Why a start-up company experience dramatic growth, while another will struggle to survive? Many entrepreneurs are asking this question, and rightly so. So, what can distinguish successful start-ups from those people who don’t know to run a successful business.
While it is true that the business model is the foundation of any successful business, it must be said that it is largely insufficient to guarantee the success of a start-up. One can easily compare the business model to the foundations of a building.
On the foundations rests the whole building, and if they conceal a vice, there is a risk of collapse. On the other hand, although the foundations are important, the building still has to be erected once they have been cast. The same is the situation of the business model. Although it is necessary to have a good business model for a successful business.
Many factors hide behind the success of a startups. It would be misleading to claim that to be in a position to list them all. All the same, it is possible to reveal to you the five factors having the strongest impact on the success of a start.
These factors have broad consensus in the field of research and practice of start-up support.
1. A good knowledge of your industry
It is not uncommon for me to recommend that an entrepreneur return to the labor market punctually. While it may seem counter-intuitive to recommend an entrepreneur to find a job, it is sometimes necessary to do so. A work stay in an industry is often the best way to learn how it works.
It is essential for any entrepreneur to have a thorough knowledge of his business sector. No entrepreneur can do business in an environment that is unfamiliar to him, and he knows neither the mechanics nor the key players.
Knowing your industry is much more than having a few contacts in the community!
This includes knowing the high and low periods, the different marketing methods used by competitors, the most frequent operational difficulties, the typical approach to potential customers, or even the notions of labeling partners, distributors and suppliers.
The knowledge of an industry is the basis of a successful start-up. Entrepreneurs who start a business in a sector that is foreign to them suffer several costly gaffes, and the performance of their business suffers enormously.
2. A clear and logical business vision
More than twenty years ago, the vision in the business world was idolized. It was praised incessantly and in the end, few people really know what it means to have vision.
The most successful entrepreneurs are those who have a clear, detailed and consistent business vision with their niche business. So it’s not enough to have a good idea and a good business model. It is also necessary to have a clear idea of what kind of company you are going to open, on what it tends. This is called vision.
The entrepreneur who sees his company as being in constant transformation is able to create a vision of the future of his company. The entrepreneur’s business vision then becomes his compass, his guide. It will be its main strategic guidance tool in a busy and constantly changing business environment. This is not negligible! Like I opened a Website designing company in USA and now I’m a successful businessman just because of my proper planning.
By sharing his vision with others, the entrepreneur can bring people together around his project, including industry partners, financial partners and collaborators. It must be understood that it is through his business vision that the entrepreneur will succeed in mobilizing people and exercising leadership. This is his main leadership tool!
3. Good planning
At the moment, the business plan is unfortunately no longer in business. There is a tendency to glorify the action and a painful portrait of the famous business plan is depicted. You have to be very careful, however, because the business plan is far from good or for garbage!
It is important to take essential action for a successful start-up. Be on the ground, validate his idea, and adjust the shot in real time. It’s necessary! However, the most recent studies still demonstrate the positive impact of planning in the context of a start-up. Entrepreneurs who lend themselves to the exercise of planning succeed better. It’s a fact, it’s proven! That is why I use the business plan as part of my coaching practice.
It would be totally wrong to say that the business plan is not associated with the success of starting a business.
In a complex and agitated competitive environment, the business plan has never been more meaningful. The exercise of the business plan is simple. It is a question of taking a step back and putting on paper various observations with respect to the market and especially, compared to the efficiency of its business model. It’s not rocket science and most of all, it’s worth it.
4. A mentor at his side
A mentor entrepreneur will have a 75% chance to move up the critical first 5 years with his or her business, compared to a non-mentor entrepreneur who will have a 50% chance of getting there. This fact speaks for itself, and they quickly convinced entrepreneurs to join a mentoring program.
If on the other hand mentoring increases the chances of survival of a new company, it also has a positive impact on its overall performance. When the entrepreneur is mentored, there is a marked improvement in his general management skills. He or she then becomes more comfortable with his or her role as a business leader, and there is better decision-making. In addition, the entrepreneur identifies business opportunities more easily when they arise. For these reasons, mentoring is a key success factor.
5. Adequate initial capitalization
Cash is the oxygen of the company. However, the entrepreneur who goes into business is sometimes afraid to contract debt, which greatly hurts him.
In order to be able to fulfill its current obligations, the newly created company will need a good working capital, especially in its infancy. At this time, sales will be insufficient to cover the costs of the business. The working capital will then cover these expenses, until the company is profitable.
It is important to tie up the financial package upstream of the start-up. A start-up expert can help at this level, to ensure that there is no shortage of funds to ensure a hassle-free start and also, help the entrepreneur to find the various funds. Do not hesitate to be accompanied at this stage.
Every start up is unique!
Several elements should be considered when starting up: the current state of the industry, macro trends, business model, human and material resources required, financing options, target group response to different tactics marketing, etc.
While it is true that the five factors listed above are a guarantee of success during a start-up, it is also necessary to consider the specificity of your start-up. As a promoter, your resources, the angle you want to take to realize your project, your deep motivations and your personality are just a few of the specific aspects of your start-up. It is important to have a global look at your project, which includes you as a promoter.