5 General Rules of Running a Startup

There’s no handbook out there that lays out rigid guidelines on how to come up with or sustain your startup. It all begins with an instinct, followed by passion towards the idea which is then led by setting up other financial and physical requirements to sustain it. Depending on the success or failure, every startup has a different story and each thereby follows different rules to create breakthrough solutions. However, despite individual differences, there are some generic rules that all startups follow and vouch for. What are they?

Build a Stellar Team

Never compromise on the quality of the team. Hire talented, committed and passionate people because the idea in itself is nothing without those people who share the vision and contribute towards its success. Constantly seek for the right people who can fit into an organization and give life to your idea, even if you cannot afford them sometimes.  For that you may need to do some bit of extra networking. Mozilla, Barclays Capital, Gillette are some examples that made it big because they never compromised on the quality of their employees.

Know Your Competitors and Keep an Eye on Them

Always be on the lookout of what your competitors are up to. That will keep you on your toes to exceed beyond what is planned. Initial ideas often evolve into something much better and useful—always be open to change. That will help you stay ahead.

Keep your Customers Happy

Understand the pulse of the customer and deliver what you promise. That way they will spread the word about you that can help your business scale great heights. Use the Internet to network and market your products on a regular basis. That will make sure you don’t fade away from their memory and will help you sustain for a long time.

Spend Wisely

Even if you have the necessary funding to sustain your business, spend carefully. Remember you must focus your attention completely towards generating revenue. However, to achieve that don’t obsess over esoteric spreadsheets and spend more than required on networking. Spend to make a difference in the life of your customers rather than on swanky office spaces or facilities. 

Don’t give up!

Success doesn’t come overnight. It only comes over time with perseverance and focus.  If your business isn’t heading the way you intended it to, don’t get demoralized and give up. Try the SWOT analysis to identify your strengths and weaknesses to come up with strategies to help you rise. Rope in your entire team to come up with solutions.

Every startup has a different mantra for sustenance. But most successful ones would vouch for recruiting and building a team aligned to the company’s goal as the most crucial one. You must always have your eye on your mission and effectively communicate it to your team. Once you have these in place, your customer needs are automatically taken care of and if that it done, your startup clock will never stop ticking!

SWOT Analysis for Startups: Why is it Crucial?

If you are serious about your startup, you are not new to SWOT analysis. You understand that it’s crucial to unravel opportunities that can be exploited. At the same time, it underscores the weakness of your business, so you can be prepared in advance to face and eliminate possible threats. To put it in a nutshell, this simple tool, if used effectively helps you craft a strategy to stand out in the crowd and stay ahead of your competitors. To understand the basics of SWOT, look up here.

Why is SWOT analysis important?

  • SWOT analysis is very crucial for startups as it analyses the strength, weakness, opportunities and threats involved in a venture. It specifies an objective and identifies the internal and external factors that are favourable or otherwise to achieve that objective.
  • The results of the analysis are often presented in the form of a matrix of 4 columns for quick view and understanding. Strengths and weaknesses usually match listed opportunities and threats, though they must correlate as they are interlinked in some way. Billy Bauer, MD of Royce Leather noted that pairing external threats with internal weaknesses can put focus on the issues that need to be tackled on priority.
  • Entrepreneurs must constantly evaluate these factors and their effects on business. This can add value to the product, attract new customers and sustain the current ones, and extend services effectively for long.
  • Small businesses should take an extensive look at all internal resources and threats to map its future and SWOT helps achieve that in four straight steps. Once you have your analysis in front of you, you need to take a call whether it is more crucial to eliminate internal weakness or fix external threats to strengthen your business.

In the business context, SWOT analysis revolves around internal and external factors that need to be considered during strategic planning. What are these?

