Starting your own business takes a lot of dedication, hard work, and of course, capital. While there are plenty of great stories that tell of various startups’ journey to success, the risk of failure is always there. A Small Biz Trends article details that of all the small businesses established in 2014, just 62% made it to year 4, while only 56% made it through to year 5. More sobering: 30% of startups barely break even, while another 30% keep losing money. Despite this, some startups do survive, and 40% of them actually make profit.
Your startup could be one of those survivors that make money — all you need to do is follow these actionable tips that can help make your startup grow and thrive.
Get More Funds
According to the same Small Biz trend article, a third of small businesses started with less than $5,000, while approximately 58% began with less than $25,000 — it’s no wonder, then, that startups struggle to make it to year 3. However, startup mentor Martin Zwilling explained that there are some creative options to raise funds. For instance, if you have an excellent credit score, you can take out a loan from the Small Business Administration. You can also join startup incubators — such as the Mucker Lab in Los Angeles or Angel Pad in New York— that provide free resources, like office facilities and consulting, as well as seed funding in some cases. You can even source help from venture capital investors, especially if your startup is ready to scale.
PerBlue, a mobile game studio based in Wisconsin, is proof that it’s possible to get additional funding. Co-founded in 2008 by Justin Beck and Andrew Hanson, the then-startup was able to raise some $800,000 in 2010 through angel funding (another setup where millionaire investors invest in a startup). Four years later, in 2014, PerBlue raised around $3 million in venture capital, with Chicago-based Lightbank among the biggest contributors. Today, PerBlue is a respected mobile games studio with a partnership with entertainment giant Disney, releasing games like Disney Heroes and Parallel Kingdom: Age of Ascension.
Assemble The Right Team
Traklight founder and CEO Mary Juetten emphasizes the importance of surrounding yourself with the right people, as they will help you achieve success. These people should be handpicked, fully understand and support the vision, and fit into the mindset and culture you want your company to have. Not to mention, they need to have the requisite skills and expertise to actually carry out your operations.
A perfect example of this is the success story of mobile app EatStreet. Founded in 2009, EatStreet was originally just a three-man team of college students from University of Wisconsin-Madison (UV-M): Matt Howard, Eric Martell, and Alex Wyler. While the trio made a great team, who grew their business as they were studying, they admitted to getting invaluable help for their mentors — seasoned entrepreneurs who reached out to them after they won the Burrill Business Plan Competition in 2009. “The judges reached out to us and helped mentor us for the first year of the company,” Howard told USA Today. “They’re kind of what I call ‘the been-there, done-that entrepreneurs,’ and they helped us grow the company.” Such mentorship is something you will need, too. So, find mentors to be part of your team. Create an advisory board of seasoned and successful entrepreneurs, if you can, as they will be able to guide you in navigating the ins and outs of growing a business.
Establish Your Business Within Places Of Opportunity
Peter S. Cohan, an expert on regional startup ecosystems and author of Startup Cities, explains that location matters because the right one provides the resources a startup needs: revenue, talent, capital, and expert advice. Granted, while it will likely cost more to base yourself in cities like Seattle, New York, or Chicago, the trade off of opportunities could grant your business far more. Industrious notes that Chicago is a global economic powerhouse with over 200,000 businesses, as well as being one of the leading cities for co-working spaces. Both of these points make it an ideal location to create a startup due to the increased number of affordable workspace options and the wide networking opportunities. Miami is also vying to be a startup hub, with startup accelerators (similar to incubators) beginning to pop up to promote “iguanahorns,” or the tropical equivalent of Silicon Valley’s “unicorns” (startups that are worth more than $1 billion).
Case in point, Chicago-based Tock, a cloud-based platform that connects people to restaurants and similar establishments, was able to take advantage of an opportunity that came from being based in the city. The Windy City has been in the midst of a restaurant boom this decade, and that presented Tock with a great opportunity. The startup was able to take advantage of the numerous companies and is now expanding, despite the restaurant boom waning, after securing $9.5 million in funding last November. It is also now serving markets in tech hubs around the world, namely London and Hong Kong.
Craft A Comprehensive And Creative Marketing Strategy
Chron recommends that every business craft a marketing plan, as it is vital to your startup’s success. This is because your marketing plan will outline how you will promote your products or services, and what prices you intend to set. To do this, you’ll first need to research your target market thoroughly, as we explained in our ‘Key Marketing Strategies to Scale Your Business Globally’ post. You’ll have to find out how big the market is, as well as your startup’s competitors. This way, you will be able to gauge whether or not your business model will work, or if you ought to change it.
Creativity is also always welcome in marketing strategies. If you’ve got a bright idea, don’t be afraid to try it out. After all, out-of-the-box ideas are oftentimes the most successful. Consider how Alex Ohanian, co-founder of Reddit, spent $500 on Reddit stickers, gave them away for free, and placed them everywhere to increase public awareness. YouTube once raffled off iPod Nanos to users who uploaded videos and invited friends. Android developers even teamed up with KitKat for the launch of Android 4.4. The takeaway? Try to get as creative as possible. Leave no idea unexplored.
Establish Relationships With Your Customers
In an Inc. feature on how to achieve startup success, the Young Entrepreneur Council points out that ensuring customer loyalty and happiness is “the key to building a successful business.” So, look to establish lasting relationships with every one of your customers. Follow up on them and create touch points, as this will make them feel a vital part of your business. Listen to them, learn from them, and show them that you care for them. In short, ensure an enticing and lasting impression of great customer experience. Central to that customer experience, of course, is the quality of your product or service. You’ll have to offer something that is of superior quality. Otherwise, customers won’t be coming back.
One way to start connecting with customers is by being available to them as much as you and your team can. In this case, you can leverage social media, especially if you have a younger market demographic. You can even reach out to your customers on a personal level by communicating with them freely and openly. This way, you not only build engagement, but also trust and loyalty. The EatStreet app is a great example. When the startup was just starting out, Howard, Martell, and Wyler implemented a rewards system for regular customers. Then, in 2017, the company listened to complaints about slow delivery times (something EatStreet had no control over), and responded by acquiring Zoomer, a delivery company. This is the level of commitment modern customers demand, and it is something you must aim to provide consistently through all stages of the business.
A Final Note
Creating a startup is a challenge, and getting it to thrive is even harder, as evidenced by the percentage of startups that don’t even make it past years 2 and 3. Your business, though, doesn’t have to suffer the same fate. From getting funding and assembling the right team to basing yourself in the right place and establishing relationships with customers, it’s definitely possible to succeed. While it will definitely take lots of hard work, if you have a proper strategy in place it has a good chance of succeeding, and that will make all your hard work and sacrifices worth it.
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