This is yet another weekend, and today we want to consider startups. What are startups? There are so many views about the definition of a startup but we can broadly say that a startup is a new business venture or a young company just beginning to develop. It’s a new business aimed at meeting a need, want or problem in the market place through products, services, platforms or processes. Some people however argue that a venture can only be recognised as a startup when new products or services are developed usually under very uncertain environments. They argue that a startup is established to solve a problem where the solution is not obvious and success is not guaranteed. This second idea of startups seems to rule out replicas in business, and yet the business world also freely uses the phrase even for replicas.
This blog is not about the definition of startups. It’s not about the arguments regarding the definition. Rather, it’s about top issues or things that an entrepreneur must know in order to make his or her startup successful. Where the new business venture is principally a replication of an old idea (which some people argue is not a startup), the main focus is simply on execution. However, where the startup relates to new products and services, solving problems whose solutions are not obvious etc., there are usually many more challenges. The critical issues addressed below are relevant to both situations though some relate more to non-replication business ventures. An important aspect of a startup is how to build a sustainable business, and not just the product or the service. This is vital for success.
So, what are the 13 critical things an entrepreneur must know to make a startup successful?
- A faster understanding of the market and customers is vital. The lack of knowledge of the market and the customers a startup is focusing on is usually a main hindrance to the success of startups. Don’t you agree with me? Don’t over rely on market research and think that it is everything. Customers may not understand your product concepts. Your strategic analysis of the market could be terribly wrong, and yet you build your plans on that. This means that you need to be flexible to change. Once you have known the truth through customer action over time, that same truth will make you free from the heartaches of uncertainty as a startup but this takes some time. You might need to change positioning of the product or the business. So, a good knowledge of the market you want to enter into and dominate, and the people therein, are important.
- There is usually need for iteration of products and services. The fact that you are new in business and are working under extreme uncertainties makes iteration or testing products and services fundamental to success. Come on Mr. Entrepreneur, your vital goal here is to build or bring and offer what people want and can pay for as quickly as possible, not what your mind tells you they want. You can only start planning to scale up the startup after you have established this fact otherwise you will be on a journey of fools. You might spring up with something people dislike like plague. Customer experiences are vital to the success of your product or service, hence your business. Getting customer loyalty is a challenge. Customers may not even know what they want. You have to create and deliver value that pleases people and makes them pay for it.
- Metrics and other approaches to measuring success don’t make sense. My dear entrepreneur, you also need to know that the common metrics and approaches used in measuring success in long established businesses do not work for startups. What I’m saying is this: the traditional business evaluation and performance management parameters don’t make sense for many startups. Yet, small incremental numbers may mean a lot more in startups than you think. Do you understand this Mr. Entrepreneur? Don’t go and hang yourself because your statistics are very far away from those of established competitors in that industry. You will get there gradually. This means that for you to make your startup successful, you need to develop your own way of assessing progress initially, and also have patience to continue working with hope, otherwise you miss it altogether. Don’t rush too much with a startup.
- A startup is a beehive of activities and chaos. This knowledge is important because some of us don’t like confusion and chaos. I’m not talking about the kind of chaos that is useless and unproductive. I’m talking about productive chaos that is disruptive in a way. This is vital for success. In a startup you are at the same time trying to improve your products and services, get funding, furnish your office, recruit and develop staffs, get new customers, modify your business model, get a product road map etc. It’s an endless array of things that go in your mind every day until the business stabilizes. Am I not speaking the truth? For you to succeed you must be comfortable with this chaos and multitasking, less you take off and disappear when no one is chasing you. Do you get me?
- Renowned managerial styles and approaches might not work. Another cornerstone for success in a startup is for you to know that renowned managerial approaches and methods might not work in a startup environment. I mean, the prevailing managerial paradigm don’t usually work in such cases. I know that many people have read books; many prime-time managerial books for that matter. Many pride themselves in having master’s degrees in many things including business administration itself. The irony of it is that they fail to successfully run their startups and yet they are successful business executives for big corporations. This is the gist of the matter. Never carry your big grammar and corporate lifestyle you deploy in big corporations and think that it will automatically work in startups. It won’t. Period! Many CEO’s of big corporations cannot dare throw themselves into startups, and if they did, could fail catastrophically. They are used to leading and managing order and not chaos. You need to be smarter than that to succeed in a startup.