Internal Factors:

The first two letters of the acronym S (strength) and W (weaknesses) combine to form the internal factors which include, among others, the following:

  • Financial resources (funding, sources of income, investment)
  • Human resources (employees and target audience)
  • Physical resources (company’s location and facilities offered)
  • Trademarks, patents, copyright
  • Strong brand name, superior product and personnel
  • Good reputation among customers

External Factors:

  • Market trends (technological change that can make a product obsolete, shift in customer tastes/ unfulfilled customer needs)
  • Economic trends (financial trends at local, national and international level)
  • Relationship with suppliers/partners
  • Regulations (political, environmental and economic)
  • Age, preferences, gender, cultural needs of the target audience.

Once your SWOT analysis is in place, you need to come up with strategies and recommendations based on your findings. These should leverage your strengths and eliminate weaknesses/threats. While CEOs must be involved in the analysis, other team members can be roped in as well. That way, blind spots can be scraped off, which if left unnoticed can be detrimental to business. Prune long list of factors, prioritize them and make sure the options generated aid strategy formation. For better results, use them in conjunction with other strategy tools.

Look here for examples of SWOT analysis of real businesses to get ideas relevant to your business needs. They can help you spot ideas and get started.

Is Your Startup Worth Investing In?

Most investors receive an overwhelming number of pitches every day, though only a few get noticed. If you have to be one among those with a compelling pitch and wish to have investors come calling, then you must have a business idea that’s not just innovative, but viable as well.  What is it that makes your startup worth funding in?

When you come up with a new idea it is very critical to source startup funding to keep the business operating for the first few years. However, it’s not as simple as it sounds; it requires a lot of groundwork and convincing on your part to compel investors to fund your business venture. However, the good news is, there are several resources that help you track the right people, the right way.

Here are some tips to help you sail through this challenging task.

Lookup for Startup Launch Platforms and Angel Investors

These connect you to potential investors. You might also want to browse through crowdfunding sites that provide access to different kinds of investors who might be interested in your idea. Sometimes, it could be someone from the general public or an accredited investor whose business interests may be aligned to yours. You can find more details on these and more such sources here.

Know your Numbers

If you love to play with numbers and are particular about calculations, then calculate ROI to evaluate the profit derived from the investment. You might also want to access the NPV (Net Present Value) and IRR (Internal Rate of Return). These might be useful for those products with a long development lead time and whose returns vary every year. For details on how to calculate these, look up here.

Create an impressive Business Plan

This is crucial and must lay out clearly your business plans, target audience, and projected sales for the next couple of years. Make it look professional; you can browse through templates available online. You must be ready with answers to some obvious questions.

  • Is your idea useful enough to solve your customer’s problem and make their life easier?
  • If yes, do you have a specific solution and how is it better than what your competitor has to offer?
  • What is the size of the market that you are targeting?
  • How to you intend to make money and sustain the business?
  • How different are you from your competitor/s?
  • What are your marketing plans? Do you have a qualified team with requisite credentials and skills to handle their job well?
  • What kind of funding are you looking at? How much equity can you offer?
  • Do you have a projection charted out for the next 5 years in terms of revenue, expenditure, cash flow?
  • Do you have a plan for exit strategy—Merger/acquisition or public stock offering?

Hire an Expert 

If you don’t have prior experience, it makes sense to hire an experienced consultant. S/he can assist in convincing the investor for you.  Tell them how your startup is different as against your competitors. You could tell them about patents and differentiators that place you ahead of the competition.

Know your Basics Well

When you are reaching out to an investor over mail be careful to choose your words. It should not look like one of many messages you’ve sent out. Just as you need them, investors need you too. So, take the time to generate attention. You may hear a lot of “Nos”, but remember that’s part of the game to help you make corrections and move ahead.

All that is needed to make your business idea worthy of investment is smart planning, effective delivery and a professional attitude. At the end of the day, it’s all about how passionate you are about your new venture and how well you put it across. It’s not always lengthy presentations or statistics that make the cut, rather it’s the uniqueness of the idea combined with your effective communication that will decide the outcome.

