The 5 key elements that you need to build a successful corporate startup
We are living in the age of technology. And since it is such an important part of our daily lives (with our phones becoming an extra appendage!) it’s no wonder that more and more people are gravitating towards a career in the tech startup space. Many (arguably misguided) people who have good ideas think that they will be able to build a successful corporate startup based on this alone. The numbers, however, prove otherwise: according to the Bureau of Labor Statistics, an estimated 90% of startups fail, 34% of those within the first two years of operation, and only one in 10 making it for the long haul. Talk about a waste of time, energy and resources!
But what are the reasons behind all these unfortunate failures? While lack of funding and too many competitors offering similar products rank high on the list, research conducted by tech market intelligence platform CB Insights, indicates that the main reason — the one responsible for 41% of closures — is that people are not doing enough market research and are trying to offer something that there is actually no real demand for.
So if you don’t want to become another statistic and make up the one of the 90% of startups that don’t go the distance, what can you do to guarantee viability, profitability and longevity? Here are the five most crucial factors that will determine whether or not you stand in good stead for long-term success.
1. The idea + planning
We have already established that the idea isn’t necessarily the most important factor when it comes to determining startup success, there does need to be one to give you a starting point from which to work from. It is, in fact, the idea combined with extensive planning (and, later, execution) that will be a bigger indication as to whether the idea will flower into profitable fruition. This planning should cover everything, from your goals to your targets and even your operations. The more time you spend fine-tuning the initial plan and researching the market, the better your chances of launching a product that is realisable and relevant.
2. The timing
No, I’m not talking about meeting your deadlines (although adhering to a timeline is important!) but rather considering the timing and being aware of competitors activities when revealing your product to the often-critical, always-fickle consumer market. While you might think that this requires you to be very forward-thinking, it is more about addressing a current need or solving an immediate problem. Being too far behind — or too far ahead — of the curve is unlikely to yield a positive and prosperous outcome. So instead of trying to be the next Elon Musk, be thorough in your market research to assess viability, long-term loyalty and sustainability.
3. The team (and its leaders)
You might think that being a savvy entrepreneur, you are able to achieve market domination on your own. It is rare, however, that people accomplish great things in the startup space without the support of a trusted team and strong leadership. The people you employ or join forces with will be responsible for everything from maintenance to innovation of your business, so appoint them wisely. It is also important to select your team not based on their educational background but rather their level of experience and competency. Hiring the wrong people can result in even the best ideas and most intricate planning falling flat.
4. The money
While it might not be the leading factor behind the failure of most startups, liquidity issues do come in second at 29%. And this number should come as no surprise to anyone who has tried to get any type of business off the ground or maintain its success. While securing funding — especially in the early stages — can be tricky, the benefits of personal and familial investments can be twofold: not only will this (hopefully) supply you with enough funding for the initial phases, but it also communicates to prospective external investors that you believe, and are invested, in your startup, its positive reception and profitability.
5. The marketing (and growth) strategy
It can often be overlooked or be an afterthought, but the way that you market your startup is crucial if you want it to have any hope of long-term success. Even inferior products that are more unique, innovative or exciting in their packaging and presentation generally outsell or outshine their better-but-boring competitors. Implement a clear marketing strategy so that your message is uniform but creative, while also coming up with a plan to help your startup grow, which shouldn’t be so fast that you can’t keep up, or so slow that you remain stagnant. Balance, as they say, is key!
