Startups are on the rise. Millennials are taking massive efforts to fuel startups, although it looks like only the youth will continue the trend.
Starting a company from zero is both exhilarating and full of risks. Business professionals are always eager to meet people with the same goals and vision, work on them, and turn their ideas into reality. But, simultaneously, it’s also known that around 90% of new startups fail — and that’s disheartening enough to kill the passion. So, how do you get started?
Bill Gross, the founder of Idealab, said that it’s not the concept, business plan, revenue model, partners, or even money that drives the success of a startup. Instead, it’s all in the timing. In his TEDx talk, he mentioned the journey of one of Idealab’s startups, Z.com, an online entertainment company. It had good seed funding, an extraordinary business model, and even joined hands with a famous Hollywood personality. So, where did they go wrong?
The main reason for Z.com’s setback was that the broadband penetration was not up to the mark back in 1999-2000. Back in the day, watching video content online was a big hassle. You had to figure out how to download and install a video compression software tool in your web browser. And that wasn’t even the end of all the issues. These problems forced the company out of the market in 2003.
In 2005, YouTube was established, and the company launched a similar platform that could grow into the renowned video-sharing platform it is today. The catch? Adobe Flash resolved the installation challenge and broadband penetration soon enough crossed 50 percent in the U.S.
There are several crucial factors defining the success of startups that most entrepreneurs fail to consider and become the reason for the collapse. Addressing them right at the beginning may increase the chances of a business to survive in the high competition and guarantee both growth and longevity.
Moreover, what all successful businesses have in common is an extraordinary growth model, planning, dedication, and persistence. This looks simple, but each factor becomes more complex if we break it down.
Success Factors for Tech Startups and Businesses
Below are the five crucial factors deemed important for the success of tech startups and businesses.
Startup Funding
Sometimes businesses receive a huge amount of money in seed funding rounds — but is it the factor for the startup’s success? No, it isn’t. This attribute accounts for a mere 14% success ratio in the startup community.
Now, you can’t ignore the value of money in making a business thrive. A startup without major funding will collapse under its own weiof debt. A consistent funding source is the stimuli on which a startup runs and thrives. It increases your penetration and attracts the attention of investors and customers, thereby adding more value to your business.
In any case, good funding doesn’t always guarantee the success of a business.
The bottom line is if you want your business to grow, look for the right timing, build a great team, and all other factors will fall in place once your business idea kicks off.
Startup Idea
Everyone loves business ideas that have the potential to revolutionize and transform the world. Great business ideas are the first step towards establishing a successful startup. Without them, you can’t make progress, and change doesn’t happen, leading to setbacks in a startup. If you’ve got an extraordinary idea, you can look for a team and get the funding, in turn gaining recognition in the market. However, business ideas only account for a 28% ratio in the success of a startup.
Business Model
A great business model is a vital and strategic element if the startup has a distinct path to generate revenues. However, having a great business model isn’t enough if it can’t be devised and executed to make your business work.
A business model brings your startup ideas to life. Moreover, it also helps you to achieve both short-term and long-term goals.
However, it is important to note that you can start a business without a model and formulate it later. For example, when it was launched, YouTube didn’t have a business model, nor did Yahoo!
Strong Team
A great team can help execute your business idea. The majority of investors know that the customer is the true reality of a business’ potential.
It’s not only the timing that matters for a business’s success; it’s also how concrete the company is as a whole.
One of the primary reasons most businesses do not survive is the wrong team choice. Irrespective of how perfect your timing is or how talented your team members are, the path to failure is certain if their work is inconsistent and unstable.
A strong team is all about respecting each other’s opinions and efficiently working together to implement a business idea — the only way to survive getting punched in the face by the customer.
Right Timing
Some of the greatest entrepreneurs or business professionals may argue that money or the idea is the most crucial element for the success of a startup. However, according to Bill Gross, timing is the most essential for a startup’s success, accounting for 42% of the difference between failure and success. But we all are aware that not every moment is right to penetrate the market.
A well-known example is that of Airbnb. The majority of investors even thought it was odd for a person to lease a room in their home to an absolute stranger. However, other than its superb business model and robust team, Airbnb had timing on its side. Another great example is the taxi-sharing business, Uber, which was launched during the recession — when drivers were essentially looking to earn some extra money to supplement their income.
The Bottom Line
If you’re looking to build a startup and want your business to thrive in the growing competition, before you consider anything else, ask yourself if it’s the ideal timing for your new product or service. Do your research and trust the market. If you believe it is the right timing and you’ve done the market research, then go ahead and start looking out for potential partners and grow a strong team.