Most startups fail – five steps to increase your chance of success by 500 %
An IDEA alone will never make money. There are millions of good ideas, only one successful company that milks that idea and make money.
To succeed the idea has to be transformed into a business model and executed well. The steps to do this are:
- Sharpen Value position : Understand the customer problem your idea solves. This must he known precisely. An idea that doesn’t do this is no good.
Flipkart solves a customer problem of having to go to multiple shops to buy stuff. The site allows ease of shopping at very attractive prices. This is the value proposition.
What is yours? Knowing this is the first step.
- Know your customer ? Different types customers- users & payers. Your value proposition must address both these. Understanding customer and meeting needs with your product is the next step.
Google and Facebook are classic examples. You the consumer do not pay for their core service( search in the case of Google) and (networking in the case of Facebook).
Yet somebody pays. Google and Facebook have to take care of both users (you) and payers ( advertisers , etc).
- Create Business model : how will you convert your idea into revenue and profits. Fine tune the model . This consists of (1) revenue model (2) sales channel (3) back end processes (4) customer acquisition and (5) key partners.
Revenue model- how will you make money? The answer cannot be – ” by selling my company “. For somebody to be interested to buy your company, it must have a revenue generating capability which is proven.
Sales channel : how will you get sales- how will you deliver. Is it physical or non physical( web, mobile)
Backend processes- what set up do you need internally to make and deliver product or service.
Partnerships – who are your key suppliers/ partners without whom you cannot do your business
Customer acquisition – finally how will you scale up and grow with new customers.
Test the model – throw out what doesn’t work and sharpen all parts of business model.
- Get initial customers : get repeat orders – this is call customer traction. No idea succeeds unless a customer endorses it by buying it.
- Convert the startup into a company that can consistently deliver and grow. This requires (1) a team and (b) scalable processes.