Creating a company that is not only going to survive but thrive is difficult. However, with a certain combination of elements, strong willpower and the right information, you can create a business that will stand the test of time.
Lack of funding is one of the biggest issues that new companies face, but other issues include product-market fit, not properly defining a custom problem and HR/people problems between founders and team members.
As a startup founder, I’d like to dive into each of these problems and lay out how startup founders can mitigate these issues to help ensure their companies survive and thrive.
To start a successful business, you must offer a product or service that is sellable and that fits into a market, either niche or mainstream. You can have a product or a service that is fantastic and that you have spent years thinking up and developing, but without a proper market, it will be extremely difficult to secure investors who share your vision.
Consider this: 42% of businesses failed because there was no market need for them, according to 2014 CB Insights data. So, here are some key ways to determine whether or not you have product-market fit.
• Talk to your target audience via customer surveys to determine if there’s a need for your product or service.
• Make sure that the value proposition you’re proposing will address the current and future needs of your customers.
• Look for investors who not only want to sell your product but also invest in its development.
Defining A Custom Problem
Unless your product solves one specific problem, it will be difficult to justify why an investor should throw their hard-earned money into your idea. Your product needs to serve a purpose and, again, be sellable in order for investors to see that it has potential.
Investors need to know that you’ve considered not only the viability of your product, but also ways your product could evolve. Ask yourself what assumptions you’re making and whether you’ve validated your assumptions.
• Have you proven that your audience needs it?
• Have you explored (or considered) other ideas?
• Have you mitigated risks to ensure product success and return on investment?
Yet another issue you may face involves your co-founder(s). Often, when one founder comes up with an idea and the other wants to go a different way, you may have trouble coming to a consensus about what you to do with the company.
• Write out all your ideas related to the topic in question on a whiteboard and determine the areas where you agree.
• If disagreements escalate, consider bringing in a consultant to facilitate open and honest discussion with your co-founder and perhaps your leadership team as well.
According to the same CB Insights data, 23% of companies failed due to having the wrong team. It is always best to take the time to get on the same page and to try to find a common goal and direction for the company.
• Remember, you’re a team.
• Create an environment where every person’s opinion is valued and appreciated.
• Set aside the time in your busy schedules for team meetings.
• Make effective communication a cornerstone of your company’s culture.
Lack Of Funding
Lack of funding is one of the hardest things for a company to overcome and many simply do not find the investors they need in order to thrive, let alone survive. Thousands of aspiring companies offer similar products. It is your job as a founder to make sure your company is the one that stands out. You must capture the eye, and the pocketbook, of the right investor to help your company succeed.
The key is to collect the proper metrics:
• Revenue generation
• What affects revenue generation
• Features that will drive growth and revenue generation
The goal is to improve the perceived value of your company to heighten its appeal to investors. Finding investors is the next step, which is easier if you know where to look.
• Contact companies that you admire and ask for advice. You may get a better response than if you come right out and ask for money.
• Develop relationships at networking events, conferences and more; you just might find an investor who is interested in your company and eager to invest.
Taking the time to create a strong base is the fastest way to get sound investors and make sure that your company will stand the test of time.