This article is intended to offer practical step-by-step advice and tips to early-stage startups on what should be their initial growth strategy. Let’s get started and understand each one of them crucially.
- Demonstrate the uniqueness of your product or service. You need to be able to explain how your product or service works and why your innovation is better than existing alternatives. Show how it can change the customer’s life. Be prepared with data to back up your statements. If you are working on a game-changing solution in high technology sectors, you need to ensure that your idea will stay unique and that it won’t be copied. More about protecting your IP will follow in a next article.
- Demonstrate you have a market(a large group of prospective clients interested in buying your product).No matter how innovative, game-changing and important your solution is, it will not make for a business unless there is someone to buy it. Focus on determining who your customer is. Does your market already exist, or do you plan to create a new one? Additionally, it is very important to be able to demonstrate market needs. What is the real problem your customer faces? You need to be able to describe the problem and show how it affects the customer. The more severe and painful the customers’ problem is, the higher the demand for your solution will be. Link this problem to the market need. How much money is spent/lost because this problem is not solved? How much they will gain from using it? Think about your scalability: should you go global or concentrate on some specific region? What is the Total Addressable Market (TAM)? TAM includes everyone you think you can reach with your solution. You need to show reliable assumptions by breaking down your market into segments and targeting a very specific and reachable part of the potential customer group. To show you have full control over your business decisions, explain the market conditions and the evolution of the competition. Make sure to support your story with relevant data, statistics, and reports from trusted sources as this way you confirm the deep knowledge of your customers.
- Make sure you have the right team to succeed. Your growth strategy starts with recruiting the right people. Despite the cutting-edge idea, you still need to prove that you have the right human resources to carry it further. A typical startup usually has a CEO (Chief Executive Officer — responsible for the overall company strategy), a CTO (Chief Technical Officer — responsible for the solution development strategy), a CBDO (Chief Business Development Officer — responsible for setting and following the step-by-step growth strategy) and a CMO (Chief Marketing Officer — responsible for promoting the business online and offline to maximize outreach). You need to think at the strategic positions you still need to fill and then find the right people. If you don’t have the right people on board, the odds of a successful venture are low. It is also very important to make sure your team members are highly motivated and committed to growing your startup. In this case, they will willingly dedicate their time for shares in the company. Don’t be afraid to give away shares! Better to have 50–70% of millions than 100% of nothing.
- Plan how you want to approach the market/potential customers. Once you know your market, you have to decide on how to attract customers and promote your solution. Having a good idea is simply not enough. Analyze what channels you should use to promote/sell the solution. Also, think of your revenue model, how are you going to generate revenue from your products/services and where your income streams will come from. A great business is one that can generate additional revenue streams and even spill over to new markets.
- Don’t be afraid to ask for strategy advice/support/feedback. Find advisors that can help. Look for well-established entrepreneurs/well-known figures, a representative for your industry. Ideas do not grow in isolation — they are the results of collaborative creation and a good mentor will maximize the business potential.
- Start making your company known in the market. Participate to as many hackathons/startup contests you can and publicize this activity online. If your company is at an early stage and pre-revenue with the product in development, taking part in hackathons or even winning a contest -whatever proves there is interest in your company or your product, will be of great value. Gather as much support in the first months of our project, to build a portfolio of success and recognition that will build your future credibility.
- Start promoting yourself and the company. After you have the right team in place, you need to create your branding, set up the website/landing page and the social media profiles (LinkedIn, Facebook, Twitter, and Instagram). The core team needs to associate themselves with the company on LinkedIn, to show alignment and support. If you are a CEO or a CTO, you need to start promoting yourself within the area/industry you activate in. Ideally, you should establish yourselves as subject matter experts and be invited to industry conferences as speakers. Networking is a precious resource of undiscovered potential that many businesses ignore for the purpose of protecting their ideas.
- Join a Startup Accelerator. As a startup you are usually missing some of the experience required to move forward with your growth plan. Startup accelerators can help you develop the needed entrepreneurial skillset in a short period to make sure your business idea is displayed the right way. Usually, they provide access to life-changing mentors, investors and even act as a gateway to future customers. Not to mention that you will get the opportunity to work and foster relationships with other like-minded startups during the program. In the first months of life of a business, you have the chance to test it, stress it, shake it, break it and put it back together until it holds together seamlessly — even if it becomes a totally different monster than the one you started up with. Use platforms like FundingBox or F6S to find the acceleration programs that fit your growth needs.
- Prepare a strong pitch ready for all possible situations(a contest pitch and more complex investor deck). The contents need to be easily adaptable. A pitch deck should be a brief presentation of your company, its mission, product and business strategy. Keep in mind, however, that a good business idea in itself is not enough and you still need to raise some attention around it. You should do your homework to make your pitch effective. Ideally, you should also prepare a short video presentation. The competition pitch deck is usually used at pitching competitions or accelerators. You have to stand confidently in front of a large audience and in 3–5 minutes, with maximum 10 slides, you need to convince the jury & investors that it is you, not the others, that can make it. An investor deck is an initial business plan. You have 10–20 minutes to present the specifics of your business to potential investors. If you do it properly and include crucial data, this deck can serve as a stand-alone document and great written follow up material which you pass down after various presentations. Later, upon request from investors or various programs, you can develop a more comprehensive business plan.
- Look for non-equity financing. Although raising equity from venture capital or angel investors is the most well-known source of external finance, as a startup, you can also use other non-equity sources of capital to finance your innovation, either because equity capital is not available to you or because you want to avoid the ownership dilution and governance constraints associated with equity investments. Also, if you are a new, highly disruptive business, most often you will not have the resources to keep the ownership of your business in front of established investors. Non-equity funding can offer you the needed time to grow your negotiation power in front of investors.
An important tip of advice for proposal writing is to work with experts and look for consultants with a proven track record. Even if you feel like saving money by preparing the proposals yourself, if you are not a specialist, it is highly likely that you will not be successful.
The right consultant knows exactly what to ask from you to build the best proposal and knows how to position the provided data to impress the evaluators. Another tip of advice is not to give up. Even if you are not financed on the first try, you can always improve your proposal and resubmit. The chosen consultant will support you in this.
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