Quitting your day job to start your own business might seem like a promising and exciting opportunity to many. However, it is also full of risks and difficulties. It’s not enough to have a great idea or a product along with a theoretically perfect business model and marketing strategy. In fact, building a successful startup is a much more challenging task than most people realize.
Sure, there are plenty of questionable ventures that have become immensely successful over the years. But let’s not forget there is an even longer list of hypothetically incredible endeavours that never got off the ground for one reason or the other. Here’s an unfortunate truth to put things into perspective: more than 50% of startups fail within the first four years of their inception. For every startup that generates a small profit, there are several that fail to generate enough income to even cover their initial investment.
When you first set up a company, it’s hard to determine if you are making a huge career mistake or doing something that would potentially change the entire trajectory of your professional life – in a positive way, of course.
Key factors for starting a successful startup
There are dozens of elements that can potentially make a startup company successful. However, here are a few core (and perhaps the most important) tips for building a startup that all entrepreneurs must keep in mind.
An idea that solves a real problem
Wondering what makes a startup successful? The answer is simple: a product or a service that addresses and solves a real-life problem for real-life people. Some of the most successful entrepreneurs of our time were able to gain success because they marketed an idea they had accidentally stumbled upon while facing an inconvenience of some sort themselves.
However, not every good idea can be marketed. Before proposing a business venture or putting anything down on paper, do extensive market research. You need to figure out if there is a gap in the market that your product or service can fill. If your product fits a specific need and solves a consumer pain point, you can start off by doing some test marketing and monitoring the results.
Another key success factor for startups is coming up with a well-designed product. Needless to say, even the best business strategy and a brilliant marketing team can’t make a product or a service successful if it is simply bad.
Similarly, if your idea only caters to the needs of a small group of people, you need to expand your niche product by focusing on a larger demographic. Selling a product to a targeted market might be less stressful and more successful at the beginning as you probably won’t have many competitors. However, your startup probably won’t be able to generate enough profit in the long run.
For entrepreneurs who want to build a startup from scratch, it’s perfectly alright to start small before growing into a bigger company. But a good leader needs to have that vision from the very beginning.
Moreover, here are some ideas to start a business with low-investment.
Harmony among co-founders
Nothing can put a company under quicker than a chaotic leadership. In order to build a successful startup, you need to work with people you not only trust to have your back but people who are also capable to help you get your business off the ground. Needless to say, you need to be extremely selective while deciding whom to go into business with. Just because someone has been a really good friend to you doesn’t really mean they would be a good or an efficient business partner as well.
However, you also cannot run a startup alone. According to famous entrepreneur and angel investor Dave McClure, every startup needs at least three core leaders: a hacker who can code, a hustler who can bring in the business and a designer who can make the product appealing to the consumers. Now, you might have the skillset for all three of these roles, but you won’t be able to focus on each aspect individually if you do it all on your own. It is imperative to form a team with trusted people who have both the ability to complete their tasks and can keep the moral high. If you have a good team, you are already on the right track.
Poor leadership is one of the biggest factors that influence business startup. Therefore, it is important to maintain a certain decorum while running a business. Moreover, it is just as critical to have mutual respect among the team members. All co-founders need to know their capabilities as well as their limits and assist each other. Hiring new employees is almost impossible for most small startups in their early stages. Therefore, co-founders have to rely on each other to make their idea popular and accessible.
Learning from failures
We all know how children learn to walk by first learning to fall, right? Well, the same model can be applied to startups. Despite all your hard work and flawless strategies, your venture may experience failure due to a number of reasons. However, instead of being dejected and losing all hope, a key success factor for a startup is to be smart and analyze what went wrong with the business model. You have to figure out the shortcomings that led to your failure. Once you’ve done that, try and learn from your mistakes so you can avoid a similar fate the next time you launch a venture.
It’s extremely rare for first-time entrepreneurs to succeed – at least in a big way. It’s great if your new business has already taken off. But if it hasn’t, you should see it as a learning opportunity.
Building a startup from scratch is a daunting task. If you’ve already been through the mill a few times and have been able to determine and eliminate the factors that became the downfall of your business, you are already in a much better position than those who are just beginning to test the waters.
Securing investment
Investment is one of the most important factors for starting a successful startup. Apart from having a sound working capital, entrepreneurs also need to secure funding in the early stages of their business. It’s definitely not easy and it sometimes takes longer than expected to attract potential investors. In that case, you can turn towards your friends and family members for investment. However, make sure to give them a timely return as soon as possible.
For a successful startup, the co-founders should know exactly how much money they need to raise. Apart from developing and disseminating the final product, you’ll also need funds to carry your venture through various redesigns and policy changes. All startups experience these at the beginning. Instead of constantly asking investors for more money, quote a sum that would help you hit a major milestone and help further develop your business.
Moreover, avoid overspending. Instead of hiring full-time employees and paying their salaries, look into outsourcing. You can definitely get more employees once your startup starts bringing in enough profit. However, it is a waste of money to hire more people when you can barely afford to pay for your marketing strategies and test your product. Therefore, one of the key success factors for startups includes making the most out of every single penny.
A suitable business model
You have a good idea and have been able to secure some funding? That’s great. However, no matter how brilliant your product or service is, you can’t use it to make money or even sustain yourself without a suitable business model or a plan.
Before you begin, you need to research some tried and tested business models. You also need to keep in mind the model being used by your competition. Analyze how it ties to the consumer-related problem you are aiming to address. Thorough research is yet another key success factor for startups.
This step can pretty much make or break the entire thing. Instead of reinventing a business model, entrepreneurs with no prior experience should actually look into what their predecessors have been doing to become successful. It is important for startup founders to spend as much time on perfecting a business model as they would spend on finalizing their product.
In addition, a potential investor is also bound to inquire about your business model before deciding if the startup would be able to generate some kind of return on their investment. If your plan doesn’t appear too sound or well thought of, you might face trouble acquiring funds to kick start your business.
Perfect timing and execution
Getting both the timing and the execution right is perhaps one of the biggest factors that influence a business startup. Your business model and strategies are only valuable if they are executed perfectly. A great plan with poor execution could lead a startup to its failure. Meanwhile, an average business plan with good execution just might work out long enough for the founders to figure out their shortcomings and improve them.
If you want to build a successful startup, you need to observe the market. Moreover, you have to determine when would be the best time for you to launch your product. Apart from that, startup founders should always be ready to deal with an inevitable crisis that will arise during the first few months (or even years) after your product goes live.
You must deal with a crisis in a proper and timely manner. Otherwise, it could affect your entire operations and eventually become your downfall. You can’t build a successful startup without outlining a crisis response plan in advance.
