5 Steps that Startups Need to Take and 5 to Avoid
The greatest problem in differentiating between a brilliant and a disastrous move lies in the fact that they’re not always polar opposites. Sometimes, all it takes is a slight miscalculation for you to make a mistake that you were trying to avoid from the very start. Fortunately for you, knowing there’s a problem is the first step in avoiding it. With that in mind, here are five steps that startups need to take, alongside some that they need to avoid at any cost in order to triumph.
- Do: Identify your audience/ Don’t: Cast too wide a net
The first thing you need to understand is that even though your audience consists of individuals rather than demographics, it’s quite helpful to know the averages. Sure, personalizing and customizing experience is important but it’s not something that you can perfect for every single customer. Therefore, identifying your target audience is your most important task. Some people believe that focusing on a single demographic may minimize your potential audience, yet, casting a net too wide may cause you to fail in attracting anyone. Therefore, the importance of identifying your demographic is probably the first thing you need to have in mind.
- Do: Choose a pricing strategy / Don’t: Stick to penetration pricing for too long
Another thing worth knowing is the fact that choosing a pricing strategy isn’t the same thing as setting a price. For instance, when first entering the market, you might want to set penetration pricing. This means that you set a price that’s staggeringly low for the industry in order to gain a foothold. On the other hand, this is something that your competitors will follow, which will result in a war of attrition. Needless to say, due to the fact that your business is new and your budget is limited, it’s a war of attrition that you’ll most likely lose. Instead, you could try cost-plus pricing, competitive pricing, price bundling and several other strategies that can provide you with a greater fighting chance.
- Do: Protect your trademark / Don’t: Infringe on other people’s intellectual property
The next thing you need to understand is the fact that an intellectual property (IP) is an asset. Now, unlike a physical asset, the fact that someone else is using it doesn’t really mean that it’s unavailable to you. This is the greatest problem in the world of IP, due to the fact that this means it can be classified as theft. On the other hand, other people using your intellectual property means that it diminishes in value, possibly even gets misused, so that hurts you. To avoid this, you need to start by doing research on availability, register a company online (since this is the simplest and quickest way) and apply for a trademark. Needless to say, don’t do unto others what you don’t want done unto you.
- Do: Know your long-term goals / Don’t: Overinvest in temporary solutions
This is a fairly simple one, seeing as how it can save you money in more than one way. Let’s say you start out as a home-based business with aspirations of eventually moving into a proper office. In that case, it would be foolish to overinvest in the infrastructure of your home office (provided that you have one). On the other hand, if you’re planning to run a home-based business with telecommuters as employees, postponing an investment in an adequate home-office might be a bad move. In other words, the best course of action is so obvious if you only knew your end goals.
- Do: Outsource / Don’t: Attempt to do it all on your own
At the end of the day, a lot of small businesses and startups tend to outsource, yet, some first-time entrepreneurs still dream of having a self-sustainable business where everything is done in-house. This latter method is not just too complex but also highly inefficient, seeing as how you’ll stretch your efforts thin and you still won’t be able to reach the desired efficiency. Experts from a specialized IT security agency will, even then, be more efficient than your own IT team. Same goes for customer service, digital marketing, HR and many other similar functions.
At the very end, it’s easy to understand how one could make any of the above-listed don’ts, especially due to the fact that some of them are incredibly intuitive, even logical. Nonetheless, making data-based decisions, as well as making the right instead of the obvious moves is how some succeed where many have failed. With these several tips under your belt, you might just be able to do the same for your startup.
Emma Worden is a startup funding consultant from Sydney. She enjoys reading and writing on different aspects of entrepreneurship, usually finance and marketing.