There are a large number of companies, trying to solve today’s challenges. However, so many of these companies fail due to a flimsy business model. Let’s explore how you as a startup founder can overcome these challenges and put together an ironclad business model which will be sustainable for years to come.
Does It Have Value?
Before developing the perfect business plan, you’ll need to find out if there is a market fit for the service/product you’re about to offer. According to CBInsights “42% of startups fail because there’s no market fit”. So, validating your idea is crucial before beginning your business. Talk with friends and family. Get their opinions on your idea. Form an online community and ask for feedback from your peers. Don’t waste your time working towards a business that has no fit.
I’m not writing this article to tell you ‘how’ to create an idea. But rather how to ensure you’re working towards a sustainable one. Let’s take the famous Juicero for example, a Wi-Fi connected juicer. The astonishing thing about this company is the amount they raised, reaching $120M USD, and they still failed. A huge reason as to why they failed is that, their product did not fit the market, no one wanted it. There are many reasons that made Juicero fail, but one thing was for sure, there was no market need for it.
Competition
You would be surprised by the amount of startups wanting to invent the next ‘smartphone’. Like, what? Why would you work on a product that’s market is already completely dominated? When developing your business keep in mind that you’re going to have competition. But, what differentiates your product/service from everyone else’? Your product/service must be innovative, unique, or substantially different from anything already on the market. Otherwise you’ll never be able to grow.
Start With The End
This advice is by far one of the most important. Create a goal. Envision what the finish line looks like. Decide where you want your company to eventually get to. There are many companies who set out to solve the next big thing! Sure, go and solve it. But without a clear vision it’s highly unlikely your company will grow. Otherwise, you’ll be roaming aimlessly without direction. Imagine how you want your company to exit, whether that be IPO, M&A, or just plain growth.
What will your company look like in two years, five years, and ten years? Compile a list of goals for you to reach whilst keeping in mind your exit plan. Your company’s success is purely down to what you decide it to be. However, many founders view money as success. In this case, then revenue growth is a good way to measure your growth.
Let’s say, in two years you want your company to break even, with a 10% rise in clientele. Put together missions on how to achieve this. The five-year plan will generate a profit of 12%+ each year, and a team expansion of over 10%, same thing, create a plan on how to achieve this. Everything you do in your company must have a reason, otherwise you’ll struggle to grow and sustain.
Quick Pointers
Now, I’ve touched on some key areas that will help you build the perfect business plan. However, here is a checklist to keep in mind when developing your business plan.
- Your business at a glance – Create an overview of your business outlining the issues in today’s World, and how your company is solving those issues.
- Description – Describe your company. Keep in mind not to use industry jargon, but rather keep your end customer in mind. Simplify your company’s vision so people can easily resonate with your goals.
- Market Analysis – One of the most important points. Remember, over 40% of startups fail due to the lack of market need. Research your market extensively to ensure you will have a viable business.
- Company Structure – It’s not uncommon for a founder to hold many roles within the company. But this can also be bad, don’t be afraid to hire and delegate certain positions as to free up your time. A good tip is to lay out all the job roles and allocate the people you’ll need to fulfill them.
- Marketing & Sales – Of course this is a crucial aspect to think about when developing your business plan. Using a lot of the information you have gathered from your market research it is vital that you develop a strong ‘go-to-market’ strategy. Otherwise, your product is as good as dead.
- Funding – Second reason why startups fail, is because they ran out of money. Don’t ever underestimate the initial capital you need to get you to market (especially in hardware). Be meticulous when calculating the funds you need.
- Financial Projections – Finally, you’ll need to provide insight into your companies growth vision. By doing so, you’ll need to provide your financial status, as well as, predictions/evidence on future growth areas.
Conclusion
Starting a company is nothing far from a headache. There are many things you need to ponder even before setting on this journey. Many founders I have spoken with try and handle everything by themselves, which ultimately leads them to burning out. Don’t be like them, layout your business plan as best as you can, and work towards achieving your goals. The plan may change along the way, in fact, it will change, but your goals should always stay the same.
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