The entrepreneur spirit is alive and well. To assist you in “kickstarting” your startup or re-start, here are seven critical factors (CSFs) that successful businesses have embraced.
1. Be realistic about your business objectives
Passionate leaders command most startups. They have an aura of electricity and their enthusiasm is contagious. Unfortunately, many of these same leaders set unrealistic goals. Setting goals that are overly optimistic and vague, such as, “to be the company to grow to $1B faster than any other business,” lack substance and meaning. Others such as “to become the defacto standard for web-based self-service in 12 months” include a time horizon, but fail to indicate how, what, or with whom success will be achieved.
Every company needs a clear vision and a mission statement, but specifying ambitious goals without providing proper investment and support will lead to agitation in the board room, frustration for the sales team, and a detrimental cash burn rate. Your goals must be clear and credible. To ensure team buy-in, consider enlisting input from your employees. If they are part of the conversation, they’ll be more likely to own the objective.
Success Factor #1: Identify realistic goals and reasonable milestones and timelines that can be matched with current investment and spending plans. Saying so doesn’t make it happen: Be realistic in investing the right resources to meet your goals.
2. Truly understand your unique value proposition
Successful companies know that it takes more than technical leadership to create a sustainable business – there must be value for the customer that exceeds the value currently being offered by competitive solutions (even if the alternative is “to do nothing”). A value proposition starts with careful focus on the target market and your target persona(s). The temptation to try to be “all things to all people” leads to the overextension of resources and the inability to execute. Next, a value proposition needs to reflect your brand promise along with the basket of benefits you offer to multiple market segments and the price the customer pays for those benefits.
Value propositions are not created in a vacuum or the boardroom. Consider soliciting input from prospective customers early in the product development phase. Collect feedback regarding the customer problem your product can solve. Do your homework and anticipate market reaction. This information will help you hone your business plan and accelerate a return on your marketing and sales investment.
Success Factor #2: The customer must be the center of your universe; not your product. Build a value proposition that identifies the target markets, their problem, and what you do for them better than anybody else.
3. Take a hard look at your competition
It is surprising to find that many startups and emerging companies are convinced they have no competition. Some entrepreneurs are focused so intently on their product that they fail to recognize evolving market trends or anticipate competitive advancements in markets that may overshadow their own value proposition. With product lifecycles shortening, it is critical that companies accurately judge the competitive landscape in order to take full advantage of their market window.
Consider these two dimensions of competition: 1) How are users addressing this need today without your product or service? In most cases, users have adopted some solution or service to address the problem you solve. These startups spent time understanding alternatives being used today before they launched their product. 2) What similar products or technologies are being employed today? One startup we worked with researched 30 competitors and distilled them into three categories. From this grid they were able to clarify their points of differentiation.
Success Factor #3: You cannot win with a “me, too!” product. Research the competitive landscape and categorize your competitors, noting their strengths and weaknesses. How, where, when, why are your better than alternatives? You must be brutally honest with yourself. If you are not, your customers will be. And you won’t like the results.
4. Invest in a solid marketing foundation
It is common for entrepreneurs to incorrectly believe that marketing is not important at the early stage of a company’s development. They think marketing can wait until after the company is funded and a few deals have been won. This is wrong. Marketing begins on day one. It begins when you come up with an idea for a better product or service. Marketing begins when you decide you talk to Venture Capitalists.
Let me be clear: you do not need a marketing organization on day one. However, you must have several marketing elements built into the DNA of your initial business plan and investor presentations. Marketing elements such as:
- Target market segment descriptions
- Illustrations of the target personas
- A positioning statement that differentiates you from alternatives
- An elevator pitch that captures interest and attention of your investors and early-stage customers
Whether or not you have a chief marketer on board, your executive team will need to develop these core elements of marketing. Successful startups create a clear message, then repeat it, reinforce it, and drive it home consistently in everything they do. And it starts on day one.
Success Factor #4: Invest early in marketing to clarify and articulate your value proposition, key messages, and defendable points of differentiation. Integrate this market strategy into your product development plans, your VC investor pitch, and later, your sales organization.
5. Integrate your Marketing and Sales teams
Turf battles and political agendas waste time and energy. So, do everything you can to ensure your Marketing and Sales teams share a set of common objectives. To function at peak performance, Marketing (with input from Sales) should identify the target segment(s), identify and nurture likely prospects, and execute a relevant and meaningful communications strategy. Sales (with input from Marketing) should determine the field tactics and best approach for turning targeted prospects into actual customers. Marketing develops the weapons (e.g. the messages, sales tools, competitive intelligence). Sales learns to use them effectively in each unique customer environment to win.
Another common trait of successful companies is in their ability to establish joint sales and marketing measures and metrics early, allocating appropriate resources to let the teams function as one. A common goal expressed by one VP of marketing is that at the end of each day, marketing and sales must be able to conclude that their combined efforts accelerated sales in some way. The most successful businesses we’ve worked with embraced this philosophy. It led to one startup growing its revenue stream from $100K to $3.2M in 9 months.
Success Factor #5: Regardless of organizational structure, ensure your Sales and Marketing teams share a common set of objectives, milestones, and measures.
6. Plan for the future
In planning for the future, successful companies juggle these three management dimensions: managing their cash burn rate, adjusting headcount carefully, and embracing creative hiring practices.
Managing the cash burn rate: It’s easy to not spend money and manage a business from an income statement perspective. Unfortunately, no company ever saved its way to profitability or sustainable growth. Successful companies are willing and able to make strategic investments when appropriate. While the days of Hollywood-style events and lavish press conferences are over, important infrastructure investments are critical for any company’s ability to grow. Sales force automation tools, customer resource management tools, sales training, a professional looking website, and developing a content-marketing strategy are all key investments that allow startups to rapidly build a solid brand and operate their business smoothly.
Adjusting headcount carefully: All CEOs would agree that terminating poor performing sales reps is often necessary. However, be careful with that axe! It is possible the sales person isn’t the weak link. Perhaps it is an off-target marketing message, a poor product design, or a fumbled value proposition. Carefully consider all options before you hire or fire employees.
Embracing creative hiring practices: Along this same line, successful startups exercise great creativity in their approach to hiring and firing. They “beg” retired executives to volunteer their time as part of their advisory staff. They “borrow” expertise through consultants who become a temporary or interim extension of their staff to add unique expertise to projects and meet specific objectives. And, some seek to “steal” from the best by hiring away good employees into needed positions.
Success Factor #6: Be fiscally prudent, but willing to consider targeted investments to build a solid business infrastructure quickly.
7. It’s all in the execution and learning
Nowadays, its very common to find organizations that are measured solely on its ability to execute programs on a daily basis where there is no time to plan. Unfortunately, aggressive but untargeted execution is ineffective and wastes valuable resources. A challenge for all businesses is in their ability to balance these two extremes. You need a “big picture” plan as well as a “tactical operations” plan. For example, it is not uncommon to find both a 3-5 year business plan that shows the planned evolution of a company’s vision, mission, and value proposition, coupled with a tactical 6-month plan that maps quarterly business objectives that are reviewed monthly with employees.
But, you will hit bumps in the road. That’s life. The best, most interesting startups are the ones who have a culture that seizes these opportunities for learning. Instead of becoming angry or punitive, push your team to learn from the mis-step. Focus on the future and make changes in real time.
Success Factor #7: Speed and ruthless execution are everything. But don’t forget to learn along the way. As the saying goes, “if you aren’t making any mistakes, you’re not trying hard enough.”