Hi Startupper, last time you had a chance to check the 10 main startup mistakes. Today, we would like to point out the main startup key factors to target.
Sometimes it’s not just enough to have a great startup idea. Sometimes it’s a case of being in the right place at the right time.
Take Airbnb as an example. Founders Brian Chesky and Joe Gebbia were struggling to afford the rent on their apartments in San Francisco. There was a design conference in the city and they decided to rent their apartment out to delegates who couldn’t find a hotel.
People paid up, and Airbnb is now worth an incredible $10 billion!
A lot of the talk was spent looking at the top reasons why startups succeeded. In this article, we’re going to look at these reasons in more detail. And sure, would like to review the critical features that all successful startups have in common.
What are the five startup key factors?
- Funding
- Business model
- Ideas
- Team
- Timing
Funding
14% of startups say that funding from investors was a crucial part of helping them to succeed.
This doesn’t sound as high a figure as you may initially think. In fact, many successful startup founders started by funding themselves through their own savings and loans – this is known in the business as bootstrapping.
Many big companies like Dell, Facebook, Apple, and Coca-Cola all famously started as bootstrapped businesses. Apple founders Steve Jobs and Steve Wozniak started off building computers in Job’s parents’ garage before hitting the big time.
Although funding can make all the difference to a startup later on in its lifecycle, it’s not always the most critical startup key factor at the start.
The best way to determine what type of funding is right for your startup is to see how much money you have and how much money you need. For example, do you need additional capital to take on new staff or buy a new piece of equipment? Again, getting into the specific details will help you see what you need to do to get ahead.
Remember that you can always start with a basic product or service, and look at investor funding at a later date.
Angel investing vs venture capital vs private equity – which is the right choice for you?
Business model
24% of startups say that having the correct business model in place was the most essential startup key factor for their success.
A business model is a way that your startup will make money. For example, will you charge users a subscription fee to use your product or service, set a brokerage fee, or make money by selling advertising?
Find out more about startup business models on the You Are Launched blog.
If you need an example of a startup that failed because they got their business model wrong, take bookmark syncing company Xmarks. The business offered a free premium product and was extremely popular with customers, but it couldn’t make enough of a profit to survive. It also didn’t help that browsers like Chrome and Firefox started to introduce bookmark syncing as standard. So, that’s was their startup key factor.
To help you pick the right business model, startup positioning is especially important. Understanding your product or service’s relation to the market will give you valuable insight into how you can turn a profit.
The different startup positioning types include:
- Positioning by unique selling point
- Positioning by the target audience
- Positioning by the high quality of the product or service
- Positioning by pricing
It’s also important to know if your product or service is the first of its kind in the market, or whether you have direct competitors.
Once you know how to position your product or service, you will have more of an insight into how to price it. For example, if you are selling at a low cost compared to your competitors, you will need to look at alternative ways to fund your startup, like advertising or sponsorships.
Ideas
28% of startup founders say that the right ideas can help make a fledgling business successful.
An idea can make or break a startup, and it may be the case that the first idea you think of isn’t the idea that you stick with.
How to think of the perfect startup idea?
Want to create a startup but need some inspiration? Here are our top tips for coming up with the ideal product or service.
- The best startup ideas are the ones that identify a problem and solve it. Take, for example, file-hosting service Dropbox. Founder Drew Houston was on a bus trip and wanted to do some work on the way, but realized he didn’t have his USB memory stick on him. Frustrated, he then started writing the code that would lead to the creation of Dropbox.
- Be creative. Creativity and innovation are important values when it comes to founding a successful business. Don’t be afraid to look into new ways of carrying out old tasks. As an example, many restaurants have offered delivery services for customers in the past, but Deliveroo started offering delivery by pushbike. Not only was this an advantage in built-up urban areas, but it was more environmentally friendly than delivering food by car.
- Make sure your startup is something you have a passion for. Many great startups originally were side hustles! Facebook was famously a side project for Mark Zuckerberg and his college roommates, and Yankee Candle founder Mike Kittredge started off making homemade candles for family and friends.