- The need to pivot is almost certain. By pivot I mean redrawing your steps and reverting to revisit critical decisions, and possibly taking another direction from the one you have zeroed down on. I know some entrepreneurs are reluctant to do this. They stick like super glue even to wrong things. Their eyes will only open when they have lost all their money following vanity. The need to pivot is common in startups and an entrepreneur who needs success should not ignore this. Product development and offerings must align with real customer needs and strategy. If this alignment is not possible you need to rethink your plans. I’m not saying that you should run to and fro always in confusion. Ok? Be smart and know when to retrace your steps.
- Continuous learning is an essential part of startups. By the way Mr. Entrepreneur, try and understand that continuous learning is part and partial of startups. You and your team will make mistakes, small ones and big ones. In all these it is vital that you validate your learning. What do I mean here? You have to demonstrate empirically that you have discovered some truth in the learning process; otherwise you will be paying a high price in mistakes for nothing. I hope you are still following me! You need to identify value creating efforts and concentrate on them while withdrawing from non-value creating activities. Mistakes could be very costly, and could make you bleed out all the moneys you need to continue operating your start-up, so be mindful of the nature and extent of your mistakes. Don’t be silly! You need success. Don’t you?
- Deadlines sometimes don’t work and you don’t need to kill yourself and your team for it. The knowledge that not all things work according to plan is vital for an entrepreneur to be successful with startups. Don’t get me wrong. I’m not telling you to lazily do things and always have an excuse ready in your lips that you are in a startup business with many uncertainties blah blah blah! Ok? Work like the world is ending, towards your goals and objectives and deadlines. However, if you don’t beat your deadline, don’t unduly punish yourself and your team. If that deadline affects the market and other key stakeholders, communicate early the aspect that you are running behind schedule, so that they know and appreciate, rather than springing up with annoying surprises at the last minute. You won’t look smart in this latter scenario.
- Business plans cast in stone may be meaningless. Another critical thing to ensure success in a startup environment is flexibility with business plan. The idea here is that you usually make your business plans for a startup based on many assumptions and these might not make sense in real life or when you begin testing the assumptions in the market place. Such plans might not have a good basis because there is no history for a startup. The environment also is not static. The plan might have too many details that are not critical. So, when you realize that your business plan is baloney, please be flexible to adjust and proceed. Don’t you agree with me Mr. Entrepreneur?
- HR challenges in startups are unique and need to be properly addressed to ensure startup success. For a start, not all kinds of employees fit in a startup environment. While some may enjoy the diversity, uncertainty, chaos, informality, constant change, the thrill etc., some will run and never look back. Those that fit must have reasonable appetite for risk, instability and constant change. The usual approaches to building teams and team structures in established entities don’t work in start-ups. You may not even have a team. Training needs may be very different, and the learning platform never the same. For you to be successful therefore as an entrepreneur you need to understand these dynamics and work to address the challenges, otherwise you cannot be successful.
- General business and marketing functions are as important as product development. This is another critical thing for success in a startup, especially in startups where product development is a major factor or determinant. You would be an unwise entrepreneur if you place all your efforts on product development and ignore the other aspects of general business and marketing functions. Don’t you think so? The structure for the general business to operate well is vital. The products you are developing have to be marketed and sold, less you pile your excellent products in your stores and soon start crying. You need to have some balance.
- Most startups fail but you can succeed through a process. I’m not a prophet of doom. Don’t blame me for saying that most startups fail. It’s the reality and it’s backed by multiple researches. Actually, you don’t need to bother looking for books where the research reports are. Look around you area and check the success rate of about 10 new enterprises you have seen starting business in that area. Business success is not about luck, location, industry, magic, genius, product, having a godfather etc. It is about patiently and wisely building a business. It is about the process to turn your insights into a great business. It is about bringing in a structure and some science into the informality. It is about understanding the market and the customer, and the wider business environment. It is about managing risks. Do you understand me?
- You can leverage on partnerships to succeed. Partnership and collaborating arrangements with financers, investors, bankers, business networks, suppliers etc., can help you succeed in your startup. Never be a lone-ranger. However, choose your partners carefully. Choose trustworthy partners and those with good reputation. Chose partners with knowledge that you can gain from. Choose assets and not liabilities.
Let me just stop it right here for today. Startups are a challenging and yet very engaging and thrilling environments. The desire to succeed should make an entrepreneur do everything good and possible to ensure that success. The above are 13 critical things an entrepreneur should not miss because they help in ensuring startup success.
With every good wish,
The Wise Entrepreneur