While there are constantly more and more tech startups being founded each year, the research found that just over 20 percent of startups failed within their first year. With such a dire situation what does it take for a new business to thrive?
What are you going to do differently so that your startup isn’t just another statistic to add to the research? Read on to find out exactly what and you will be certain to make it well past that first year!
1. Detailed Business Plan
An idea gives you the motivation to start a business. However, that idea will go nowhere without establishing a legitimate business plan.
A business plan, put simply, is a write-up of your company’s future. You create an outline of both your goals and how you are looking to reach these goals. By creating this business plan you give potential investors a clear idea of the path you are on.
On average an initial business plan outlines the first three to five years of the business’ operation. By addressing this first and foremost it can help the rest of the concerns on the list.
Also, just because a plan is initially established does not mean you can not return to it and adjust as you continue along your path.
2. Identify Your Target Audience
It is pointless in developing a business and the marketing needed for the business without understanding the audience it serves. This is especially true when it comes to marketing efforts, it can cost a business huge amounts of money.
There are three major ways of identifying the core audience being served;
- Analyzing existing market data
- Reviewing personal networks
- Gathering survey data
By reviewing who your competitors are marketing to most effectively you can get a starting point of who your target audience should be. You can get an idea of what types of products are selling best and what strategies are most effective.
3. Establish Growth Metrics
It is hard to know your level of success if you have not established proper performance indicators ahead of time. You need to establish both your goals and how to measure your progress as your business grows.
Some of the most important KPIs or “Key Performance Indicators” include;
- Gross Profit Margin
- Customer Lifetime Value
- Conversion Rate
- Customer Acquisition Cost
- Burn Rate
The most obvious of these being the “gross profit margin”. This is a general measure of success and no matter the specific goals of a business, it should be observed. It is the revenue obtained after paying the cost of goods and operating costs.
Conversion rate, a very important factor in the tech world, measures the percentage of customers that become a sale. This measures the effectiveness of a marketing campaign and in recent years, especially, a landing page or website.
4. Strong Support Network
For a startup, a long list of contacts and potential mentors is one of the greatest resources that they could hope for. Networking is going to be the most important thing that you will be doing as your business grows.
A deep and extensive network allows you to connect to talent, it connects you to experts in your field that you can call on and even better that can eventually call on you.
Look into a local chamber of commerce as well as the professional organization for the industry that your business is a part of.
5. Branding and Brand Presence
Reputation is being built once anyone mentions your name anywhere. As they say, these days, once it is on the internet it is out there forever.
By establishing a strong brand image you can spread your identity online with ease. Social media provides a platform not only for marketing but also a place to engage with a customer base.
You can provide a living image of the business and allow customers to be a part of it. By forming this relationship you improve the experience that guests have online and with your business
6. Importance of a Quality Website
You should not wait for the official opening of your business for your website to be live. It should be a promotional tool for the business. Potential customers should be aware of your place in the market even if a brick and mortar is not quite open.
You have the potential to generate revenue through a website before going live. You can do pre-orders, you can begin scheduling, and prepare your business.
7. Place in the Market
You may have the best concept for a product and the top minds for development but if there is little need for your product in your market it would be all for nothing.
This returns to knowing your audience. You need to know the needs of the market as well. Does your product and/or service solve a problem that needs solving for these people?
You must conduct proper market research. Learn what is working, what is not and with that, you can feel out exactly what your audience is looking for. This can help focus on the direction you are moving in.
8. Master of Marketing
Methods were touched on some but the importance of knowing not only how marketing works but how you can make it work for you is key if you want to thrive as a start-up. If no one knows why your product is so great, is it really as great as you think?
You are setting yourself up for failure if you do not start to master the various forms of marketing.
The digital era has blown the door open with a variety of marketing platforms.
It is important that you allocate a marketing budget, this will allow you to make proper adjustments when looking at overspending and the effectiveness of your efforts. You need to be able to analyze the return of investment.
9. Proper Growth Management
Scaling in its own right can be a positive thing. It means that there is positive growth within the business. To accommodate the growth a business adds more resources.
The problem arises when it’s mismanaged scaling. Most often this is premature scaling.
There are many ways to avoid premature scaling if business management is handled properly. It is essential to monitor business-wide spending habits, to work at limiting overhead where ever possible, and to avoid debt.
A popular way that has been utilized when a start-up is very small is the “co-working” space. These are been shown to have the potential to save thousands of dollars every year.
Not only is there is the savings for your team but a shared space opens up the potential for networking and organic support networks. Many co-working spaces also offer specialized resources for education and training.
Tech Startups Finding Success
Remember you had a great idea and needed to start a business with it. You have a plan and now you can pair it with our plan for success. If you stick to both of them you are certain to not become another statistic like other tech startups!
And once you are done dominating the tech world be sure to stop by the blog for more material we have curated!