“A ship in the harbour is safe, but that is not what ships are built for.” – John A. Shedd, 1928
The first phase of running a new business can be challenging. It requires an extra amount of commitment, passion, and faith. It may take you some time before seeing significant growth, but it doesn’t mean that you should let time do everything to facilitate your business’s growth.
According to the Small Business Administration, around 65% of all enterprises fail within the first ten years of operation. Time, leadership, and having the financial resources to live long enough to generate a profit are all barriers.
? Tip 1: Monitor Your Startup Strategy
Let’s say that you’ve already put in the effort to create a strategic plan for your startup. Using metrics to track its development ensures it stays on track – it is, for this reason, our first tip.
According to a BDC survey of over 1,100 small and medium-sized businesses, measuring progress is a hallmark of successful organisations. They found that using three or more performance measuring indicators was 50% more common in fast-growing enterprises than other businesses.
- Choose your metrics – This includes your milestones (the execution of a work by a specific deadline) and quantitative performance indicators (such as profit and revenues).
- For tracking – Performance dashboards are a great way to keep track of your key performance indicators (KPIs). It can take many forms—it can be as simple as whiteboards or an electronic screen.
Here are the most important KPIs and metrics that every startup should track:
- Financial Metrics: Revenue and profit margins are often the focus of KPIs connected to financials.
- Customer Metrics: Customer-centric KPIs are typically concerned with customer efficiency, experience, and retention.
- Metrics for Process Performance: Process metrics are used to track and measure operational performance across the company.
Keep in mind that the leaders should celebrate little victories with the rest of the team!
? Tip 2: Not to Sell Too Many Products
Most startups begin small, intending to expand after learning some key lessons, such as avoiding poor product launches that could sink the company or making poor judgments that could do the same. Most businesses work toward this goal by testing a few products at a time, but not too many. The point is that these products should have a common denominator. It can be the same target market or marketing effort!
- The Pros – There is focus and a great niche, and you can develop your product quickly rather than splitting your efforts. There is a high conversion rate as well!
? Did you know?
In Professor Sheena Lyengar‘s famous jam study, when 24 types of jam were provided, just 3% of those who tasted the samples bought the jam. But when given only six types of jam, 30% purchased at least one jar of jam.
- The Cons – You’ve got a lot of pressure on your shoulders. When you just have one product to market, you rely entirely on it. There are fewer repeat customers and fewer marketing opportunities too.
Honestbee Case Study ? Takeaway
Failure Point #1: Lack of Focus
One of the reasons Honestbee failed is that its business model lacks direction. The company was involved in too many initiatives, going into grocery delivery, food delivery, laundry delivery, parcel delivery, ticketing, retail, and food & beverage. Honestbee also seemed unsure about allocating their resources and capital, resulting from an unclear direction of the company.
To learn more about failure points of startups from E-commerce, Fintech, 3D Printing, Gaming and many more industries, become a paid subscriber of Why Startups Fail Newsletter.
? Tip 3: Keep an Eye on Your Competitors
Of course, as a startup, your goal is to be ahead of your competitors. They’ll either beat you up, or you’re the one who will beat them. It’s natural for businesses to be in constant competition with each other. Keeping track of your competitors’ moves can help formulate ideas and plan to grow your business. It will also keep you updated on the trends in the market.
- Identify competing startups in similar markets.
- Hunt for critical financial data on them—this includes the amount of capital raised, revenue, pre-and post-money valuations, financing history, deal multiples, and series terms.
- Determine the investors behind a competitor’s funding round(s).
- Keep tabs on your competitors’ internet influence. For example, Sprout Social helps a company manage its social media while emphasising competitive analysis. SEMrush is an SEO tool that allows users to check the health of competitors’ websites.
? Tip 4: Establish Partnerships
However, your competitor may not always need to be a competition. You may establish partnerships through which both parties gain. You can also make each other’s business expand another. For instance, merging your business also means connecting your resources to accommodate what you lack. A pizzeria or restaurant may also partner with a courier business to deliver. It doesn’t just lessen competition but decreases the cost as well.
- Begin with a win-win mentality built on thinking a few steps ahead of time.
- Have a clear vision for the company, its network of relationships, and how they all work together to help it expand.
- Be clear about what you can provide and what your partners can provide.
? Tip 5: Evaluate Results
As a new startup business, everything is trial-and-error. First, you need to assess if your business growth strategies are effective. You can hire experts to evaluate each aspect of your business from product cost, processing, sales volume, and marketing. But in the end, you’re the chief responsible for carrying out market research and management plans. When you have a clear view of your business’s financial and marketing data, you can now decide whether you should modify, retain, or completely change your strategies.
Check out Why Startups Fail Newsletter
Why Startups Fail is a bi-weekly newsletter where curated insights on startup failures and what you can learn from them are delivered straight from Southeast Asia’s boutique Business Scalers to your inbox.