Having a good business idea is not enough to succeed in the hypercompetitive startup ecosystem. According to the U.S. Bureau of Labor Statistics, about 20% of startups fail within their first two years, while 45% of them in their fifth year.
In the era of economic instability, there is a wide range of factors to consider before you call yourself an entrepreneur. Here are some of them.
1. Identify your Target Audience
Remember that not everyone is eager to purchase your products. Not having a target customer in mind, you may fail to design relevant products, develop an authentic value proposition, and create targeted marketing campaigns. Studies found that 42% of startups fail because there is not a market for their offering, while 14% do not have a relevant marketing plan.
Therefore, focus on users that are genuinely interested in your products and services. Start with broad assumptions. Identify a large group of potential customers. Next, segment them using variables, such as their gender, age, location, and brand preferences, to eliminate customers that are not the right fit.
Above all, rely on actionable data. Monitor your competitors to identify which audiences they target. Keep collecting feedback. Use online surveys, social media monitoring, and collect reviews to collect customer feedback. Use their demographic and psychographic data to create relevant buyer personas to guide your business strategy.
2. Choose your Budgeting Strategy
A startup budget is a breakdown of your company’s capital and costs. It points you in the right direction and allows you to make smarter business decisions. Of course, you may need to supplement this with some learning of your own if there are areas of running a business that you don’t have much experience in – for example, if you don’t have experience with payroll, you may wish to learn about compliance here so that you will know what needs to be done regarding this, even if you fully intend to outsource this. Apart from keeping your finances healthy, it also helps you determine when to purchase equipment, negotiate with suppliers, and predict cash shortfalls. Above all, you will be able to seek investors and fund your business. Having a sound startup financial model is one of the first steps to building a budget for your business. In addition, establishing a financial model past your startup phase is critical to executing your business plan.
To build a budget plan, you need to:
- Determine overhead costs, such as your rent, payroll, business insurance, website hosting, internet services, phone vendors, bank fees, third-party partnerships.
- Estimate variable costs, such as commercial business supplies, advertising spend, shipping costs, equipment, utilities, etc.
- Assess your total expenses and compare them to your revenue. Based on these estimations, determine which costs are obligatory and which ones you can save for later.
- Map out cash flow. Cash flow is the amount of cash going into and out of your business.
- Calculate your monthly revenue. Make a list of your revenue and funding sources, such as crowdfunding, savings, bank loans, sales, etc.
3. Build a reliable team
As a startup owner, it is essential to surround yourself with the right team. Build your team gradually and cherry-pick its every member.
While an impressive resume is a fundamental starting point for any business owner, it should not be the only thing to focus on when hiring a candidate. Check their online presence – take a look at their personal websites, LinkedIn profiles, and endorsements from clients and coworkers. Next, ask candidates to demonstrate their skills in real-life situations. For example, when hiring a salesperson, ask them to sell something to you. Above all, make sure they align with your company’s values, culture, and missions.
4. Figure out your Marketing Plan
Without marketing, no one would know that your business exists. For starters, do not spread yourself too thin. Set clear marketing goals and choose the right marketing channels. As a new business, you probably want to focus on raising brand awareness. Therefore, you should focus your marketing strategy on the practices that help you achieve your goals. Here are some of them:
- Influencer marketing maximizes brand visibility and builds trust with customers.
- Blogging is a proven way to drive traffic to your startup’s website and position yourself as an authoritative business.
- Social media marketing engages customers and increases brand loyalty.
- Referrals encourage word-of-mouth marketing and attract new customers.
- Paid advertising improves customer targeting and helps you put your business in front of the right customers faster.
- Traditional marketing practices, such as visually-appealing brochures or pamphlets, can help local companies boost brand awareness. By inserting QR codes or your website address, you can also attract offline leads to follow you online.
Over to You
Having an entrepreneurial mindset and passion is critical to start a business but is often not enough to succeed. It takes a lot of research, planning, and experimenting to turn your idea into a profitable business. Many factors impact your startup’s growth, and those are just some of them. Additionally, you should also:
- Find a mentor.
- Pick funding sources.
- Choose the right location for your business.
- Identify suppliers.
- Focus on legal and government compliance.
- Perform regular accounting analysis.
- Choose business operations to outsource.
Eve Anderson is a marketing specialist turned blogger. Interested in sports and exciting travel destinations. Love to share content that can inform people