There’s no doubt about it: starting a business is hard. There are many reasons why small businesses fail, even if they have a great product or service, plenty of funding, and otherwise do everything the right way. According to a study by Shikhar Ghosh, a senior lecturer at Harvard Business School, as many as 95% of startup companies never see their projected returns on investment.1
Still, there are some things that entrepreneurs can do to help boost the likelihood of success. Given that SingleHop is itself a startup company, we thought we’d share some of our own ideas about what can help a startup business thrive.
1. Improvement to an Existing Product or Process
Most successful new businesses are not built by creating new products and services from whole cloth, but by figuring out how to simplify the products and services people already use on a daily basis. Sometimes that simplification comes in the form of fewer manufacturing steps in order to make producing a product easier and more cost effective. Sometimes it comes from saving time for customers, such as by simplyeliminating a field or two from forms.
That’s not to say nobody ever comes up with completely new ideas – that certainly happens. However, in this technology-driven era of quick service and intuitive products, a startup is more likely to succeed by improving something that people are already familiar with than by trying to convince them that they need a new product or service in their lives.
2. Willingness to Adapt
Successful startups are flexible. They can sense the tradewinds of the marketplace and learn to move along with them. Software companies don’t stop at version 1.0, just like car companies don’t stop trying to eke out more efficient gas mileage. Startups that want to succeed can’t ever be satisfied with the first draft. They need to watch and learn from customers, competitors, and even developments in other industries to find better ways to deliver valuable products and services.
Sometimes adaptation means more than simply improving an existing product and service. It might mean expanding product offerings or exploring new areas. It might even mean throwing out the original plan and coming up with something new altogether. For example, Coleco – the maker of early video game systems and Cabbage Patch Kids in the 1980s – is an acronym for Connecticut Leather Company, which describes the type of products the company made when it first started out.3 Ultimately, knowing when and how to change focus in these ways is crucial for flourishing as a startup company.
3. A Head in the Cloud
Lofty goals are great, but we’re talking specifically about cloud computing. Obviously, technology is a big need (and cost) for startups, but these days, cloud services are particularly necessary for a number of reasons. Compared with twenty or thirty years ago, it’s incredibly easy to become an international business essentially overnight. That means it’s even more important to have notes, documents, presentations, videos, and a variety of other kinds of files readily available when meeting with clients, financiers, and other business partners.
Startups also need to think about how best to protect their digital business assets, like using a hosted private cloud for document storage, offsite backups, and other on-demand applications. Cloud services are customizable to meet a startup’s specific business needs, and they are scalable to allow for seamless growth when expansion is necessary. In the highly interconnected world of today, cloud services can provide much of the technological heavy lifting startups require.
4. Funding for the Future
Having an excellent product, a willingness to improve, and technology solutions to support your process will only take a startup so far. Making it all run smoothly requires the lubricant of the market: money. Whether it’s in the form of loans and credit lines or dedicated backers like a venture capital firm, startups need access to some form of capital to build a foundation for their business, especially before they start making any sales or charging any fees.
There are far too many variations on how to get funding to cover them all. In general, successful startups need to make hard and honest calculations to ensure they don’t overextend themselves. Balancing the need for funding with an appropriate estimation of how much a product might be expected to earn is perhaps one of hardest aspects of building a successful startup.
5. Attracting the Right People
Finding the right people to help create and operate a startup is critical to ultimate success. Success means growth all around, with new positions being created as individual tasks become too big for a startup’s founder(s) to complete on their own. Finding competent, knowledgeable people who have the enthusiasm to offer new insights and improve the business model is absolutely essential to success.
On the other side of things, a successful startup has to know where to find its best customers. Assembling a dedicated customer base early on will help the startup financially, as well as provide a much needed emotional boost and validation that customers actually want and need the products and services the company provides.
But Wait, There’s More
Of course, these aren’t the only things that go into making a successful startup company – there’s also good timing, hard work, discipline, etc. – but they are definitely at the core. Every startup that wants to establish itself as a respected brand needs all of these things at a bare minimum. Figuring out these five things will put any startup in a good position to grow into a thriving business.
Join our London Fintech Startups #TMUFintech Thursday, 24 September 2015 from 18:00 to 21:00 (BST)