After Grofers, PepperTap Scales Back; 4 Ways How Startups Can Re-evaluate Strategy Just don't try too hard.

2015 was all about fireworks in the startup ecosystem in India with unprecedented funding and valuations, but 2016 seems challenging. Some of India's fastest growing companies have relinquished their expansion plans and the new startups are jittery.

Within a month after on-demand online grocery store Grofers India Pvt. Ltd decided to close operations in nine cities, including Ludhiana, Bhopal, Kochi, Coimbatore and Visakhapatnam, PepperTap, the hyperlocal delivery startup is shutting operations in six cities, including Mumbai, Kolkata and Chennai. This will reportedly result in laying off 400 delivery staff.

The company had earlier said it has aggressive plans to expand to cover a total of 75 cities by the end of March of this year. But not everything happens how we plan. Stellar startups fail, brilliant ideas don't work, investments turn bad and things look glum.

Here are 4 ways how startups can stay ahead of competition and safeguard their interests as well as of investors'.

Slowdown in funding, what to do?

There seems to be saturation slowly creeping up. A global crunch in startup investing is slowly taking place in the US and China, the effect seems to rubbing in here too. Businesses need to take a step back and reinvent their business model to keep up with the changing times.

Capital loss could be the culprit

With all their energy focused on expansion, there is a major risk of capital loss for the new businesses. Startups need to conserve capital to help them in the long runway while investments have slowed down. Generating cashflow is equally important for a startup to sustain. In fact, it is more important than earnings.

Consolidate and not expand

Focus on the existing market and achieve operational efficiency. India's venture-capital backed startups have to rationalize their pricing. The way to go about is to streamline the company's core processes and reduce costs, improve customer satisfaction, and stay ahead of the competition.

Echoing the same sentiment, Navneet Singh, CEO and Founder, PepperTap said, "Given the short to mid-term investment climate outlook, we have decided to focus on depth rather than breadth. We are digging our heels in for the long term. We will focus on building a stellar customer experience by providing additional categories and services that differentiate us from our competition in cities where we continue to operate."

Planning and logistics

Understand your target customers. This is THE most important aspect of your business. Then model your business around their need. Pivot, if required or change your business model to succeed. Make sure the products that your are selling comply with the end customers' preferences. Study city-wise preference, if your presence is in multiple cities.

You can run, you can hide, but you can't ignore Marketing

With investors putting pressure on start-ups to improve financial metrics, hyper-local firms such as Grofers and PepperTap are spending less on discounts and other marketing initiatives.

Which is not a good idea. Initially, PepperTap had launched its marketing campaign "Bahut Aasaan Hai" on YouTube, social media, radio and print. It caught on, and PepperTap was doing well. Adopt diverse marketing strategies and keep reinventing to impress customers.

In your initial years, don't be in a rush to offer 20-odd features, instead focus on the ones that are really required and market the need, not the product.