Growing a successful startup takes time, talent, and solid business acumen. It is well-known in entrepreneurial circles that approximately one quarter of venture-backed startups will find long-term footing in their respective industries, and 50 per cent of those will make it past their fifth anniversary. These statistics don’t mean only 25 per cent of all entrepreneurs have worthwhile ideas. While it’s understandable why some people want to tie the future of a startup venture entirely to the idea behind it, the ultimate success or failure of a startup is actually driven by a complex and diverse set of factors, decisions, and circumstances.
There are two main reasons why coming up with a great idea is less vital to entrepreneurial success than most people think. The first is that an idea itself doesn’t tell you anything about how a company will be managed. The second is that ideas and timing can never be divorced from one another when it comes to entrepreneurship.
Ridesharing apps offer an illustrative example of this phenomenon. As long as the concept of taxis has existed, there have been numerous flaws with execution of the service. In many cities, they are either prohibitively expensive or too sparsely available to be a reliable mode of transportation for people who need them regularly. When you add in the various regulatory issues, potential for corruption, and widespread customer complaints, it becomes clear that the traditional taxi industry has been ripe for competition from an innovative competitor for many years.
While the idea behind ridesharing services is inherently innovative, until recently the timing wasn’t right for the idea to take hold. This is both because the technology that makes the process economically feasible is relatively new, and because people are just now becoming comfortable with the possibilities created by the digital economy, as exemplified by this amusing tweet:
It is clear that timing is crucial when it comes to the ultimate success or failure of a company. In fact, in a study of 200 startups, timing was found to be the most important factor related to success in 42 per cent of the cases, the most of any single factor. Ideas can still be powerful even when the timing isn’t right, but when you combine the two, you have the potential to create a business that revolutionizes a marketplace and leaves a lasting impact.
We could spend the entirety of this article discussing how important it is to hire the best people you can, and it still wouldn’t be as much time as it deserves. You will need employees in order to grow, and the people you choose to partner with in this journey are going to significantly shape the culture, values, and performance of the organization.
While your employees will have influence over the execution of your vision, it is still your vision at the end of the day. This means when you hire the first members of your team, you need to seek out people who demonstrate a clear understanding of your vision and have concrete ideas that will help you bring it to fruition. You must be surrounded by people who know your business’s purpose, your customers, and how to make your vision a reality.
Trust is crucial. Without it, you will always second guess your decisions. When anyone gives you a reason to distrust them during the hiring process, it’s best to thank them for their time and move on. The potential benefits don’t outweigh the risks.
Adaptability is also vital, because working in a startup can require wearing dozens of different hats at a time, and switching them at a moment’s notice. When one of your team members has an important conversation with a client and the situation is upended, you want to be confident they will be able to assess the situation and respond quickly.
You want to surround yourself with people who share your values. This doesn’t mean they have to be just like you; in fact, hiring a diverse team of colleagues who have different experiences and backgrounds from you can be great for the organization. But you should be able to find common ground when it comes to big-picture strategies. Disagreements are going to happen by necessity, and when they do, you want to have them with people who are respectful and act with the shared goals of the organization in mind.
While delegation is an important skill for startup founders to master, hiring is one area where you should insist on being directly involved, especially in the early phases of the company’s lifespan. Take an active role in all hiring decisions until you have built stable teams with strong leaders who explicitly understand what you expect and can deliver results.
As you build the long-term plan for your startup, you’ll be faced with a lot of uncertainty. No more so, perhaps, than when you are trying to decide if you can build a feasible and scalable business model to support your idea. After all, there are so many variables that come into play, and so many developments that can alter the course of your company, that it’s extremely difficult for even experienced entrepreneurs to predict whether or not their sales model will be able to power the company through early growth and into sustainability.
At some point, you have to figure out what your sales benchmarks are, how much you expect to spend in order to reach your goals, and how sustainable the model will be based on your growth projections. You sell without a definitive sales model, but don’t wait too long to create one. You’ll soon need to have a detailed model prepared so you can make quick decisions about growth opportunities, or decide how much you can afford to spend on sales and marketing when needed.
Confidence is often a great attribute, and you and your employees should feel good about standing behind the value of your product or service. Still, you may make mistakes, and you and your collaborators have to learn from them if you want to succeed in the long term.
The best way to accomplish this is to surround yourself with partners who understand that failure is an opportunity to learn and improve. In fact, there are numerous examples of successful entrepreneurs describing how failures made them and their company stronger. Trying to eradicate failure and mistakes from your venture is a lost cause. However, if you and the other leaders in your organization learn to recognize failure as an opportunity to improve, you will be able to turn it into an asset.
Receiving your first round of venture funding as an entrepreneur seems like Christmas morning as a kid: People give you capital because they believe in you and trust you to generate a return on their investment. It’s tempting to keep raising as much money as possible early in your company’s lifespan. Who doesn’t have dreams of being like Apple and sitting on vast cash reserves that could buy an entire country?
You should, however, resist this temptation. It’s better for the long-term health of your startup if you raise only the funds needed to meet the particular set of goals you immediately anticipate. This is one of the core principles of the lean startup methodology, and it allows you to be more adaptable, and facilitates innovation when circumstances require it.
In addition, in the early stages of your startup, you may rely on incubators and other programs provided by successful companies like Salesforce, or by seasoned entrepreneurs and investors. These initiatives help small businesses grow and increase their odds of long-term success.
The life of an entrepreneur is filled with contradictions. It’s a life punctuated by periods of intense elation and stress, excitement and drudgery, and camaraderie and loneliness. Many inexperienced entrepreneurs don’t think about the negatives very often. They anticipate being too busy collaborating, strategizing, and selling their vision to ever experience true loneliness.
Startup founders who have already been put through the ringer know that it often gets lonely. That’s one reason why the most successful startups are helmed by leaders who have strong support structures. They can be any combination of family, friends, professional networks, business partners, civic organizations, and so forth, but whomever you choose, that support needs to be reliable and ingrained in your life.
The most effective startups are built around the concept of value, and the most successful entrepreneurs understand that value lies at the heart of everything they do. The entrepreneurial idea is a conception of value, strategic planning is a conduit for value, branding and marketing communicate value, sales is a mutual transfer of value, and onboarding is a commitment to value.
When this vision is fully realized, then every step throughout the process makes inherent sense, because they’re all connected to tangible value. Whenever the size and scope of your startup seems daunting, remember to frame all of the functions and facts through the lens of value to put the whole venture in perspective, and return your focus to its rightful place.
There’s no guarantee that your startup will succeed, but with a solid strategy built upon these factors, you give your ideas a fighting chance to provide value to others. The economy is ripe for disruption; after all, as Tom Goodwin writes, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” Your next interesting startup idea could be the next to change the world.