The 5 Pillars of Successful Startups
Successful startup founders have their distinct experiences with scaling and building their startups. When you listen closely to their grind to structure and develop their successful startups, you begin to see some intersecting realities. Those startups have some constant foundation pillars across various industries.
The entrepreneurship journey begins with an idea about solving a problem, which usually comes with the optimism of going head to head with the fierce competition in the market. You also have to start considering how to get your solution to your target audience, among other daunting tasks. Because of the constant change in market dynamics, some strategies that seem to work in a period might be useless in others. However, some fundamental pillars sustain and power startups through rough times.
The main aim of starting a business and nurturing the solution is to get it to your target market and make some profit from it. Understanding what makes successful startups successful is vital for scalability in your startup.
So what are those five pillars?
Let’s closely examine these pillars of success and try to explain why they are essential for successfully building your startups and examples to bolster their importance.
Startup success depends on the quality of the solution it offers to the market on a large scale. The answer to specific problems needs to be helpful and intuitive. Developing this product to a certain quality level is critical for your market. You need to understand the market and fill the gap to continue to get patronage from your customers.
You need to answer this simple question: What does your startup offer? The answer should be obvious and straightforward from the jump. It would be best if you started thinking about your solution so that your stakeholders would understand.
Your product should not be among the ‘nice to have’ idea types. It should be among the ‘Must have’ or ‘We need this product’ category for several wanting users. Unfortunately, not all new products in the market are new ideas. You might have to repackage the concept to deliver a product that solves a specific problem that the other similar idea type are not solving yet.
Some successful startup companies are product-driven. These startups place all their focus on developing their product for their users. The continuous update on these products or services keeps their customers coming back for more. One company that believes firmly in this principle of managing and running a company using the product pillar of success is Apple Inc.
Apple essentially believes and actively uses this “build it, and users will buy” strategy for its product and services. Apple created AirPods even when the market did not know they wanted such a product. This key pillar of success for startups provides the opportunity to spot market gaps and challenges that users are facing and do not realize they need a fix yet. It makes your startup the incumbent, and you can patent innovation and have control of the market.
The backbone of every company depends on its workforce. The team working on a product or a service is crucial to the success of that startup. Your team is a critical pillar in determining whether your startup will succeed or fail. Choosing a combination of interdependent people with the skills, knowledge, and resources to achieve a goal is vital for a successful startup.
Startups have their peculiarities because they do not have standard work operations and resources cast in stone. Your startup combines a group of people that have a common goal but are willing to take up more than one task at a time. Ensure that there are no gaps between the team to guarantee the project’s success. To ensure success, a startup’s team must check certain boxes.
A startup team must be ready to learn and pick up necessary skills in demand. Your team must be diverse and willing to adapt to dynamic business scenarios. The interdependence and understanding of your team are indispensable to following through on the collective vision of your startup.
However, the productivity of your workers is imperative for your startup’s success. How productive is your workforce? Are you adopting an open work environment that allows for employee freedom? You must know optimizing your workforce to perform various functions and be flexible enough to produce better work.
Especially in this new age and time where people are working from home and considering the hybrid work method, you should try not to fall into the productivity trap in your company. Concentrating on the final product can be a great way of measuring the productivity of your workforce. You can also use metrics to set targets and milestones for different teams depending on how your workforce is set up and what needs to be done.
3. Target Market
Your startup should always have your customer in mind. From the early stages of your startup, you have to understand your startup’s target market. It is almost impossible to build out a product or service without interacting with customers in this stage. You will need to understand your customer profiles and present your solution to them.
For example, suppose you plan to build a technological solution for your customers. In that case, the logical ways to interact with them is via e-mail, push notifications, or surveys about your product. This way, you can use analytical tools to help you derive valuable data for your product development.
With valuable tools like CRM, customer acquisition tools, data warehouses, you can compile a comprehensive checklist of customer needs. The next step is to time introduce your solution to your customers.
Customer acquisition can be challenging. Acquiring new customers comes at a cost. Retaining these customers comes at a higher price. If your startup’s churn rate is high, you have a severe hole that you need to address immediately. You need to go through four stages to start your customer acquisition process.
