Best Advice For New Startups
Best Advice For New Startups; are you about to start a new company? There are many paths to success and failure. And, there are many questions to get answered before you jump ahead and establish your Startup. We have gathered our best advice!
Starting a new company is a big challenge and for most entrepreneurs, there are many uncertainties and hurdles to overcome. We have gathered our best advice for new startups in this article.
Are you ready to start?
First question you have to ask yourself is of course: Are you ready to start a company? There are many things to consider, but why you want to start a new company is certainly one you need to know. If you have the right knowledge, or how to get it is important, and if you have what it takes to start a successful company.
There has never been a better time to start a new company. With cloud computing resources available at record low prices and social media marketing opportunities, entrepreneurs have great tools to compete and be effective.
Measuring the market
Before you jump ahead and start the company, you should ask yourself how big the market will be for your product or service? Lack of demand is one of the most common reasons for new companies to fail.
There are several reasons for the lack of demand. First one is poor timing, launching something that the market is not ready for will inevitably fail. Secondly your idea, weather it is brilliant or not, might be something people are not willing to purchase. Finally, the problem you solve may not be a big problem, or may not be big enough for people to buy your solution.
Is your product a “nice to have” or a “must have”? Many Startups fail because the founders cannot measure the market correctly. Don’t be biased, thinking that the product is a must have, while the potential customers think different is a reason to fail.
Focus on sales and marketing
The biggest challenge for a new company is generating revenue, to be more precisely: making a profit. So your number one focus, in the beginning, should be to generate sales and to find out the best ways of selling and marketing your product or service.
Marketing is extremely important for a Startup. It is usually underestimated by rookie entrepreneurs. You have to find out the best possible ways to get new customers, and there is a very little chance to succeed without focusing on sales and marketing.
Lean Startup Principles
There are many ways to start a business, and when you do your research on this there will be many conflicting bits of advice. Some will recommend you write a business plan first, others say launch and iterate.
We recommend the Lean Startup Principles, which favours experimentation over planning, customer feedback over guessing and iterative development rather than traditional large-scale waterfall projects.
Lean Startup model recommends that you develop a business model.
The most critical part of the business model is being able to estimate the Customer Acquisition Cost (CAC) and the Customer Lifetime Value (LTV). Obviously, the cost of obtaining one new customer have to be lower than the value an average customer will bring you. Not being able to generate a higher LTV than CAC is a show stopper.
Still, this is one of the big challenges for Startups, as many entrepreneurs tend to be over optimistic of how low they think their CAC will be. Our advice: Test it!
- Can you find a scalable and repeatable way to acquire customers?
- Can you generate significantly more income than your CAC?
In most cases, your income will cover your CAC within 12 months unless you are establishing a Telco, an aerospace company or an oil company(Or in another industry that need extreme investments before revenues start coming in.)
Another big reason for startups to fail is a failure of developing a product that meets the market’s demands. This is what we call “Product-Market fit.”
Most Startups needs to revise or even rethink their product more than once in the beginning. We recommend you get out of the building and talk with your customers or potential customers to test your product and get valuable feedback from your customers.
Speed vs Quality
Are you the type that will not consider something completed unless it is perfect? If you are, you should be careful by bringing that philosophy to your Startup.
Many startups have failed before their product even was finished. You don’t have to have a perfect product to launch it. How will you get better and more honest feedback than launching your product and getting feedback from actual customers?
In a Startup, speed is more important than quality. It is essential that you get the necessary things done, and you can always make improvements that raise the quality over time. Read more about how to get things done in this article.
Most Startups need an investment before the company is able to make profits. You need to make sure that you covered that with your own savings, or you will need to find an investor or partner that can help.
If you need to find an investor, you should think very carefully about who you want as an investor. Investors will only want to invest to get a better return than they can get on other investments, hence their focus will be growing value of their shares and return on investment by dividend or cash out.
Usually, entrepreneurs need to fund the early stages of a startup by their own savings. If your idea is really great it is possible to get help from family, friends, seed investors, crowdfunding or you might want to involve a partner who also can help invest in your company.[Tweet “Do you want to start a new #company? Read our best #Startup #Advice @Cloudnames”]
Great time to start!
There has never been a better time to start a company! Cloud Computing provides easy solutions to develop online services and e-commerce solutions at a fraction of the cost of traditional IT development projects. Here in Cloudnames, we are providing all these services via cloud computing.
With Social media marketing, you can easily test your business idea and get new customers again at an extremely low cost. Cloudnames can help you with that as well.
With the Lean Startup model, you would reduce the risk dramatically. This makes everything easier for entrepreneurs and makes today the best time to start a new company.
Contact us today for a discussion about Digital Marketing
Other relevant articles
- The 7 most important technology trends
- Is that an AI supercomputer in your pocket?
- The changing face of technology
- Artificially intelligent automotives
If you would like to learn more about entrepreneurship, please leave your contact details and follow our blog. Do you have a great business idea and want to start a company? Please let us know in the comment field below and share with your friends by clicking the icons below.