Regardless of the line of business you are getting into, the beginning is bound to be difficult. Startup companies are being born in astonishing quantities (400,000 expected to be launched by the end of 2015), but they die at an amazing rate, as well.
Namely, around 90% of businesses fail in the first five years, while only 18% of entrepreneurs succeed in their first venture.
Therefore, entrepreneurs need to be really smart about their launch strategies in order to succeed. This especially relates to those with no previous experience in surviving a startup launch because they are likely to face even greater challenges. Nevertheless, as long as they keep their focus on strategies that matter, they increase their chances of getting to the top.
Innovative business models
Prior to the internet era, many companies used to focus on creating products without planning their marketing strategies in advance. They would engage in promotion and marketing only after the product is released, hoping that customers would want to buy it.
This so-called pipe-based business model enables a business to take linear flow, as the values are produced upstream and consumed downstream. TV and radio still often work based on this model, but this doesn’t mean it’s efficient for all types of businesses, especially startups.
The new platform-based business model enables startups that struggle with finances and resources to compete with big industry names. It makes the interaction between consumers and producers possible by matching participants with each other and providing central infrastructure on which they can create and exchange value. Consumers are not passive anymore, as online platforms allow them to participate and co-create. As opposed to the pipe model, the flow is circular – the more customers there are, the more producers there will be.
Some companies like YouTube, Wikipedia and oDesk chose to take pipe model and transform it to platform completely. The new sources of supply they created were inferior to traditional ones in the beginning. However, over time, they gained popularity among consumers, attracting more and thus ranking higher in quality. It can be quite challenging to create new user behavior, and platforms solve this through curation, making it possible to vote and rate. This way it is easier to separate the best ones from the rest.
It is possible for pipes and platforms to co-exist, but it seems that there will be more opportunities for platforms to thrive next to traditional approach by creating greater scale. Employing platform thinking to your business, you can rest assure that you will not play low for the eternity, but eventually get the chance to compete with the industry’s big fish.
Focus on scalability to win investors
Many investors would agree that scalable startups are the best investment, as on the long run they are most likely to multiply their revenue at low initial cost. A ready-to-scale business is the one that has a legit product as well as business model, and is able to expand to new geographies and markets.
This kind of business model enables startups to achieve the impossible: increase their profit without increasing the cost. But how exactly can you make sure your business is scalable and investor-friendly?
- Do not concentrate on either consumers or investors, make the balance. These represent two ends of one stick and changing one means affecting the other, which is why they have to be synchronized.
- When you need a consultation about your business or product idea, statistics are the ones that never lie. Look at your competitors, other successful startups, see what their initial model was and try applying it to your business plan. Good research attracts investors as it shows them just how serious you are about your work.
- Invest in market research from the start; develop a content marketing strategy to help you gain authority online and stay connected on social networks to monitor your consumers’ behavior and interests. Of course, don’t forget to pick a great .ME domain name to make your brand more memorable online.
Be smart when you work on innovative products
Bringing innovation to competitive industries can be quite tricky. There are decades-old legacy systems that seem impossible to change because people tend to respond better to what is familiar to them. They have certain standards that you have to meet one way or the other, which is why all forms of innovation need to be implemented strategically.
Your idea might be groundbreaking, but not everyone will respond to it immediately. Since you are aiming for the instant profit and want your startup to thrive now, you have to listen to your customers and understand their needs.
Eric Ries, who introduced lean startup methodology, said that 9 out of 10 startups fail because they waste time building products that people do not want to buy. In order to introduce your innovation fast, you have to learn fast, which is way more important than growing fast.
As previously mentioned, pipe model is an obsolete thing. This means there is no more designing a product, pushing it to the market and taking a leap of faith. This tactic will lead to products that customers do not want to buy, regardless of the marketing strategy. According to Agile/Scrum approach, you need to build a small piece of your idea in a short time frame and evaluate your customers’ reactions. You can learn a lot from it by working significantly less.
When it comes to the lean startup method, it refers to building a product step by step with constant testing to see what works. For your business, this means you could build a landing page with free trial only or release an app even if it’s not completely ready. If people do not even want to participate in it, then you know that there is no point in launching the idea in the first place.
Lean approach is about creating order in the chaotic business world. It is about testing the vision you have and leaving ‘just do it’ approach to Nike. If you figure out what is the right thing to build in the first place, you will not waste months waiting for customers’ feedback.
To reach the top and stay there, you have to work smarter rather than harder. It is of great importance to get familiar with industry trends in order to build effective tactics. Put a process around the product development and answer the question whether you “should build a certain product” rather than “can you.” Learn not what your customers need, but what they actually want to buy and you’ll be more likely to succeed.