Eight Simple Ways to Build Successful Start-Ups
Date: Friday , June 03, 2016
Ampligrow Consulting specializes in Strategic Initiatives, Business Consulting and Frameworks and provides solutions to business-critical problems across vast industry domains
Just before launching my own entrepreneurial venture, I was researching the success rate of start-ups and new businesses. The statistics that are available on the topic is mindboggling! 75 percent of the start-ups disintegrate within three years. When we specifically look at technology start-ups, the percentage of failure goes up to 90 percent.
I have been fortunate to have worked very closely with several entrepreneurs, either as a partner in helping build the organisations or in more recent times, as a coach to some of the best first generation entrepreneurs. These interactions have taught me simple rules to ensure success on an enterprise.
1. Accept What We Do Not Know: I have seen several businesses which started around a great idea, but quickly fall by the way side because of lack of expertise/knowledge outside of the founding members\' core competency. So, the first item on the to-do-list for a founder is to identify his/her core competency ; and this, more often than not, is deep insights into a specific domain or technology. The second step is most critical - identifying and building complimentary competencies around the core business idea. Identifying a coach or a mentor would make this task easy.
2. Choose Right People For Right Reasons: Given the limitations around funding, many start-ups may not have the \'purchase power\' to hire the best brains for every role. Hence, it becomes very important to identify critical roles which needs best of the talent and make sure right people are hired - irrespective of cost. These \'right roles\' have to compliment the core competency of the founding team and help creating holistic capability for the organisation.
3. Do Not Hesitate To Hire Professional Help: One of the biggest factors for failure of start-ups has been around letting-go of control from the \'founding members\'. Every business reaches a point where it needs professionals with right background and experience to be at the helm of making key decisions. I have seen the struggle the founders go through either in hiring professional leaders from the industry or in empowering them to take decisions without too much of consultation. More often than not, this becomes a determining factor in the longitude of the organisation.
4. Keep Asking \'What Next\': Any new product or service, however innovative or successful, will plateau over a period of time. The key to continued success of a new venture is to have a vision that extends beyond the initial innovation or the idea around which the business is built. The question is whether we are prepared for next phase of innovation before the business hits the cross roads. This is where the \'founding members\' have to focus while allowing the professionals to run the day-to-day functioning of the business.
5. Sell The Solution, Not The Product Or Service: The new services we have seen in the last decade or so have changed the way consumers experience a service or a product. A cab aggregator like Ola or Uber is not selling cab services, but the convenience of having a cab available at the door step. Positioning of the product/service from a customer stand-point becomes the most critical success factor for the new business.
6. Transfer The Passion: For a great idea to transform into a successful, revenue earning business, the company would need to expand its employee strength beyond the founding team. I have often heard the \'founders\' bewildered why the employees are not as passionate as they themselves are about the new idea/product. An employee - by definition, is someone who works for someone else for a pay, not passion. It is critical to invest time and efforts in transferring the passion and help employees connect with, and contribute to, the BIG picture.
7. Groom Leaders Not Just \'Technocrats\': Almost every single start-up I have experienced, focuses on building technical competence, which of course is critical to ensure the idea/product is \'market ready\' in the shortest period of time. The flip side of this would be poor man management skills in the leaders. Needless to mention, the impact of poor people skills in the system would have greater negative impact on the business than lack of technical skills.
8. Ensure Consistency Of Policies And Processes: It is critical for an organisation to have clearly articulated policies and practices - not only at the business processes side but also at the support processes like HR and Finance. Be it a performance appraisal process or how the costs are managed, it is imperative that the policies are not only made available, but also employees educated periodically. I have seldom seen a start-up investing in support functions in the initial journey. By saying this, I am not suggesting that start-ups/mid-size companies hire a huge team of Human Resource or Finance professionals, but must look at optimal use of internal capability and external service providers. This would help in consciously investing time and efforts in attracting, grooming and retaining talent.
Successful businesses are built, grown and excelled on right blend of strong internal/external process and critical human capability; not just great ideas. In following these simple rules, the organisations would have started their success journey on a strong foundation.