A start-up company is an ambitious venture which stands as the epitome of an entrepreneur’s ardent endeavours. The success of the company is highly subjected to the manner in which the company serves the customers and how it sustains in the industry. Eventually, the company grows through the many adversities that the industry throws at it, which brings up various questions as to how the business entity achieved stability. In the corporate world, stability signifies success as it culminates not only the revenue the start-up is making but also the amount of market share it is gaining. Revenue is the financial gains of the company in exchange for its services, the excess of which results in profits. Market share, on the other hand, is the cumulative assessment of the total consumer market the company has tapped both in terms of demographic population as well as the geographic location where the company has set up the business.
Key Growth Factors of a Start-up
Gone are the days when passionate business owners would barge into the market without proper inspection of market specifications and consumer trends. In the era where business entities are becoming more data-driven day-by-day, so are the entrepreneurs who incorporate them. New business owners or entrepreneurs have grown fond of an updated strategy to start their ventures. The crux behind this updated strategy is to collect data, study the market, create an entry and then incorporate the business to begin operations when a clear opportunity for market entry is spotted. A new habit that entrepreneurs have also grasped is to analyze the company's Key Growth Factors so that they can capitalize on those elements to not only become successful in the present but also to survive through ever-changing uncertain market fluctuations. Thus, keeping these factors in mind, the main reasons for a start-up’s success are –
1. Understand and Cope with Market Demands
A fascinating cum attractive feature of a start-up is that it is subjected to flexible changes and customizations post receiving consumer feedback as well as market demands. Start-up companies must mandatorily implement a pilot project in their early stages, providing their product or service to a test market to gain feedback and make changes. Test markets often range from a population of 500 to 1000 consumers. The feedbacks and reviews of these consumers are considered to make valuable changes to the product/service or manner of implementation or operation. This strategy helps the start-up to prepare for a secure market entry before their incorporation as they have a furnished product that consumers will feel relevant to and thus, will accept the company and its brand. In this manner, start-ups that cope with market demands and customer feedbacks have a more significant success rate than those which do not understand the needs of their consumers.
2. Create a Flexible Fund Allocation Plan
The most relevant keywords that business professionals associate with start-ups is funding. Funding is the lifeblood of a start-up, and an adequate fund allows the company to offer quality products as well as invest in marketing for gaining consumer attention. In the modern business ecosystem, investors of regional industries often flock towards attractive and feasible business ideas to hedge their investments. These investors are –
- Angel Investors
- Venture Capitalists
- Start-up Boosters
- Private Incubators
- In-house Promoters
- Family Investors
- General Public (when start-ups go public and issue Initial Public Offerings – IPO)
Once in contact with these investors, aspiring start-ups are exposed to a series of funding plans and options to gain investments. Still, it is the responsibility of the top management to decide the most strategically accurate investment option for the company's future. Top managers need to decide on the proper diligent allocation of these funds out of the various investments that get added to the capital of the company. The allocation format includes the following –
- Deciding a departmental funding plan so that all departments receive proper resources to operate.
- Make a list of fixed and variable costs and allocate funds accordingly.
- Plan beforehand on future cost control methods.
- Create a reserve fund in case of contingency scenarios.
- Establish exit strategies and return policies to reimburse investors in case the venture does not break even during the allotted phase.
3. Create a Phase-wise Implementation Plan
A plan of action gives direction to new business owners about the approach taken towards setting up the business and how to grow the business over time. A basic phase-wise plan needs to consist of 5 years of foresightedness into the company’s future. A phase-wise plan guides the decision-makers of the company towards –
- Knowing when to invest and divest.
- Planning helps in deciding when to expand the business or shut down certain operations.
- Planning gives insight to the company for deciding on brand building and marketing.
- Planning helps to decide when the company is ready to collaborate or make new partnerships with other firms.
4. Network and Consult with Professionals
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