Nine secrets of turning your budding startup into a success

The what-to-do list

You should know how you can differentiate effectively from others in the market andbuild your Unique Selling Proposition. It could be either finding a gap in the market and trying to fill it up by innovation or value addition, or building better relationships

Founding a startup is not difficult but managing it is indeed difficult. The startup genome report coauthored by researchers from UC Berkley and Stanford tells us that 90pc of technology startups fail every year. Another survey by Statistics Brain Research Institute tells us that almost 65pc of information technology startups fail in their first five years of business while overall in all industries this percentage is around 50pc. This means that almost half of the startups founded every year tend to fail. It is important to avoid mistake which others have already made to sail the boat of your startup as smoothly as possible. Here are the nine secrets to avoid the common pitfalls which can become major obstacles in your startup’s success.

1. Gain relevant experience:

Nowadays it is more fashionable to term a new tech related business to be called a startup but a startup can be anything. It can be any business ranging from offline businesses e.g. import, manufacturing or services to online modes e.g. new Business to Business products (B2C), e – commerce or any online disruptive model. The most important thing in a startup whether it is an offline or online one, is to have relevant experience of the industry which you want to target e.g. If you are building a property portal app, you should have a real estate experience. It is important because every industry has its own peculiarities. In order to understand the industry and your customer, you should be an industry veteran or posses minimum industry relevant experience of around 3–6 months.

2. Cash flow is king:

It is an old adage in business finance that cash is king. Cash flows in a business just like blood flows in the body. Without cash, a business cannot pay its bills, pay employee’s salaries and make payments to its vendors. So, it is very important to manage your cash flow. It is even more important if you are having a B2B business which is on credit. Data by Statistic Brain Institute shows that 30pc of startups failed because of poor credit granting practices. So try to keep your cash flow positive i.e. the time period of getting the payments from your customer should always be less than the time period in which you have to pay your vendors/suppliers. And if is not positive then have a strict check on it.

3. Keep an eye on basics – account keeping:

In the excitement of our new idea or the unexpected growth we often forget the basics; the boring stuff which we feel not important but is the core of any business – account keeping. Never keep your books unattended. Hire a professional accountant for your book keeping or learn accounting from any online course and deploy any simple accounting software e.g. peach tree, quick books, etc. According to the data by Statistic Brain Institute, 46pc of startups fail because of ineffective book keeping. Similarly, savaree, Pakistan’s first car sharing app, failed because they did not maintain their accounts as one the founder confessed in one of his blog posts.

4. Focus on your key metrics right from day one:

A business is not just creativity. It’s pure maths as in at the end of the day you have to make money through your venture. So, if you are going to measure your key performance indicators right from day one it will help you a lot in managing the success of your business as you will know much better that where are you heading. Your key metrics can be anything related to your business e.g. number of leads generated, percentage of conversions from leads, your sales revenue, customer cost per acquisition, etc.

5. Make a solid business plan:

Preparing a solid business plan is a central key to the success of startup be it an offline or online, traditional or disruptive one. You should know the pain point which you are going to solve for your customers, your target market, average customer persona, market size, how you are going to market your product, your costs for managing your company, your sales projections for the company in the in the short, medium and long term, in how much time you expect to break even, how you are going to fund your startup and how your startup will generate money. You should know how you can differentiate effectively from others in the market andbuild your Unique Selling Proposition. It could be either finding a gap in the market and trying to fill it up by innovation or value addition, or building better relationships and giving effective service than your competitors, having a wider product base or having some unique functional feature of your product which others do not have. Whatever it is, you should try to differentiate from others in the market. Usually, new startups in the traditional business segments try to get a market share by lowering their prices but that should not be adopted as a long term business strategy. Rather, the focus should be on innovation and value addition, improving quality and building better relationships with your customers. Business model canvas and some other tools can really help a starter in building a business model and answering all the required questions.

6. Don’t try to conquer all the market all at once:

Jack of all trades but master of none is an old adage and it applies to startups as well. If you will try to attack all market segments at once you will end up conquering none. The reason behind it is that a startup has usually less resources and it needs to channel those resources on one specific niche rather than all the market segments. Even Amazon, the biggest retailer in the world, started with a particular niche market of selling books and then later expanded to other categories. Similarly whatever business category you are in, pick up a niche market which you feel has less competition and big market size and try to focus on it rather on everything.

7. Be customer centric, not product centric:

The research on startups by MIT suggests that ideas or products change in the course of a startup. The startups that focus on their customer needs and market insights and transform their products accordingly have a higher probability of survival than those who remain stubborn on their product. An MIT lecturer and a technology entrepreneur, Bill Aulet, started with a medical simulation company but ended up in an industrial design company. Snapdeal.com, one of the largest e commerce websites in India started as a discount couponing website initially but after observing their customer feedback, they converted it into an e commerce market place which proved to be a huge success.

8. Do not lose hope in the start of the journey:

The entrepreneurial dream is not a smooth journey. You may make very smooth and wonderful projections on paper but never expect them to go in the same smooth way. Starting a new company is like sailing in turbulent waters not knowing what may lie ahead. There are many ups and downs, disappointments and excitements. The key point is that you should not never lose hope, keep working hard and learn from your mistakes simultaneously. If things do not go according to your plans then make new plans based on market realities. To be more realistic and pragmatic, you should always make three plans for your sales projections. One should be the ideal case scenario, the second one to be the moderate case scenario and third one should be the worst case scenario and you should base your sales expectations and financial planning on the worst case scenario.

9. Build an effective team:

“A good teamsky rockets your business success while a bad team can ruin your business” is the common business sense in the startup world. It is your team be it in sales, technical or in the operations department whose combined efforts are going to make a difference for your startup. If you want to build an effective team then try to be a real leader yourself and hire the best talent. Try to set examples yourself by showing punctuality, respect for deadlines and instilling the passion of your hard work and company mission in your employees. If you will not come on time on your office, not complete your own deadlines your team is surely not going to work for you. Try to hire proactive people who can also give advice to you and are not mere back benchers. Instead of being bossy let them do a positive critique to improve company strategy and performance. Try to build a company culture which rewards hard work, performance and innovation.