Start-ups are hard! What are the common traits found in successful start-ups? There is no one answer. There is not enough data to point to a silver bullet. However, there are some common traits that the most successful companies share. Here are five must-haves of a successful start-up:
1. Make sure there’s a market for your product or service; 2. Find out what the competition’s offering and at what price; 3. Devise marketing strategies to position your product or service relative to the competition; 4. Determine whether your plan is feasible by calculating your “break-even” point (the point you’ll be breaking even on costs); 5. Create a timeline of milestone activities, including when you expect your business to turn a profit.
People often confuse goals with plans, which is a mistake because it confuses effort and results. A goal is what you hope to accomplish. A plan is a series of steps or actions necessary to meet these goals. Good planning is critical because it helps keep your company on a specific path toward growth and profitability.
Six months of research before you start. Intelligent people will raise objections and concerns when discussing your analysis with other people. You want to confront these objections and overcome them. Their comments should be a considerable part of your plan. It would help if you went into your research period thinking about the usual issues when someone wants to start a company.
For example, “How could this product be made cheaper using less well-known technologies?” or “What alternative uses would make it more useful to users?” But unless you are an expert in the market you are trying to enter, it’s hard to think of all these questions in advance. So to collect them systematically, interviews are much more effective than just thinking on your own.
You can answer questions like who else is doing this? Will they try it? Are they likely to adopt it? How do we deliver it? What is our value proposition? What are the costs? Who are our real customers (not the ones we hope will buy)?
Doing a deep dive into your market, speaking to people about the issues you are trying to solve, and checking out some of the companies that already exist in this space.
The information you gather from your research will help you make decisions about every aspect of your business: financial, sales, marketing, and personnel. It is a mistake to depend on guesswork to make these important decisions.
When developing a start-up plan, it is vital to begin by having a detailed analysis of the competition in the target space since this will provide a lot of information about the industry in general. This exercise will also help you understand and define each of your product’s unique benefits and how you can position it to gain the most leverage over competitors.
As entrepreneurs, we must always be aware of our competition and constantly think about how we can more effectively perform against them. Not just the obvious competitors, but all competitors to products and services like ours, even if that is a broader category. This enables us to understand better how customers think about our product or service and how/where we fit in the customer’s mind.
There is an example of a start-up where founders didn’t have any experience in the jewelry industry; they could still make a business plan because they had researched their competition. They identified existing jewelry companies and explored their websites, business models, and product offerings. After learning about the marketplace, they could develop a competitive advantage over existing companies. They would offer custom designs to customers that they could create on their own without professional help. Customers can make their own personal designs using the website’s proprietary software and a few tools, such as digitally-created stones that resemble cubic zirconia.
Whatever you do, you’ll still be doing marketing, so plan to spend a significant portion of your time on it. You’re probably thinking: I’m a marketer. There are tons of ways for me to drum up exposure and users. And the truth is: yes, there are some fantastic DIY tactics out there for companies to leverage… that takes a lot of time, effort, and of course, money.
Seek out every opportunity to get feedback. Meet your customers face-to-face at networking events or industry conferences, talk to them on the phone, or email them with a new product idea and ask if you can send them a complimentary sample for their input. Although it may sound obvious, find out who your customer is and what they think about your niche.
The two most important things to consider when making your choices are demographics and geography. Your products’ age group and target users will largely determine where you allocate your marketing dollars. Great content may get you some initial traffic, but you’ll need a targeted marketing strategy to ramp things up.
It’s crucial in the early stages to figure out what you do. This should be thought of as a discovery process, not a decision process. Even if everyone you ask says something like, ‘Well, what you do is obvious: you’re going to sell widgets to consumers through Facebook links!’, you shouldn’t start working on that unless there are no other options left.
Marketing strategies include personal selling, sales promotion, advertising, and direct marketing such as mail order, telephone selling, and Internet sales. Most firms use a mix of marketing channels because reaching targeted markets is often best achieved through a combination of tactics.
The break-even point (BEP) matters more than most first-time entrepreneurs realize. The break-even point is a business’s life cycle point when your business costs are less than your revenue, and you are making money and “in the green.” If a start-up can’t reach the break-even point, it will be shut down by investors or run out of cash and need to close down.
Most people hear “break-even” and immediately think about profit, but break-even and profit are different. Break-even is when the amount of money coming in equals the amount going out. The profit comes after break-even has been reached, and until then, all you’re doing is making sure you don’t run out of money.
It’s great to have an idea, but that business has no future if you don’t break even. I’m not saying you will make a profit at this point or have a paycheck, but that the expenses meet the sales income.
If you don’t know where your break-even point is, you can’t know when to call it quits and take a new approach. If you don’t know where your break-even point is and instead just wait for sales to start increasing, you have no idea how much time you’re wasting or if the sales will ever improve.
You’re working on your project and thinking about your timeline or what you will or should accomplish over time. A good way of thinking about this is by breaking things down into milestones. This will help keep everything on track and organized. A milestone is simply a specific event that marks a significant step forward somehow. It’s important to remember that the objective isn’t just to make the milestone happen but to produce some sort of forward progress.
There are a few things to keep in mind when thinking about the timeline of milestones. First, this is an interactive process, so things won’t always go perfectly as planned, but they will be ok if you work on them and do not over-react. Second, build the questions you are asking into the timeline. We want it to be clear how each milestone is answering key questions.
In times of significant change, it’s hard to predict the future, but we can make some educated guesses. We know what industry landscape start-ups are competing in, and we have a good idea of their needs, so figuring out how they will be looking to solve problems in the near future is not a giant leap of faith. Given this information, how should planning your milestones look?
You don’t have to have 10, 15, and 20-year plans. You don’t have to know what your start-up will do when it grows up. It’s tough to know that at the outset, any other successful start-ups will prove this by doing something quite different from what they set out to do.
Imagine the ideal start-up founder. It’s someone who takes on significant challenges and solves them more effectively than anyone else. Instead of besieging a fort, he marches past it by way of a hidden path nobody else had noticed.
Now, go forth and take the fort!
The Intellectual Property Attorney you hire to represent you and your business is one of the most important decisions you will ever make.
These are the values that guide this firm:
Having a lawyer is often the difference between success and failure. A good intellectual property lawyer is priceless. Without one, you’re basically out in the cold on your own. I have seen so much go wrong for clients’ businesses and even personal finances apart from the company.
– Jerry K Joseph Esq. Founding Attorney