Running a startup company is one of the most demanding jobs out there, but is nonetheless the very essence of the American dream; millions of Americans fantasize about being their own bosses, coming up with an unbeatable idea or product, and raking in the big money.
However, even for those entrepreneurs with the audacity to found their own companies, the sad fact is that three out of every four startups fail altogether.
It takes much more than hard work or determination alone to succeed with a new business venture. Here are five things every startup needs in order to survive, and eventually thrive.
An Unbeatable Team
The key premise of any startup is that you are delivering the solution to a problem better than existing firms. You can expect that the competition and pressure will be brutal from the start, and you are going to need a core of highly competent people who can thrive in a challenging environment. Not only will your team have to deal with intense pressure and competition, but they will also have to do so by remaining talented and adaptable, to ensure you get that unique product or service to market.
Having an unbeatable team, therefore, is one of the most important components of any successful startup. Entrepreneurs should choose core team members wisely, and ensure they have the right attributes.
Beyond the founding members of the startup, entrepreneurs should seek out adaptable people who possess intense, intuitive talents in the startup company’s particular field; prior experience in running a successful startup is often helpful as well. Core team members should be dedicated and loyal to the company, and must be ready to put the company as the priority in their lives.
Finally, you should ensure that each core team member is a good “fit” within the company, and doesn’t distract from the synergy or camaraderie you are working to instill.
If your all-star team is not focused, then your start-up will likely get into trouble, and fast. Your core startup team has been assembled to provide the solution to a complex problem better than current competitors can; if they lose sight of that, your company will almost certainly fail to deliver on its promises.
Keep your core team heavily focused on the mission essential task, and do not let administrative or other requirements prove to be a fatal distraction.
Consider outsourcing less critical tasks to freelancers or other contractors, so that your core team can stay on target; leveraging technology to automate and simplify mundane tasks and communication can be helpful, too. Additionally, ensure that the problem itself does not morph or grow into something that is drastically different from the original premise (but see below on adaptability), leaving your startup incapable of delivering a product on an acceptable timeline.
As the leader, one of the entrepreneur’s most important tasks is to exercise good judgment as to whether the startup team is sufficiently focused, and that the product is still viable and clearly defined. Keep the big picture in mind, and never let the team stray too far afield from it.
A Customer Base
If your startup is going to succeed, your product or service has to satisfy the demand of a market in a way that your soon-to-be competitors cannot. Before investing heavily in personnel or infrastructure, ensure that your startup’s product is something that people actually want.
Surveys and other market research can be extremely helpful here. Once you are actually in business it is also imperative, especially early on, that you maintain excellent relationships with your first customers, so they keep coming back for more.
Remember, repeat customers account for 55 to 70 percent of total sales for most companies, so ensure you cultivate a loyal customer base. Additionally, customers can be some of your best (and cheapest) advertising. Work hard to facilitate positive word-of-mouth from early sales, and provide venues in social media where customers can share their experiences. This feedback can also help you relate better to your current or future customers, and assist you in improving your startup’s product as well.
Finally, continue working hard to build your customer base at all times; make every sale counts.
Adapt or die is not a cliché when it comes to startups. If your business is going to endure and ultimately thrive, then it will almost certainly have to be extremely flexible. An effective company will adapt rapidly to change, and seize fleeting opportunities faster than the competition can.
Your core team can never rest on its laurels and simply be satisfied; it must always be thinking about improving the product, or introducing new, better ones.
In some cases, it may be necessary for the startup to pivot dramatically away from its original core service or product. Many highly successful contemporary companies pivoted dramatically from how the were originally envisioned as startups.
YouTube, for example, originally had lowly beginnings as Tune In Hook Up, a video-dating site. The image-hosting giant Flickr, on the other hand, was originally an online game.
Again, one of the most critical leadership tasks of the entrepreneur is exercising the judgment to determine if changes need to be made, risks taken, or if the company needs to dramatically alter its plans.
All of the attributes above are critical to the success of a startup, but they are also intangible; the one critical, and tangible, element your startup needs on day one is a solid cash flow.
Once you are in business, you are going to need to meet payroll, pay vendors, satisfy your landlord and keep the lights on. All of that requires cash. If you do not anticipate making money initially, ensure that you secure sufficient capital to meet your requirements until you anticipate making money. Be as efficient as possible in the early days, and make every single dollar count.
Succeeding as a startup is extremely challenging. Entrepreneurs who want to make it must build an effective, highly adaptable team, cultivate and grow a loyal customer base, and stay focused; they also need the judgment to know when it is time to make dramatic changes. Finally, startups need a sufficient cash flow, especially in the early days as they are getting established.
While nothing in life or business is certain, ensuring your startup has these five attributes will put you in the best possible place to begin.