Not all business ideas transform into success stories, but that does not mean one should never take a risk
Being your own boss is a dream that everyone strives to realize. Whether it’s building a brand from the ground up or persuing some passion, the prospect of becoming a successful entrepreneur excites us all.
However, it’s not all roses and unicorns when it comes to starting a small business. Some ideas transform into multi-billion dollar empires while others fade into oblivion.
Although it’s hard to pinpoint the exact reasons why some startups thrive while others fail, there are some patterns that can be noted. There are common factors separate the winners from the losers in the startup game.
Also Read: The nuances of fundraising: what startups need to know
But before we get to them, there some statistics that are enough to shock, excite and scare every aspiring entrepreneur.
Some fascinating startup stats
Did you that 34 per cent of the startups that were established in 2000 closed down in 2002? There are some other numbers that speak volumes about the startup culture particularly in the United States.
34 per cent of startups have owners that are 20-29 years old
Gone are the days when people with decades of experience ventured towards their own business. Professionals, especially in the tech industry, are now starting at the ages of 20-29.
This means they are high in spirit but low on experience. Similarly, 40 per cent of startups is founded by people that are 30-39 years old. Surprising, only 5 per cent of startups have someone above 50 at the helm.
39 per cent of startups have a single owner
It’s lonely at the top for 39 per cent of startup owners that go into the business alone. While 40 per cent of entrepreneurs start with a partnership, only 4 per cent of startups has 4 owners.
Due to a limited number of owners, the financial constraints are always an issue with startups.
High-tech startups are biased towards four cities
Boulder, San Jose, Cambridge, and Seattle have become a hotbed of high-tech startups. These cities see around 50-60 startups emerging every year. Tech-giants have taken a liking to these cities.
75 per cent of startups fail
If you are going to start your own business, the stats dictate that you have a 1 in 4 chance of achieving success. If you’re launching a product, the chances of it failing are a staggering 90%. So the odds stacked against you. To be successful, you need to have a measured approach.
How you can be part of the 25 per cent
Below, I will explain what entrepreneurs can do to radically increase their chances of success.
Also Read: Can partnerships with other startups be impactful?
Know your market
While it’s natural for business owners to believe that their product might have a mass appeal. It’s extremely unlikely that something will appeal across all demographics.
So before setting up your business, it’s highly recommended that you extensively research the market.
As Julia Markle writes in her blog, going in without any research will lend you in unfamiliar territory. While business owners use different methodologies of research, the purpose remains the same.
The goal is for you to know your potential customers, their spending habits and budget limitations. Using online directories is a good way to conduct some in-depth research.
You will also gain some insight into what resources you need to build your business. From the best communication channels, marking opportunities to possible collaboration, you will know which resource to utilize and when. Of course, your budget requirements will also become much clearer.
Have a sound financial strategy
Initial capital for a startup generally comes from the owner’s saving with certain help from friends and family. Some entrepreneurs also utilize angel investors and crowdfunding to ensure a proper influx of cash.
However, it’s imperative for a small startup to consider their future expenses as well. Not to forget, potential setbacks should also be taken into account. There’s always a chance that initial customers won’t pay their invoices in a given time.
This is where invoice financing becomes an option to keep the irregularities and help your business until the client comes through with the full payment.
Build a brand
Had Steve Jobs envisioned Apple as just another run-of-the-mill tech company, things would’ve turned out differently. Instead, he elevated the brand by putting innovation at its forefront.
This shows how important it is to have a purpose, vision, and mission for creating a strong visual identity. People will connect with your brand better if you tell a story. You will need to find some common ground with your audience and communicate about the gap that you intend to fill.
All you need to do after this is invest in marketing efforts. Utilize all the appropriate channels and create unique and appealing content that makes your brand appealing. Your marketing efforts should reflect your overall business strategy.
If it’s the online shoppers that you’re after, create an all-inclusive digital marketing strategy covering everything from SEO to social media marketing.
Also Read: “Nail it then scale it” – the new mantra for startups
Create a powerful team
At first, hire roles that you cannot fulfil.
This could be accounting, HR, marketing and legal. It’s always good to keep your options open. Sometimes you will be better served to work with freelancers on a project basis than hiring a full-time employee. As your business grows, your mode of business will also transform.
Find people who share your values above everything else. As these people will be the first ambassadors of your brand, they should reflect the ideals of your business.
Remember to be empathetic. Dan Granger of Oxford Road explains his strategy of attracting and retaining talent as “Caring, caring, and caring. To the point of exhaustion. In every way, I know how.”
Good leaders instil loyalty in their employees by treating them with respect and dignity.
TLDR version:
- Research the industry and potential customers
- Create a sound financial strategy and have a backup plan
- Build your brand by communicating your vision to the masses
- Hire individuals who share your values
Conclusion
If you come out on top, you will be able to do something that 75 per cent of entrepreneurs have not.
Although luck played a role in the success stories of Apple and Amazon, there are some common reasons these startups succeeded. They knew their market, had a potent financial plan, build a strong brand and formed a good team.
If you’re getting these things right, you are setting yourself a major win.
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