By Jeff Kupietzky, PowerInbox
Fear of failure might be the biggest reason why the idea of starting your own business remains just a dream for most — backed by the fact that 50 percent of new startups flop in the beginning stages. It’s not exactly the kind of news that makes entrepreneurs jump at the shot to invest the time and sweat equity into building their own empire.
In the beginning, no entrepreneur who takes the plunge expects to end up as one of the ones who don’t make it. Dreams are saturated with images of a corner office with an impeccable view and a product that changes the game. But, launching and running a prosperous business takes so much more than just a great idea and big dreams. For an enterprise to run smoothly, it takes thorough planning, accurate expectations, strategic thinking and a drive to not just meet the bar of competitors, but to rise above them.
A long litany of enterprise failures and successes have provided copious lessons on what it takes to succeed. And, while it might seem almost too simple, the secret to lasting success is to implement an approach that puts customers first and stays true to smart business solutions.
7 Tips To Make Sure Your Business Is On Track To Beat The Odds
- The customer comes first. Your No. 1 priority is to solve critical problems for your customer, yet 42 percent of startups fail because they aren’t solving a market need. Having a brilliant idea is not enough—it has to be something customers actually need. Don’t waste time on unnecessary features. Forming true relationships with your customers and understanding their processes and competitors will give you a better understanding of what needs to be incorporated into the product solution.
- Research & development is your most important asset. Most startups fail because they invest based on forecast growth: if two reps can generate $10 million in sales, adding six more reps should quadruple sales, right? Yet, investing in sales capacity also requires investing in admin assistance, operating expenses and, of course, personnel benefits. At the end of the day, the best sales team can’t sell a mediocre product. Instead, spend more time and money on researching and developing the go-to solution that sets you apart from competitors and strikes a chord with customers.
- No office? No problem. A 9-to-5 workday in a designated office space is a thing of the past. More and more companies are jumping on the remote bandwagon — because it’s working for both the business and employees. Overwhelming evidence shows remote workers are happier, healthier and more productive. All the more reason to drop the office overhead and tap into a wider talent pool, hiring the best employees with zero relocation challenges.
- Stay nimble. There’s no need to create an extensive org chart when one person can do the job — and do it well. When you hire for talent, you save money and time spent on recruiting. A nimble, dedicated and passionate team should be top of mind so that employees can help with multiple projects across the enterprise.
- Save — don’t splurge — on office space. In this day and age, everyone expects an “Instagram-able” office space filled with beautiful lighting, comfy chairs and a coffee bar. But office space is outrageously expensive. Rent in the Bay Area hit a record high last year at $81.25 per square foot, beating the previous record of $80.16 set at the end of the tech boom. And that’s cheap. The cost tops $255 in Chicago and a whopping $486 in trendy Austin, Texas. Instead, skip the premium cost of a fancy headquarters and put more of the focus and money into your product. Customers aren’t won over by glam — they are swayed by how your product can solve their problem. Also, smaller office space means less furniture — a big cost saver.
- Parting ways isn’t always negative. When a company parts way with either a product or a sector of their business, it doesn’t automatically mean ‘SOS.’ It can be extremely smart, allowing you to devote more resources to a core offering or new opportunities. Switching gears and finding a buyer with better resources can do wonders for a product that you just might not need anymore.
- Don’t let the $ sign fool you. Many startups believe VC investment to be a primary goal, and it’s easy to understand why money is such a shiny object. But overfunding is a real risk — even big companies like Jawbone and the solar-power startup Solyndra, which raked in hundreds of millions in investment each, fell victim to “death by overfunding.” With big investment comes big pressure to grow in lieu of profitability, not to mention loss of control at the hands of overzealous investors. Keep priorities straight when it comes to spending more time on generating income to then invest into product-centric expansion. Choose small rounds if you do accept funding to avoid dilution and too much liquidity.
Wasting money on things like office space and an oversized sales team has fueled the 75 percent failure rate among venture-backed startups in the U.S. Following a more unconventional, but fiscally responsible and strategic path, is a much smarter approach that will enable your company to beat the odds and remain profitable.
About The Author
Jeff Kupietzky is CEO of PowerInbox.