Market Acquisition is the first stage which deals with implementing specific strategies to market your products and services to your startup’s target market. Acquisition channels follow closely behind. This process deals with the method and platforms for attracting your target market. In comes customer acquisition measurement. You must know how to measure your new customer for a given period. Lastly is customer retention. Your deployment strategy will help you keep your churn rate to the barest minimum.
If you want to see what your customer likes, step into the world of bridal fashion and experience the particularity of the industry.
~ Charles Zhong, CEO of Azazie
Zhong’s strides in the bridal fashion industry continue to disrupt the industry convention and see over 300% sales growth of Azazie.
The business strategy of a new business determines how several operations and processes will progress. It is also instrumental in the sustainability and longevity of such a startup. Why is strategy important? Well, it defines the plan you have for your startup ad how you require for that plan to come to fruition.
Your startup’s strategy greatly influences your product development and the final product. It also dramatically affects the sustainability of your business model. Your strategy also prepares for scenarios that may come up during all phases of your startup’s operation. Creating an excellent startup strategy entails several ingredients that border around your business.
There are guidelines that your strategy helps your startup form to optimize your resources, funding, workforce, connection, and many other factors. Your strategy should help you cut off inefficiencies while maximizing the utilization of your resources. You should reduce the cost of production and maximize your profit.
The strategy usually lays its foundation for successful startups in picking the best team, training, development, resource optimization, and performance against certain milestones. Analyzing and deploying the best strategy for your startup will help you maintain and outperform set expectations and challenges every single day of building.
5. Capital and Fundraising
Businesses can only build to a level with little or no capital investment. The old saying goes, “It takes money to make money.” In some cases, scaling up for startups with similar ideas is usually capital and proper investor funding. In some cases, it is from early customers and sales revenues. In most cases, it is from investor funding across different stages of a startup’s development.
Founders and CEO of businesses live and understand a simple mantra, “Cash is King.” This simple mantra should be what your startup should live by to survive tough times.
“You cannot run your business on the promise of receiving future payment. Cash is one of the primary measures of your startup’s success at every stage”.
~ Aaron Webber, CEO of MadisonWall
Your very first option at raising capital is self-explanatory and straightforward. Organically raising funds from your customer requires something valuable to offer the market. Your customers must be willing to bootstrap your new venture with their patronage. If your startup is within a definable trade or professional service, this fundraising option fits you perfectly.
Furthermore, for startups that seek to develop and introduce a new kind of product and technical services to their market, this may require a dynamic type of funding. The software development industry expects to raise funding via pre-seed and series funding, where proof of concept and prototyping may take several months.
In such scenarios, startups need to cover the operational and development cost with financial investment. The investors come in to cover the operating expense during the development phase. For some startups, pre-revenue stage funding comes from the founder’s resources and immediate circle. In some cases, these funds are enough to take them to a level with prototyping.
Nick Woodman, the founder of GoPro, Inc., is the perfect example of a company that bootstrapped from his pocket. He was able to get his startup off the ground by working different jobs and scrapping every penny to develop his product. GoPro is an American company that develops high-definition personal cameras. It is popular among sports enthusiasts because of its hands-free and high-definition video recording capabilities.
Elon Musk’s Tesla is another example of a company dependent on funding. Tesla was a beneficiary of the government program that gave out funds to companies with green technologies. Without this particular funding, Tesla would most likely be part of companies that could not scale.
Now we draw your attention to these distinct pillars that can guarantee you success while building your startup. Your ability to combine these pillars and incorporate them into your startup is the key to making it all stick. Yes, you are the captain of the ship! You must realize that these key pillars are necessary for your startup’s growth and work with them.
Having your end-user in mind throughout the entire phase of your product design and satisfying their want is vital for the success of any startup. Customer loyalty and market capitalization are essential for a successful business.
Finally, failure is also part of success. You learn from what does not work and avoid it when reworking your product offering. The above pillars of a successful startup should be your foundation to build your successful startup.
Keeping your investors and major stakeholders informed about your metrics progress is a crucial communication skill that we at Fundrs.VC value the most. Stay tuned and will help you ace those communications while keeping an eye on what’s important the most.