startup, but courage would bridge the gap between a startup and a successful organization. Ability to gauge the yield point of the risk, beyond which recovery in case of failure would be impossible, is also important.

Energy of the team is a lifeline and determines how far and how fast the startup can go.  Every Startup has to keep on fueling this energy within the team. Healthy work environment, organized operations, sense of belonging and good management culture act as a catalyst for this energy; without them any startup is bound to fail.

Attitude is the brain of any startup. Humble, nimble, perceptive and foresightful attitude can never let a startup fail. A startup should be humble in relationships, nimble in operations, perceptive of its financial & compliance standing and foresightful of market & ecosystem trends.

Any startup with a good oversight of these magic ingredients can never fail!

Our success is backed by our enthusiastic team

management team inuxu

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