What makes a successful company in a market? Is probably the single biggest question a new start-up team must be able to answer. What factors make a successful business has always been a difficult question to answer. So what matters In business for successful start-ups?
The answer has always depended upon who is asking the question!
Unicorn Start-Ups
Dreamers look for unicorns with unique protectable offerings, such as Intellectual Protectable rights, a Unique Selling Proposition (USP). These dreamers will invest in big step start-ups, market disrupters which will change the markets they wish to operate within. Step changing start-ups such as unicorns (are rare hence the name unicorn), but can reshape markets towards these start-ups. Think about Apple and Amazon and what they have done to the markets they operate within. Today these two are the largest (by value) companies in the world today.
Unicorns need a unique angle, a technical platform angle, a defendable IP, or a unique (and defendable) operating platform. Even small start-ups can be unicorns if they can identify and control a unique position. Inside Apple’s early technologies was the British made ARM microchip, which propelled it into be a unicorn. But unicorns are rare, and their window to get established is getting shorter and shorter as competitor awareness and responsiveness is constantly quickening.
Funding Start-Ups
Traditional funders, such as banks want high returns with low risks, and owners who will take all the risk directly, or being prepared to 100% underwrite the banks so called investment. Banks do not like, or take risks, which is uncertainty. Which is why they avoid taking them, unsecured risks are not what banks generally do. So they may support a start-up with a loan based upon a sensible fully costed and robust business plan.
Banks, who are most start-ups first point of call, often provide a poor place for people to start a conversation with about a business start-up. Start-ups looking for financial support, ideas and how to get a business start-up off the ground often left disappointed by the support which they receive.
The risk reduction by definition reduces opportunity; in essence if you remove all the risk you also remove all the opportunity a start-up can achieve. Start-ups often overstate their growth, understate competitor defensive activity and the challenges in getting established. Often start-ups can find better funding through self-funding options, alongside friends and family as stage one seed funding. It is always best to start small, prove your concept and then go out to market for stage 2 funding with a proven pilot under your belt.
Start-Up Entrepreneurs Solve Customers Problems
Entrepreneurs genuinely look at solving an emerging problem, the old adage is:-
“The secret of success is to find a need and fill it, to find a hurt and heal it, to find somebody with a problem and offer to help solve it.” – Robert H. Schuller
While the logical approach of bankers is to ride an existing market wave, true entrepreneurs look to create the wave. They are looking at a problem and identifying the ideal innovative solution for that problem’s resolution.
Researching Successful Businesses
So what makes a successful business model includes a whole variety of factors including the core idea, the experienced team, the market opportunity, market access, competition, scalability (the list goes on and on, depending upon who you are talking with) and what resonates with key stakeholders and target audiences.
Recently Bill Gross, CEO of Idealab decided to research this using his extensive range of business start-ups; 100 of his own, and matched by another 100, across a whole range of sectors. His assessment started by analysing what makes successful businesses. He came across 5 key common factors and he cross-referenced those compared to businesses which have succeeded.
Bill Cross’s 5 keys for a successful business include:-
- The Idea: defined and coherent.
- The Team: skills, experience, energy and how well connected.
- The Business Model: comprehensive worked through covering the business need.
- The Funding – access to the right amount of money to achieve its core goals.
- The Timing – identifying the market timing to meet target audience needs.
The research results contradicted what many thought would be the results across the 200 companies he and his team analysed. This survey included global names such as Airbnb, Youtube and LinkedIn amongst the 200. His analysis showed that of all the factors which can affect success or otherwise of a business, success really came down to these few key ones. They key factors which are common across all markets, sectors and over time are the defining characteristics for a successful business. But of all the factors one stood out throughout the survey.
Success in Business Start-Ups Relies Upon…
Timing is THE common factor in a successful business at 42%. It is the most common trait of successful company start-ups.
Team came in 2nd, with 32% and the Idea only came 3rd in importance with 28%. The business model, upon which so many advisors focus their attention was 4th at 24% and the funding came in 5th at 14%.
Timing Is Everything for Start-Ups
The quality fo the idea is not as important as timing. Timing, the driving strategic factor can be identified initially through a thorough PESTEL analysis. Timing is the bottomline performance criteria in driving the success factor for a business. PESTEL factors set the macro landscape a business operates and defines the timing of its launch. If the landscape is favourable then a business can succeed. I not, then even if everything else looks great then your chances are far lower, than if you get your timing right.
This shift from build and they will come, the old motto of every good idea, qualifies that statement by saying if the time is right then if you build it they will come.
What Matters in Business for Start-Up Success is therefore Timing
If you look at all successful business over time, then it is always timing that matters. Knowing what to do when really matters for leaders to focus on. The world is full of ideas launched at the wrong time. But get your timing right and the world is your oyster.
From the launch of the internet and the creation of Apple, to the development of low cost airplanes to the launch of low cost holidays, timing is everything.
The Importance of Research for Start-Up Leadership Teams is Vital
Leadership teams need to focus on answering the question their target customers ask, now. Timing is offering the solution the their customers will pay for today, not waiting for it or putting up with second best. If you can answer their needs when they need it, with what they need, then you are on the first rung to find success. Without good timing you are creating products and services no-one (or not enough people want). Timing is equally important for leadership teams to assess if your product / service can be accessed by the target audience.
Successful companies work with their markets to get their timing right in launching products and services that fit within a market. They can challenge existing customers perceptions but they must be the right product at the right time for the right customer if a business is to succeed.
See Bill Gross, CEO of Idealab Ted talk here:-
https://www.ted.com/talks/bill_gross_the_single_biggest_reason_why_startups_succeed
Like to know how Richard Gourlay can support your business to succeed, then contact Richard here or below.