All You Need to Know About Marketing Techniques for Startups

Startup Marketing is different from traditional marketing due to a number of reasons (to know more on why read here). Therefore, this calls for a leaner and smarter management of marketing techniques for startups. You may have worked hard to build a product, but you must invest equally in acquiring customers; something that most startups don’t pay much attention to. Marketing is the strongest pillar which decides whether a startup will stand the test of time or get blown away even before getting stable.

Let’s take a look at some  marketing techniques for startups that are sure to guide you on the road to success.

Focus on Marketing Techniques  for  startups:

Every startup is unique. To reach product/market fit and acquire the right traction is tough because well-entrenched companies have the resources to dominate traditional channels and to break through them is daunting. Startups are bootstrapped for resources to make their customers know that they have a better solution for a critical problem.

Here are some tested and tried  marketing techniques for startups that will certainly deliver results:

  1. Startups must alter the rules of the traditional channels to grow meaningfully. They have to think out of the box, dig deep to churn out new ideas, and test them to win customers.
  2. Always keep two marketing strategies in mind:
  • Build a product that’s worth recommending. If a single user recommends two new users, half your work is done. This is how Dropbox, Snapchat, Mailbox acquired millions of users.
  • Align your growth plans with channels that your customers turn to, to know about your product.
  1. If you have more visitors to your page who are not converting into customers, ask yourself, ‘why’. Get their feedback via Survey Monkey, feedback forms or catch up with them on skype or Intercom to know what’s holding them back.
  2. Don’t start by targeting the mass market. Try to appeal the early adopters. They, in turn, will spread the word about you and convince others to try your product.
  3. Don’t spend too much time on what or how. Rather, tell your customers why you do what you do. That’s Apple’s strategy which makes their iPads, MacBooks, iPods most sought after.
  4. Use page-promoted posts in Facebook targeting people in the news feed as these ads have the highest click-through.
  5. If your product solves a critical issue that people search for, you must feature in Google Adwords. For this, you can bid to appear on Websites related to certain keywords.
  6. Remarketing techniques encourage your users to come back to you. When someone visits your page, a cookie is dropped on their computer. When they move on to other sites, your ads appear there that encourage them to navigate back to your page.
  7. If you have a compelling video, you can roll that out as a promo on major video networks such as YouTube,4od etc.

Plan Your Work, Work Your Plan

Plan well and execute them flawlessly, no matter how small it is. Create a blog and use SEO to get noticed. The secret to successful startup marketing is a combination of several tactics, because the ultimate aim is to keep an eye on the shifting trends to connect companies and markets in a meaningful way. Before you start off, make sure you have everything ready to stay on top of things.

5 Reasons Why a Business Model is an (In)dispensable Tool for Success

The construction of a business model is intricately linked to the creation of a business strategy. A successful model determines the way a company sells its products and elucidates how it creates and delivers value to its customers. This makes it an indispensable key which determines how long a company will survive in a competitive market.

Peter Drucker described it as an answer to the following questions: Who is your customer, what does he value, and how do you deliver that value at an appropriate cost?

To know more about various types of business models, you can read here.

Executives must understand how a business model works for their organization to survive. The economic slowdown in the developed world is forcing companies to modify their business models to a large extent. Moreover, innovation in technology is reshaping industries and transforming the way companies create and capture value through business models. For instance, Kodak had to change its business model from film sales and printing to digital printing centers.

Why do you need a business model?

When managers set up and follow a business model, every initiative or  decision is taken keeping a close eye on profits. If it fails, you need to re-examine your model. For instance, when Euro Disney opened its theme park in Paris in 1992, it borrowed from the model that worked perfectly for the US. They assumed that Europeans, like Americans, would spend the same amount of time and money per visit on food, rides and shopping for souvenirs. However, this proved wrong and finally the key elements of the original business model were tweaked to suit the European set up. Gradually, things started looking up.

Therefore, it is highly imperative to have a model as a starting point– a spreadsheet with detailed analysis of every major item that you can pull apart, every sub-component that you can test and try. In brief, a business model is absolutely mandatory.

