It’s an established statistic that well over 50% of all startups fail within their first four years. Additionally, a vast majority of startups are self-funded, at least initially, which can be extremely stressful for founders. Despite these factors, Australia is currently experiencing massive expansion in its startup scene, with 35% of startups based in Sydney.
In this highly competitive tech-based market, how can you ensure your company not only stays afloat, but experiences positive and sustainable growth over the long term?
1. Know your Market
This doesn’t just apply to new startups who are in the process of planning their initial launch; no matter which stage a company is at, having an insight into the market – both what consumers want and what competitors are doing – is critical. Market knowledge is especially important for very early stage startups who are still working to gain traction and brand recognition – if you don’t continue to stay in touch with your consumer base and competitors, you will quickly be left behind.
Many companies overestimate what they actually know about their customer. They often talk broadly about their personal knowledge, but haven’t actually tested or experimented with their customer base. How data driven are you in your decision making? It’s crucial that startups focus on analysing their customers’ needs and undertaking small experiments to validate those market needs, rather than initially directing a majority of their energy into marketing and customer propositioning. By really understanding the unmet and unarticulated customer needs, you will have a greater chance of getting the product market fit right.
2. Define your Long-Term Vision
Are you in it for the long haul, or do you plan to exit once a particular goal has been achieved? It’s important to be honest about whether you plan to exit your startup and when, because this can have implications for how you execute deals and position the company.
3. Consider Sources of Funding
As mentioned above, most startups are self-funded in their first few years of operation. To facilitate maximum growth for your company, you will need to consider different sources of reliable funding and how these may impact your company’s trajectory. If you’re looking for steady, small-scale growth, it’s likely preferable to maintain majority ownership of your company. However, if you require large-scale capital injection or want to risk capital to move faster, seeking out angel, seed or venture capital funding, or even tapping public markets via a listing, may be the most desirable pathway forward.
4. Have a Business Plan
It sounds simple, but the number of companies who don’t have a succinct business plan is overwhelming. Your business plan should include:
- Your startup’s purpose;
- What problem you’re seeking to solve and why your solution is unique and valuable;
- How your concept is defensible and scalable, including protection of your IP;
- How your company is set up;
- An in-depth market analysis and explanation on how your business model has an advantage;
- A comprehensive go-to-market strategy.
A business plan is also important if you are looking for external capital. Most VCs will require that you have a solid business plan in place before they will even look at your offering so that, from an investment perspective, they can understand the risk involved and check your strategy to mitigate these risks.
If you’re a startup founder and haven’t addressed these simple steps, it’s time to take your company to the next level.
Nina Burrows is a Consultant at Chrysalis Advisory
Chrysalis Advisory provides advisory services in strategy, leadership, culture and business development to help high growth ventures scale and succeed. If you would like to discuss how we can support you to grow, transform and consider your business model please visit our website www.chrysalisadvisory.com.au or contact me at email@example.com.