The Startup Survival Guide
Over the last decade or so, our world was shaken by a massive explosion of startups. Today there are thousands of startups seeking to disrupt industries and new ones coming up every month. This abundance of providers is a remarkable achievement since you could count the number of startups on your fingers just two decades ago.
Startups are great because they democratize entrepreneurship and provide capital for budding business people. They help us radically transition from an era when only a lucky few would get venture capitalists’ funds. But with so many new entrants in markets worldwide, how can you ensure the success of your startup?
10 Ways Your Startup Can Survive
The first thing to remember about the industry is that not all businesses are created equal despite popular opinion. Just because a startup is doing well in an earlier growth phase does not guarantee success later. Take Google, for instance. It’s not hard to find information about Google’s initially unsuccessful attempts at business. Before finding its footing and becoming one of Earth’s most potent tech brands, the company had to go through losses of millions of dollars.
There are also numerous examples of startups that did well early on and then failed after they reached a certain level of growth, such as Apple’s former partner MobileMe. Businesses work in cycles; some last long while others fail quickly, but through market dynamics, business conditions change over time, even for the best companies in the world. The good news is that funding options for young startups have increased over the past decade and are essential to those who struggle to plan the financial support of a growing project.
If your startup is entering a crowded market with established players who have secured their positions already, there are at least three things you can do to compete with them.
Differentiation: customers love unique services
Make sure your product or service differs from existing ones in a way that customers are willing to pay for, such as easier use or better quality. This point is usually defined as USP or Unique Selling Point.
Expand the market by growing your share even in a crowded environment. You can achieve this through product innovation or producing products and services no one else is offering. You could develop markets that no one has tapped into yet, increasing customer loyalty and retention through excellent customer experience or cost-effective pricing strategies.
Branding: Capitalize on your uniqueness
If you’re having trouble differentiating from competitors, then brand yourself instead. Start earning your customers’ trust with special offers like price guarantees and giveaways during sales events. Research and set up marketing and advertising campaigns to create awareness and loyalty for your brand. And, of course, none of the efforts is justified without team synergy and a team committed to delivering their best.
The fourth is differentiation-by-acquisition
Instead of crossing swords with all your competitors as part of your long-run strategy to outperform them, look for opportunities to integrate or use their businesses. Such a strategy is generally not recommended unless the rival company is valued low.
Disruption: look for ways to reinvent your industry
Your products and services must provide something so innovative that it disrupts the existing business model. You can achieve this by creating an entirely new market output, like social media, or innovating faster than competitors and disrupting the status quo. While this may seem somewhat tricky, it is far from impossible, as evidenced by brave new startups like Netflix.
Getting the right people
It would help if you had passionate individuals committed to growing your startup. Do not be afraid to hire professionals who are better than you are – they can be an excellent source for insights you might never come across on your own.
Surround yourself with like-minded and capable individuals while providing the leadership necessary to motivate them towards greatness. When choosing employees, look beyond flashy resumes or educational credentials. Your trusty team better be ready to roll up their sleeves and do the hard work.
The good in launching startups value their clients, but the great in the business respect their peers even more. Gathering the rockstar team for your specific project is hard, but sometimes, the most challenging part comes from outside the talent pool. Apart from excelling at what they do, everyone must also get along with everyone else. Team synergy is sometimes close to impossible to achieve, the team sometimes looking no different than participants in a Big Brother show.
Before assembling your ideal team, make sure you know how each potential employee will fit into the larger picture. Consider cultural fits as a part of your overall hiring criteria. If the new hire dislikes working with certain people, has problems following directions, is not a good listener, or does not take criticism – you better find a replacement. Such a person won’t contribute effectively to growing your business.
Planning for growth
Only a few newcomers in startup businesses are ready to adjust their business to allow growth possibilities. It helps if you create goals and objectives that clearly state what and when you want to achieve and what resources are needed to get there. Create a business plan that documents your strategy for growth, including projected revenue, expenses, profit/loss statements, and financial forecasts.
