Starting a business is one of the toughest challenges a person can face. In 2021, nearly half of US businesses started in 2016 had closed. One in five of those started the previous year had closed. These seven strategies will help your start-up be among the survivors.
1. Realize entrepreneurship is hard
Studies show the median age of billion-dollar business founders is 34. This doesn’t mean a 25-year-old will fail but suggests entrepreneurship demands discipline and hard work, and benefits from experience.
Many new businesses start out with high expectations, like receiving significant investment or being acquired by a rival. They think little about how they’ll become profitable.
Some entrepreneurs are so confident their idea will be a success that when they fail, they can’t turn things around.
In the real world, to make your idea take off, you need to put in enormous effort to understand clients’ needs, prototype the product, and know who to sell it to and how.
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2. Define your product’s value
Look at your product and think about the value it can bring to a customer. Is there only one unique selling point (USP), or can it be used for different purposes, by different audiences? If your idea about the product’s value for a customer is wrong, it can be too late to change it.
3. Test your idea: ask for feedback and adjust
In some ways, start-ups aren’t that different to enterprises. They both need to invent new products and continuously test ideas until they become profitable.
The big difference is the amount they can invest in research and development. Start-ups can quickly run out of cash. They may make rushed decisions on gut feeling.
Never ignore feedback from potential partners and customers. Find out exactly what they want from your product to make it more appealing. Be ready to test five, ten or more ideas before moving to the next stage.
Sometimes, you don’t have to invent something extraordinary, just improve upon what already exists.
Mattress retail start-up Casper decided to sell mattresses direct to customers to eliminate extra charges. In March 2019, Casper raised $100 million in funding and investment and is now one of the fastest-growing consumer brands in North America. Their strategy reduced costs for customers and generated brand engagement, loyalty and trust.
4. Create an effective business plan and financial model
A well-drafted and well-considered business plan demonstrate how your start-up will generate money and become profitable.
Having an idea and making it a tangible product is a great first step. There must also be a plan for selling it. Then, the product can evolve. Even minimal earnings, to begin with, are better than nothing. They show potential, which encourages investors to part with cash.
A well-thought-out financial model should help control your budget and ensure the business doesn’t run out of money in its early stages. While financial models seem daunting to those who have little accounting experience, there are plenty of templates and tools to help. Or, simply outsource this stage to another firm.
5. Understand your go-to-market strategy
Think about who your potential customers and audiences are, then decide how you’ll reach them effectively.
Start-up resources are often limited, so it’s vital to reach potential customers quickly with a message that encourages them to buy.
Even the biggest brands can get this wrong. Google tried to launch Google Glass, smart glasses that keep people online but didn’t know why people would need them. This meant increased costs and lack of demand.
If you have limited experience in the market you want to reach, you can go through a partner ecosystem – marketing collaboratively with other companies targeting a similar market for mutual benefit. If you do this, it’s essential to communicate the value proposition to your partners effectively. It’s all about encouraging and motivating them to work with you.
6. Build a team around your needs
Entrepreneurs can’t do everything by themselves. Hiring the right people early can make or break a start-up.
It’s not effective to hire people to fill stereotypical roles in small businesses. Instead, focus on hiring the roles you need most. While each employee has a crucial role to play that uses their expertise, they shouldn’t be limited by it.
Recruit chameleons: people who can work effectively in both their team and other aspects of the business.
This helps the start-up stay efficient.
How can an employer get the right balance of people, right? There’s no formula to rely on. It’s best to focus on forming a team around achieving your current goals. The next recruitment phase, with more of an eye on the future, can wait until the business starts becoming successful.
7. Set goals along the path
There’s one more important thing all entrepreneurs must consider. Behind every start-up, there are people with emotions, concerns, dreams.
Start-up founders and their teams may burn out and get bored because they can’t achieve their career goals and get sucked into a monotonous routine.
You must set goals, both personal and professional. Create a plan that clearly explains how to achieve these goals, so you can find inspiration to keep going.
There’s a difference between knowing the path and walking it. Businesses always need to adjust their initial plan. Nevertheless, this is the essence of entrepreneurship. If you’re throwing yourself into a start-up, be prepared.