What are the Success Factors for a Start-up?
Entrepreneurship isn’t just a concept that we romanticise, it’s hard work, let’s be honest. It may be a magnificent combination of excitement and promise but behind every successful start-up, there’s a team that’s vigilant and ready to respond to surprise and challenges, to bring their big ideas to life.
Like a new-born, a start-up requires commitment and care. In an age where ideas abound, it’s one thing to generate a great idea, it’s another thing to build a viable business!
When building a company, much of your time and energy will be spent organising and managing everything from product, team, cost, marketing, branding, customer service, office location, overhead cost etc. It’s tricky to get these things together smoothly and efficiently without any mishaps.
Where do you begin when everything demands your attention right down to the last detail? You’ll need to start by focusing on the most important things– but don’t get overwhelmed. Sounds exhausting but when you start reaping the fruit of your labour, all the pangs of building will have been long forgotten by then.
Begin with the end in mind
“Chase the vision, not the money; the money will end up following you.”
–Tony Hsieh (Zappos CEO)
Above all, begin with the END in mind. Stephen Covey, a renowned author, educator and businessman, in his bestseller, The 7 Habits of Highly Effective People devotes the second habit to this simplistic yet powerful approach to business.
According to Dr Stephen R. Covey, author, educator and businessman, “people are working harder than ever, but because they lack clarity and vision, they aren’t getting very far.”
When running a race, for instance, if you start with the idea of finishing and winning, your instinct will push you no matter how tired and despaired you are. It’s a basic instinct that takes charge almost instantaneously. You know that at the end of the race, you’ll attain a sense of personal achievement. That gratification which follows the achievement through your own efforts provides you with intrinsic rewards. Simply put, a system of neural pathways and chemicals generates a feeling of pleasure every time you accomplish.
Beginning with the END in mind propels you in the direction that you need to go and helps you navigate your way to success. The ability to visualise where you want to go empowers you to reach where you want to be.
Another metaphor for starting a business is the process of building a house- just as a blueprint provides a visual representation of an unbuilt building, so too a vision provides a picture of a new venture.
Having said that, a vision is only as valuable as its ability to be implemented. So, make sure you combine your great idea with a clear vision of what it is you are trying to achieve, and a framework of how to achieve it with the skillset to properly execute it. This will help you get off to a flying start.
As Malcolm Gladwell succinctly puts it, “An innovator who has brilliant ideas but lacks the discipline and persistence to carry them out is merely a dreamer. That, too, is obvious.”
The working capital
Capital is a prerequisite for your start-up to grow. As a young company, you need to understand where the initial source of capital will come from to fund operations and development of an “MVP” or Minimum Viable Product.
A business in its infancy will require sufficient financial fuel to keep it going and survive until the venture is making money of its own.
In addition, it is imperative not to forget your own means. It is all well and good to have a business with a spot-on cash flow but if you can’t afford to pay your own rent, the business will have no one to helm it.
Make fundraising your priority and not something you put on the back burner. When you’re comfortably funded, it pushes your chances of success by fending off the biggest threat of any business- Capital Risk.
However, a note of caution: Over-funding is just as bad as Under-funding.
Over-funding can have a negative effect on the decision-making process, especially for a young company.
As Fred Wilson says, “But because lots of capital is available, the company takes on the capital and then that ends up resulting in no constraints on decision-making, and so a company decides to do five things instead of one, and they do five things poorly instead of one thing well.”
Fits like a glove
A market/product fit is one of the important success factor. The ‘fit’ is that perfect meeting point between what you offer and what the market needs/wants.
The product/market fit is a great “mental model” for the interaction between businesses and consumers and understanding more about it enables you to observe, notice and explore new ways to create value for your customers.
According to Andrew Chen, general partner at Andreessen Horowitz, once your product is out in the market, there are ways you can test to see if there’s good ‘fit’ or not.
#When user testing, do people group your product in with the “right” competitive products?
#Do they understand the differentiation of your product versus your competitors?
#Will some segment of users in the overall market switch to your product?
#Are some users who’ve “rejected” the products in the market willing to try your product?
#How do your underlying metrics (DAU/MAU, +1 week retention, etc.) compare to your competitors?
If the answers to the above questions are affirmative, then making assumptions about the product/market fit is perfectly reasonable. Achieving the ‘fit’ allows for traction of revenue growth that will attract more capital.
Those who hold the reins of the company play a pivotal role in driving the business in the right direction as they hold the key to a vast opportunity to advance the business. Ask any VC what they look for when investing and most will answer No 1 as ‘great team’.
A successful leader is one who is willing to ‘learn and adapt’. This leadership quality has come to the fore and is regarded to be one of the defining factors of successful entrepreneurs.
“The world of start-ups is so unpredictable that you need to be able to modify your dreams on the fly. The best metaphor I’ve found for the combination of determination and flexibility you need is a running back. He’s determined to get downfield, but at any given moment he may need to go sideways or even backwards to get there.”- Paul Graham (programmer, venture capitalist, and essayist)
According to the Startup Genome report, which looked at 650 internet start-ups, found out that founders that “learn are more successful. Start-ups that have helpful mentors……learn from start-up thought leaders raise 7x more money and have 3.5x better user growth.”
Impeccable attention to details
“If you don’t understand the details of your business you are going to fail.”
Jeff Bezos (Amazon’s chief)
Unsurprisingly, any successful and influential trailblazer from Gordon Ramsey, Richard Branson to Steve Jobs, just to name a few, will tell you that it’s all in the details. Having an incredible idea is incredible, but “big ideas are only as powerful as the details behind them.”- Jayson DeMers.
Don’t DISMISS gut feeling
Last but not the least…… Steve Jobs called it “more powerful than intellect.” Albert Einstein called it the sacred gift.
Humans are endowed with many unique faculties. We are a well-spring of ideas, invention and innovation. We have an insatiable appetite for novelty which makes innovation necessary
So, what’s the point? The point is that, if we can naturally come up with good ideas, invent and innovate then we also naturally have ‘pointers’ that direct and guide us.
If the ideas that emanate from deep within us are worth paying attention to, then the voice that emanates from deep within us must also be worth listening to. As Sonia Coquette once said, “When you follow your gut instincts you are putting something very natural to work. Your intuition will take you beyond the threshold to a place that reflects your most passionate interests and nature.”
These are just a few pointers to help start-ups on their journey in creating successful ventures. The launch of any great business will never be without trials and tribulations and remember that beginning with the end in mind is one of the trademarks of great leadership.
If you have any queries, comments, suggestions or want to know more about subjects surrounding start-up, please write to us. We’d love to hear from you!