Developing a solid management structure is key to meeting those goals and providing the necessary foundation for scaling up. You cannot afford to not think ahead in time and solely focus on getting the initial success. What if success comes immediately? Are you prepared to follow through? Many startups with incredible potential are in danger of crumbling if they did not set a clear plan for the future.
Close examination of competition
What can make you excel at what you do is finding out what your immediate business rivals are doing. Learn from them by taking a closer look at who their customers are. Keep track of new entrants, merge-and-acquisitions activity in your industry. If one or two companies become much more prominent than everyone else, ask yourself what the cause may be and whether your business is in danger of going stomped by industry giants.
Selling your business
In the art of stock trading, buying and selling are both parts of the same coin – neither is a wrong move if you have the correct prediction and act promptly. A similar condition exists in running a startup business. If all else fails and your startup struggles to survive amidst established competitors, you need to consider a way out – selling your business. One of your best buyers can be some of your immediate competition. However, before putting your business for sale, make sure you’ve depleted every other possibility to save it.
Surviving your startup: a few more tips for the road
Early-stage ventures are about building a product that solves a market problem. It would help if you take quality time and explore if your service covers an existing need. Few things are worse than spending lots of time and money developing something undesirable. Long before marching into the development phase, please do extensive research on your target customers/market!
Startups make the common mistake of trying to sell their idea too early because they’re keen to hit the ground at a high pace and get some validation from potential customers. However, this eager move puts off investors who want to see tangible and well-developed products and services first (assuming, of course, the startup is raising capital). In general, it’s better to keep your product development activities in-house for as long as possible, even if that means going without outside investment capital.
In the early stage of your startup, it is advisable to get someone with much experience or expertise running the show.
Since the initiation, you should participate in every major decision. Start putting some distance between yourself and operations so that you can focus on high-level activities such as sales/marketing, finance/accounting, business strategy. But be sure to stay close enough to know about the ongoing operations within the organization and quickly handle issues that call for your immediate attention.
Board members who are not actively involved with the company should be replaced by those who are. Passive observers do not contribute too much to business objectives. They do little to help reduce your risk profile (if you have a board member who’s constantly disagreeing with everything you say/do, then that person needs to go).
Also, boards composed of more than 5-6 individuals usually become dysfunctional because too many cooks in the kitchen spoil the dish. Think twice before inviting people on board.
Legal matters can be challenging for startups: What type of legal entity do you form? Sole Proprietorship? Partnership? Corporation? Or LLC (limited liability corporation)? The different options carry the usual advantages/disadvantages that must be measured and carefully selected. Whenever possible, incorporate in Delaware (it’s a great state for business owners), and then you’ll automatically be a C-corp unless you decide otherwise.
You should have an office of some sort, even if it’s just a tiny desk in the corner of your bedroom! Too much work from home may blur the lines between personal and professional activities. Although your home office may distract you from doing the essentials and expose your company to accusations of impropriety, it is necessary for our post COVID economy. On the other hand, having on-site employees will also create issues with income/employment taxes. So pick somewhere within driving distance where there are office buildings equipped with reasonably priced “coworking” facilities.
You will need a website and preferably a domain name that’s easy to remember and type into a web browser. There are many online spots where you can register a domain name for free, but a good business domain usually requires a modest fee.
Make sure all of the information on your website is correct at all times. Thoroughly vet any content or data contributed by others before including it on your web pages. It is essential to have a public email address so that all interested can contact you directly with questions, comments, or suggestions.
As the world of technology is evolving rapidly, The Era Of Tech Giants has started to dominate the business landscape. Entrepreneurs can no longer be complacent and must continuously innovate to develop products and services that disrupt older models. They must indulge in a constant urge to meet new customer demands. To retain customers’ attention better than your rival businesses do, it helps if you know how to analyze your competition and elevate your marketing efforts.
These are some of the ways startups survive with the omnipresent competition from tech giants. In an era of tech giants, where humongous companies like Amazon, Google, Microsoft, or Apple roam, it takes courage and an incredible amount of innovative power to make a meaningful impact. There is always room for those who dare start something new where others have failed before!