Here Is Why An Idea Is Not All That You Need For A Start-Up
There was a time when getting a fancy corporate job right after getting out of college was the dream of every individual. However, times have changed and how!
Entrepreneurship has become a trendy career choice across the globe. The sheer number of ideas reaching angel investors is increasing by leaps and bounds every year. Most of the budding entrepreneurs have stellar ideas.
However, just a great idea is not enough to propel a start-up to success. A creative idea is just a starting point; execution contributes 98% share in determining the success of a business.
What is common between start-ups WebVan.com, Pets.com, Stayzilla, Yumist and Fab Furnish?
They all had great ideas? Yes!
But there is one more commonality– All of them failed! None of them could execute their plans efficiently. This points to the fact that it is the execution that matters the most.
Many start-ups often tend to compromise on infrastructure, hiring and speed in order to save money. While in the short-run they might save some costs but they must understand that in the long run, this is not an effective execution strategy.
How to effectively execute a great idea?
For any start-up to effectively execute their idea, they need to ensure that they have ticked the following checkboxes:
Utilization of funds: This is one of the most significant problems that start-ups face. It is not only the lack of access to funding but also injudicious spending of the available funds which eventually results in running shortage of funds.
Early stage start-ups must have a clear-cut plan to the path of profitability to avoid cash-burn. Decisions like expansion of business, which require a lot of cash to execute, must be taken up only after a thorough research.
Appropriate infrastructure: Importance of having good infrastructure cannot be undermined. Appropriate software platforms, data storage infrastructure, efficient communication channels etc. are essential for any start-up.
Having appropriate software platforms suitable to a company’s needs and their product can help save a lot of money and propel the speed of product development.
Competitor and Niche Analysis: If a start-up wants to thrive, it needs to identify its present and prospective competitors and keep track of such competition. This can be efficiently done by identifying the niche market and then analysing which other players are operating in that market.
Start-ups in various sectors, be it hospitality, education, software or even finance, can predict the next step of their competitors if they have studied their niche well. Such analysis becomes extremely important as it can prevent a start-up from getting out-competed.
Appropriate Pricing: Deciding on appropriate pricing for the product is extremely important for any start-up. They must keep in mind that the pricing of the product should not be purposely kept on the higher end of the spectrum to cover the costs.
Factors like inherent/perceived value of the product, capacity of the target audience, competitor analysis etc. must be analysed before making the pricing decision.
Maintaining a steady revenue stream: A revenue stream is nothing but a source of revenue for an organisation. It reveals the earning a business makes from all various sources.
Start-ups, during their infancy stage, are characterised by volatile revenue streams where the revenue comes in spurts i.e. sometimes there might be an abnormally high increase in traffic and sales, while, at times there might be a drop.
For any start-up, having a steady revenue stream is imperative. This can be done by getting the clients to opt for monthly plans, using partnerships to win new sales, setting up multiple revenue lines etc.
A Great Team: Every start-up needs a talented team with different skill sets. This becomes even more important in the initial few years.
The most prominent bottleneck when it comes to hiring is how to find the people who are as passionate about the idea as the founders are? The answer is simple – while there is no sure-shot way to ascertain if the prospective employee would be equally passionate about the idea as the founders, yet, the aim should be to ensure that they hire talented people who are passionate about their work. This will win half the battle.
Customer-Centricity: At the heart of every product lies customer – centricity. Start-ups often get so engrossed in developing the product that it results in a tunnel vision. This is a sure-shot recipe for failure.
To ensure that start-ups do not spend too much time building a product for themselves, they must inculcate a habit of gathering timely feedback from their users and then make changes to adapt to their needs.
Speed: A start-up should build the product and get to the market quickly .It should not spend years on R&D. In fact, even if the idea is not unique and many competitors are playing with the same idea, only the one moving faster will succeed.
Emerging start-ups must understand that in such dynamic times, there is hardly any idea which can be unique. For every idea, there are hundreds of competitors who are vying for their place in the market.
In such times, it is the execution which is the make or break factor. In short, to bring the desired revolution, focus on execution!