For any entrepreneur starting a business, the levels of optimism in succeeding are always very high. Startups are sprouting from every corner of the continent – others fail, others succeed. What are the key ingredients that contribute to startups success? Is it grit or is it the idea? What about the market? Or the more conventional reason, more funding?
The following are the five key essentials that will guarantee startup success.
An idea is the starting point of the business. This is where you build up everything from. Your business idea does not hold as much weight as the execution and the team behind it. Does your idea solve an existing solution? How unique is your idea?
Are you the first mover or there other existing players in your niche? In his talk, Bill Gross says “I used to think that the idea was everything. I named my company Idealab for how much I worship the “aha!” moment when you first come up with the idea. But then over time, I came to think that maybe the team, the execution, adaptability mattered even more than the idea.”
These are the individuals behind the venture. They share the entrepreneurial flair of the founder but focus more on the operational areas of the business. The drive, their commitment, and their experience serve as a crucial factor.
A recent study from Rotman School of Management states that “A founder’s individual characteristics are important but what’s more important is that person’s ability to bring a bigger and more experienced team with them,” the researchers say. “And the bigger that team the more likely the firm will succeed.”
The Business Model
This dictates the manner in which revenue will be generated. This is a very key component for a startups success. Does a company have a clear path to making money?
The right business model will depend more on the nature of your product and service and whether it is B2B or B2C. The one important thing about a business model is that you can always change it depending on the market response to your products or services.
A business without funding might collapse. The need for funding can be a probable sign that your business is growing and you need more funds to increase your capacity to handle more business.
Funding allows you to capitalize on new opportunities that arise, investing in new products and services as you seek to expand.
Is your idea too early or too late? According to Bill Gross, timing is the difference between success and failure for startups.
He compares two companies, first a company called Z.com- an online entertainment company. “We were so excited about it — we raised enough money, we had a great business model, we even signed incredibly great Hollywood talent to join the company. But broadband penetration was too low in 1999–2000. It was too hard to watch video content online; you had to put codecs in your browser and do all this stuff and the company eventually went out of business in 2003,” he said.
Then YouTube, “It was a great idea, but unbelievable timing. In fact, YouTube didn’t even have a business model when it first started. It wasn’t even certain that it would work out. But that was beautiful, beautifully timed.”
I addition to the above, the ability for every business to pivot is of uttermost important. A true pivot is a change in course of direction that results in a material change in the product-market strategy.
It could be along the product axis or the market axis, but it has to be enough of a change that it really requires an adjustment in strategy and a corresponding adjustment in resource allocation.
Above everything, let passion be your drive.