Everyone knows how startups are supposed to evolve. A couple of young geniuses come up with a great idea that they start building in their parents’ basement. Their fledgling company attracts thousands of users, media attention and eventually a lot of venture capital financing. Then, to cap off its success, the startup files for an initial public offering.
That may be how it works in Silicon Valley, but the story in Canada is playing out much differently.
A recent report from MaRS, which provides a range of services to startups in Toronto, suggests that particularly for startups focused on IT, there is far less reliance on funding from VCs or other third parties to fuel growth. Instead, 24 per cent said revenue they earn is their only source of money.
“The immediate take-away is that startups shouldn’t expect to have massive revenue or payroll in their first five years,” the report said. “This fact echoes the sentiment that the startup ecosystem is a long-term play . . . (they will) see payoff in their investment—in terms of revenue and job growth—over years, not months.”
With Canadian startups depending on earning their own way to the top, here are a few strategies for startups to keep in mind for continued growth:
Act like you are already a public firm, even if you don’t plan to become one: Several Canadian startups recently told the Financial Post they intend to remain self-reliant for as long as possible. That means they will need to compete as though they are as big as a major bank or retailer. That’s why effective use of mobile apps will make them better able to serve customers whether they’re stuck in business meetings or in an airport waiting to travel to the next big tech conference. Mobile apps also help boost collaboration across a small but highly distributed team of busy people.
Innovate where the action is: A startup coach interviewed by the Globe and Mail said entrepreneurs should focus on the three most disruptive forces: cloud computing, mobile computing and big data analytics. There is still plenty of room for new ideas in this space, and the best way to find them is to become avid users of existing products and services. Cloud computing, for instance, can help a startup grow by keeping their costs down rather than build their own expensive data centre, while analytics can tell them more about what will happen within their nascent customer base and how they can improve the services they provide them.
Never forget the No. 1 priority: There can be lots of things to distract founders, from ideas for new features to a lack of sleep. One of the country’s best blogs for this community, Startup North, recently published a post that was a good reminder of the one thing that must never be forgotten. “Your Product is a relationship with your users,” the post said. “A relationship is that line that is formed across a series of encounters.” Technologies like customer relationship management (CRM) should be part of an approach to make sure you can keep an eye on that line as your startup business grows.
Startups, particularly in Canada, tend to have their own unique, dynamic culture. The right technology investments will help founders save time and money while allowing that culture to flourish, letting them focus more on their team and revenue. For more ideas, download our free eBook, How a CRM Helps Your Business Grow.
Photo by MiroAlt