by Logan Soya, founder and CEO of Aquicore
A landmark report, published by The Harvard Business Journal, estimated that over 75 percent of startups die within the first year. Likewise, more than 50 percent of the remaining new companies will fail over five years and more than 70 percent of startups will fail after a decade of being in business. This startling statistic has left many aspiring entrepreneurs asking, what distinguishes a successful startup in today’s competitive economy?
The answer? A mission-driven company that understand its client-base and a founder that has done the prep work needed prior to launching a business. The start-up road is not one easily traveled; therefore, I offer four entrepreneurial tips that I’ve learned along the way.
1. Validate your product before going to market.
From the onset, entrepreneurs must be realistic about their ideas and/or products. Being able to impartially ask the right questions to “gut check” the validity of a product and/or service is imperative to the overall success and growth of a business.
Some questions to consider when working through the initial start-up phase are: is my product/idea needed in this market? What problem does my product/idea solve? Is the problem large enough to launch a business around? Often times, instead of creating a solution for a real a problem, inexperienced entrepreneurs target and isolate hypothetical problems before enough of the market has determined that a solution is needed. In order to grow and scale a business effectively, entrepreneurs need to answer the “why” question up front and be able to understand fundamental economic drivers behind why their concept is lucrative and essential to the market.
2. Understand the economics of your business.
Entrepreneurs should design their business model around one customer and then build out from there. When drafting a business model, consider these questions: how much money will I spend to acquire one customer (or said differently, how many customers will your preferred sales or marketing effort acquire, even if it’s just you personally at first). Then, how much money will I make from one customer? And finally, how much money will I spend to keep that one customer happy? If the latter question out weights the former question, then the entrepreneur should rethink their business strategy.
Many early business models assume that revenue will grow X% without any clear justification. In order to scale a business, consider mapping out a business model on a month-by-month basis for at least 18 months. The modeling exercise will often inform you on where your assumptions really are, and will likely give you a few surprises where you didn’t realize that you made such a huge mental leap. Every entrepreneur should have a basic foundation in the accounting and finances of their business, if even just to understand and act on the feedback of a CFO or CPA.
3. Clearly articulate your vision.
To successfully attract investors, employees and customers, you need to effectively communicate the mission and vision of your company. This entails more than knowing why your product is important; it is knowing its worth and why. Start-up founders must practice delivering a clear-and-concise message at all times – whether that’s asking investors for money, recruiting employees or selling your company’s products and services – communication is the crux in every situation.
4. Define employee expectations early.
Once a company begins to mature (from a one-person team to several employees), it’s important for entrepreneurs to start thinking about their employees’ progress and impact on the company. When hiring, I like to attach a performance plan to every position as a way of setting expectations for my employees and myself. Outlining expectations from the beginning fosters an atmosphere of understanding and trust within a company.
Launching a start-up is the most exhilarating and stressful thing for an entrepreneur to do, and you’ll never be fully ready or prepared until you dive in. My best advice for entrepreneurs is to be a duck — keep a calm and composed demeanor on the surface as you paddle feverishly below the water. In the start-up world, crazy things will happen to you and your business; and it’s up to you to figure out how to stay collected, afloat, and methodically work through the obstacles. Allowing your team to watch you work through challenges will empower them to support you through each crisis. It’s when you find a sense of level-headedness and calm among chaos that you will create confidence and stability for your business and your team to rally behind you.
Logan Soya is the founder and CEO of Aquicore, the leading provider of IoT-driven smart asset management solutions for commercial real estate building operations. In his role, Soya is responsible for creating and implementing business strategies, managing the company’s investments and resources, as well as driving Aquicore’s future innovation and growth. Soya founded Aquicore in 2012 on a mission to create a global impact by helping clients connect to and understand their physical world.