What does a successful model do?

A successful model:

  1. Allows companies to tie their marketplace insights to economics. In short you can assume people’s reaction/response to your business. It can be tested like any scientific theory and revised when necessary.
  2. Offers a unique value promise that is hard to replicate.
  3. Is capable of generating huge profits.  Competitors cannot easily copy the models due to their low cost structure and meaningful benefits.
  4. Sets up new platforms of growth. Gradually the stocks of the company’s key assets grow and over time expands its value creation.
  5. Can weaken or destroy new entrants.  At times even rivals with different models can partner with each other for value creation.

Business model is not synonymous with strategy, though both are often used interchangeably. To explain it in simple terms, if business model is the car, strategy is how to design and build it—both inter-related but completely different.

A good business model allows all employees to align themselves around the value of the company and work towards the larger goal. In this sense, it is a powerful tool steering the company towards success.

When Is It The Right Time To Launch a Startup – A Beginner’s Guide

There may be tons of literature on how to launch a startup, to-do checklists, how to raise funds and marketing techniques, but no one will tell you when exactly is the right time to launch your own startup. Actually, there is no ‘right’ time for the go-ahead but yes, some things have to be in place when you seriously plan to launch your startup. Andrew Weinreich, an entrepreneur in NYC and founder of 7 companies, elaborates on 4 steps that you need to carefully think about before you decide to quit your current job to begin a new career at your own startup— a strong idea, enough funds, business plan, and cash flow projections. (Details can be found here).

Ultimately there’s only so much planning that you can do. At one point, you have to set the ball rolling. Here are some tips on timing to get you started:

Don’t wait forever:

If you have an idea and have done your homework well, talked to a bunch of potential customers, don’t wait for too long. But yes, this does not mean that you can go ahead with a subpar product or a mediocre company. When you feel you have information enough, it’s time to move ahead with the launch in an informed way. As Matt Lerner, the CEO of All Star Deals, puts it, “If you have an idea for an App, do it now. Throw it up online…Worry about quality later…”

Set a Launch Date:

Setting a launch puts you on a leash and forces you to focus on the task at hand. We’re all human and no matter the level of motivation, you are likely to enter a tangent that you can’t help but explore. A solid date on your calendar will deter such urges and make things happen faster.

This date should be decided on the basis of the amount of work that needs to be done keeping mind your capacity for executing these tasks with a buffer period.

It’s best to launch with MVP. Don’t over do it.

Release your MVP and let your customers lead you to the next step:

You don’t know your users, so it’s not safe to guess what they want/like. Rather, release something and let them give you  feedback. Launching early makes you know if something major’s not working and you can fix it. Dropbox learnt it the hard way– before launching, the co-founders used 0-budget hacks, yet they had to put something in their customer’s hands to generate traction. 

Generate some buzz:

Go ahead with some soft launches, promos, beta testing to generate some buzz and get some exposure. Timing will never be perfect for anything and the same holds true for the launch of startups too. Get the word out, and try to get people guessing.

Get the word out, and try to get people guessing. There is nothing like a little anticipation. Also, this lets you test how your competitors perceive you. Use this initial publicity to answer some key questions.

Look for the obvious signs:

If money is coming your way, whether revenue from a soft launch or money from a pre-sale,  don’t wait for a ‘good day for launch’. Anthony Sohoo of Dot and Bo says that when people started handing over their credit card details, they knew that the time was perfect for a launch.

Feross Aboukhadjeh took 3 hours to build YouTube instant, inspired by the launch of Google Instant. Overnight, the app generated tens of thousands of views and Ferros became a celebrity. Based on this, Christopher Beam, journalist, New Your Mag wrote, “You’ll never grasp what aspects of your site need more work and require adjustment until you actually put it in front of people. No amount of preparation will be able to act as a substitute for the learning you’ll glean from an actual launch.”