According to the IBM Institute for Business Value in Oxford Economics, 90% of Indian Startups fail in first 5 years. The reason behind it is having lack of exact needed innovation. Today, we will discuss about the 10 most powerful formula for Startups success.
1. Understanding the Customer’s Money Making
Today’s Startups are only looking for their own money making model instead of determining the money making model of customers. Startups should determine the money making model of their customers and need of the customers. Startups should understand how their customers grow with their money and where they invest their money. The greed of startups will be only fulfili if they will understand the need of customers.
2. Positive Cash Flow | Positive Working Capital
One of the main reason behind the failure of the Startups is, they are not maintaining the positive cash flow or working capital in their business. “A Cheque in Hand Means Nothing, You Need Cash”. Here, Profit and cash are different but both are important in the business. It might be possible that there is profit in your books of accounts but your payment in cash might be get delay again and again. You are having problems to recover your money from your customers. Therefore, the company have to face the Negative Cash Flow. These negative cash flow is the one of the main reason behind the failure of the startups. Recently, few startups closed because of Negative Cash Flow. Some of the names of these startups are askme.com, Auto Raja, Talentpad, Fashionara, Cab Auto, FranklyMe, etc.
3. Expansion with Positive Margin
Previously, we talk about Positive Cash Flow and Negative Cash Flow but this is about Positive Margin and Negative Margin. Most of the startups starts expanding just after Market Acquisition, having Loss Leading Strategy knowledge and Selling their products Cheap. Only thinking that if the valuation will increase then we will expand our business after taking funds from others. But, if their is no clear from where your profit will come then definitely the business will suffer. Inorder to sell their products cheap, startups compromise with their margin and they have negative margin. Startups should never do anything before preparing otherwise, they keep repairing their business problems lifetime.
4. Talented Manpower
Do you have Highly Potential, High Performing, Highly Skilled and Highly Will manpower? Startups must have a manpower that can able to execute the vision of company. It will help a startup grow very quickly. A company must have highly skilled and energetic manpower. If you don’t have good manpower then you can’t do anything alone to grow your company.
5. Scalability with Recurring Revenue Model
Scalability and Recurring Revenue Model are different things. The word “Scalability” means the process to scale the company. Most of the startups have good profit, good margin and have regional strength. But, they don’t make the plan to scale their business. They are not good in customer retention and unable to generate recurring revenue. So, a startup must have recurring revenue model and a plan for their scaling their business.
6. Correct Product Positioning
Positioning the product correctly in the market can also boost your sales. To position the product correctly, you must determine the your perfect customer for your product. You should also determine your perfect product and imperfect product. Product should not be recommended to everyone. You should recommend your product to the person who really need it. Businesses should market their product by researching the demography and psychography about the product. It will also save your time and money.
Find the uniqueness in yourself to advertise your product in the market. The uniqueness like whether you are Newest, Problem Solver, Best, Convenient, Cheapest, Best Value, Most Prestigious, Maximum Feature, Most Reliable, etc. After finding your uniqueness, you should do your product’s Packaging, Branding, Marketing, Present, Scheme launch, Policy, etc.
7. Releasing Product One Move Quickly
Businesses should release their product one move ahead before competitors release the product in the market. It will help to build Brand and creates Monopoly in the market. Businesses should understand the adoption curve of the market timing of their products. Releasing product one move ahead has many advantages for any business. Businesses should not have to give extra discount on their products, don’t have to launch any scheme, don’t have to reduce margin, etc.
8. Save Yourself from Getting Outcompeted
For any business, beating the competition is the most challenging task for them. Businesses should always watch on the competition what they are doing in the market. You must have a ready to execute plan to compete your competitors. To be safe from competitors, businesses should create Entry Barrier, build Brand Equity, sourcing low priced items to build economies of scale. These techniques will blow the mind of competitors. You can easily takeover the competitors with the help of these techniques.
9. Convert Feedback into Feed-Forward
Customers give their feedback regarding product but startups do not convert their feedback into the feed-forward. Customers give signal for the improvement of the product but many businesses ignore it. Complaining customer is good for your business because they tell you the weakness of your product and they stay with you if you improve the weaknesses.
10. Business Model of Building Complete Ecosystem
Make a business model that works on ecosystem. If there is ecosystem in your business model then your customer can never leave you easily. It will be very hard for them to quit you. Some of the best example of it are Facebook, Google’s Android. If Facebook suddenly stops working it will be very difficult for the people throughout the world without it. In case of Google’s Android, Google made a platform android where developers started developing Apps, due to which the all Mobile brands had to join the Android which built the ecosystem.