- Don’t be afraid to make mistakes. As mentioned above, it may be that the first idea you come up with isn’t necessarily the one that you launch. As an example, take Twitter, which initially started as a podcasting platform called Odeo. When Apple launched iTunes, the company had to pivot quickly, and the team came up with the concept of Twitter, which was initially known as Twttr.
- Consider how you can scale your startup idea in the future. For example, beauty subscription service Birchbox made its money by sending boxes of small beauty samples to customers. Customers could then buy larger versions of the products on the Birchbox website. The company quickly went international and was last valued at $485 million.
Team
32% of startups, nearly one in three, say that having the right team on board can be the difference between success and failure.
It’s vital to get the balance right when hiring staff for a startup. The right team with the right skillset means that you can get more done, but the wrong choices can set your product or service back.
Newstart, a news website for professional journalists, was founded in 2009 and closed in 2010, only two months after the website launched. Several reasons were given for why the startup failed, but one of the critical problems identified was that the two co-founders had difficulty communicating with each other.
Top Start key Factors to build a team
- Start with you. What are your strengths and weaknesses, and what type of people will compliment your skillset? For example, if you’re good at developing but not so great when it comes to pitching, you’ll want to hire someone with solid sales skills. You need a hacker, hustler, and visionary for the best results!
- Make sure that it is someone that you get on with. Even if you don’t always see eye to eye, you will all want one key aim: to grow the business and make it successful.
- Recruit people who are different from you. If you hire people who think like you and act like you, there will be no balance in the team. Don’t be afraid to go outside your comfort zone and hire a team that has different opinions and tastes.
- Communicate regularly. Regular meetings and calls will ensure that everyone is on the same wavelength and that there is no confusion. Even in the current climate, Zoom, Google Hangouts, and Microsoft Teams make it easy to keep in touch.
- Make sure you know what everyone is entitled to from the start. This will make sure there are no arguments about compensation, benefits, and shares further down the line. Get legal advice about your employment contracts if you need to.
- Assess your needs all the time. As your business grows and changes, it may be that the team you need changes too. You may need to bring on new people or say goodbye to existing staff.
Timing
This is the top reason for success, with 42% of startups saying this contributed to the growth of their business.
You may have a perfect idea, the best team, and the ideal business model, but several businesses have failed because they simply launched in the wrong place or at the wrong time.
Pets.com is one of the largest businesses that was flawed because it launched so early. The pet supply website launched in the late 1990s and raised a lot of investment, but failed because it hit a lot of problems. For example, it did not have the logistics in place to deliver large bags of pet food cheaply to customers.
If the concept had launched a few years later when customers were more used to the idea of getting items delivered online, it would have probably been a lot more successful.
It’s also worth bearing in mind that your business may start successfully, but could come into issues later on.
COVID-19 has been a significant reason why many recently created startups have failed. In fact, in September 2020, the number of startups filing for administration in the UK was the highest it had been for ten years.
As an example of a startup that struggled during the pandemic, take Crowdscores. This social networking app was created so that football fans could share scores and other data in real-time, and had amassed nearly £6 million through funding. However, with the suspension of football matches and the ban on spectators in 2020, the app was unfortunately no longer able to continue.
The best way to find the best launch time
The best way to ensure your business launches at the right time is to carry out thorough market research. See what the demand is for your product or service. If it’s not the right time and you’re not in a position to wait, are there any changes you can make to meet demand?
Don’t forget that it’s perfectly acceptable not to launch your business if you don’t think it is the right time. Holding back may even give you extra valuable time to develop and grow your startup idea.
It’s essential to research the lifecycle of your startup. That way, if you come up against an issue, you know what you need to do to mitigate it.
In conclusion – what you need to do to ensure startup success
This article has looked at the top five startup key factors and how you can increase the chances of your product or service succeeding.
Our top five tips are:
- Make sure you know how you are going to fund your startup, whether this is through investors or your own investment.
- Know how you are going to make money from your startup.
- Have a strong idea in place, and don’t be afraid to pivot if need be.
- Make sure you have a solid and competent team behind you.
- Carry out market research to make sure that your timing is right.
Consider all of this, and your startup will be in as strong a position as possible.
Also published on: https://blog.urlaunched.com/5-startup-key-factors-of-success/