Driven by an ethos of self-reliance, rugged individualism, and the merits of a winning idea, you have committed to becoming an entrepreneur. It is a daunting proposition, and the specter of failure looms at every turn. Though there’s no formula to ensure a startup’s success, there are guiding principles that can improve the odds.
You have a great idea, industry experience, and have established connections with investors willing to fund your startup. Will it succeed? Will it be worth all the sacrifice, and the risk you took giving up your full-time, stable job to pursue your entrepreneurial dreams? Dispiriting as it may seem, the reality is, nearly 9 out of 10 startups fail. The primary reason is an unwillingness, in the early stages, to acknowledge indicators of failure. However, if you understand the challenges, and are adaptive enough to work on them, then there is a greater likelihood your startup will survive and thrive.
Quiz : Best Indicator of Successful Startup
Here are some of early signs that a startup will make it:
1. Clear strategy
A great idea in the abstract will be irrelevant if it does not offer any tangible benefit to prospective customers. Your idea must be marketable and offer solutions to the problems of real people. Your product will only sell if it makes the lives of others easier or more convenient.
This Entrepreneur report gives strategic insights into the ways in which a lot of people rewrite the histories of companies based on hindsight bias – something that we know about the present. Highlighting the startup success example of Uber, the report adds that we all know Uber as a taxi service app that enables you to summon a ride at the push of a button. However, the very first iteration of the company was just another car service in San Francisco, with a technology twist called UberCab. The chief takeaway is the necessity of formulating a rock-solid strategy based on innovation and marketplace and customer needs.
Watch : How To Create A Strategic Plan For Your Startup
2. Validated Customers
You must know your customers through engagement, and be able to anticipate and profile their consumer tendencies, and whether they are willing to buy your products. Hence, it is necessary to retain your initial customers as well as grow your base to woo more consumers. If your early customers are satisfied with your products or service, they are bound to tell their family and friends about it. If you are successful in getting early customer traction and loyalty, beyond that obtained through media and advertising, that’s a good sign of marketplace validation. Word of mouth publicity will help you in getting your product or service across to your end-users quickly.
3. Adequate Funding
If there is one thing that can stop a promising new business in its tracks, it is unsteady cash flow. Most successful startups work hard to secure funding from investors and other sources. Once they have the funds, they are very careful and conservative in spending it. They avoid overspending and scaling up excessively in the initial six months. A successful entrepreneur understands that a lean approach to business operations in the first few months is a winning strategy.
Taken to its furthest extreme, Dan Dyer, (CEO of NASCAR Car Wash), noted in Forbes that none of his high-flying executive contemporaries have ever managed to justify the genuine need for a private jet. According to him, a company jet is a wasteful expenditure and transportation to bankruptcy.
Watch : The Metrics VC’S Use To Evaluate A Startup
4. A Great Team
A great company is known for its great workers. It is important to find the right people for the right role; people who are as enthusiastic as they are effective. Make sure you have a winning team who are as passionate about their work as they are about considering your company as their own. Be honest, transparent, encouraging, and open with them. If you don’t have the right team, you won’t have the capability to get customers.
An IQVIS blog points out that your team should be committed to the extent that, irrespective of initial failures, they will remain forward-looking and focused on the bigger picture, and not inclined to quit. The team must be proactive, dedicated, responsible, multi-talented and positive workers who can facilitate your startup’s success.
In our digital era, working in secrecy is not a feasible business model. An analysis by Creately indicates that startups operating transparently attract better employees, minimize bad press and prove that life is simpler with fewer secrets about billing methods, pricing and customer acquisition strategies. You must operate in a manner as if you are being watched. This will help you to avoid any embarrassment.
Success in business is driven by many factors. Luck will always play a small role. Hence, it is advisable to neither be too overconfident nor pessimistic about the fate of your startup. Have a winning idea, build the right team, get the cash flowing, and try until your startup hits success.
Even if you face hiccups or failures in the beginning, if you are able to get your act together fast, you could be at the helm of a startup that perseveres and thrives.