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The four golden rules for new startup success

Four

Most people are way too keen to preach how around half of all startups fail within five years of going into business.

But to get too bogged down with a seemingly scary fact is counter-productive – what about the half that succeeds long-term?

The simple fact of the matter is that while it seems like it all comes down the flip of a coin, there’s so much anyone can do to tip the odds more favourably in their direction. Get it right and fate, destiny and all the statistics in the world are meaningless – you and you alone write your own success story.

So with this in mind, here’s a brief overview of the four most important tips you’ll ever come across for steering your new startup venture in the right direction:

1. Evaluate your idea objectively

Is it possible to objectively evaluate an idea you’re so emotionally attached to? Can you verify your own unique selling point (USP) without external input? Generally speaking, the answer is no, which is why your evaluation of your idea should include other people – not necessarily friends and family members with attachments to you.

There are several key questions you will need to ask yourself before going ahead, which include:

  • Am I looking to offer something that is genuinely useful?
  • What need does it satisfy, if any?
  • Is there an existing problem and how am I hoping to solve it?
  • What will my customers get out of it?
  • Will people actually be willing to pay for it?
  • Is it something I have a genuine interest in and passion for?
  • Is anyone else already doing it?

Answering these questions will help you identify your USP, but if you find yourself wholly unable to isolate and define your USP, it could be that your idea is flawed.

2. Research your opportunity

Having a great idea doesn’t necessarily mean it will work when put to the test. Along with the idea itself, various additional factors must be taken into consideration, including price points, development costs, competitors, target audience, market size and so on. It’s a process that requires plenty of research, though cannot be overlooked in order to validate viability.

Your research will need to focus on the following areas:

  • The size of the market and likelihood/extent of the return to expect
  • Whether the niche or sector is currently in a state of decline or growth
  • Direct and indirect competition – those already doing what you intend to do
  • The costs of developing and delivering your products or services
  • How much you will need to charge to break even
  • How much you can charge and realistic profit margins
  • The demographics of your target audience

There’s really no such thing as researching your idea and your niche too intensively. However much time you invest, it will be an investment that pays off.

3. Plan for execution

An idea is nothing without the resulting action required to bring it to life. Millions of new start-up ventures are dreamed up every day by would-be entrepreneurs, only to never get out of their earliest conception stages. Putting things into action takes courage, conviction and hard work, along with a viable execution strategy to work in accordance with. Investors are interested in financing entrepreneurs, not ideas.

In planning for execution of your idea, you’ll need to address the following:

  • Decide on and join forces with co-founders with the same dedication, commitment and passion as you have.
  • Speak to independent advisors with experience in the relevant industry or niche.
  • Begin building the strongest possible team to handle key operations, with a strong focus on sales, technology and marketing.
  • If beneficial, outsource certain operations (accountancy, marketing, web design) to the professionals.
  • Establish milestones and develop a reward/incentive system for achieving early goals.

Above almost everything else, it is the human resources you choose to work with that will determine whether your venture succeeds and to what extent. This is one area in which compromise simply isn’t an option – be selective, offer attractive rewards and do whatever it takes to hold on to stellar employees.

4. Map your finances

Dipping back to that rather unfortunate initial statistic to round off, a full 42% of start-up ventures fail simply due to running out of money. Which is of course nothing short of tragic, but is also something that can be avoided with comprehensive financial planning for the operation’s long-term future.

This means creating a plan that covers the following:

  • Exactly how far you expect to get with the cash you invested in the start-up
  • How quickly you will need to source funding from outside investors and how much
  • How long before your first revenue will be collected
  • When you expect to both break even and begin making a profit
  • Accurate estimations of production costs
  • The price you will sell your products or services for to make them viable
  • Details of your profit margins
  • Likelihood of repeat business

Investors in particular play things by the numbers, which mean that if yours don’t add up, the rest is all superfluous. Even if it means calling in the professionals to help with the number crunching, your start-up will not reach its full potential without comprehensive and realistic financial projections – long and short-term alike.

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