Start-ups have been the trend for a while now and will continue being so in the future as well. While the idea of starting your own business and being your boss sounds exciting, ensuring the success of a start-up involves consistent effort and persistence. Multiple factors determine the success of a start-up and the same was explained extremely well in a TED talk by Bill Gross. Gross has been a founder of multiple start-ups and incubated many of them. He was curious about how some companies could make it while some could not. He used his connections and experience with start-ups, gathered data and ranked the companies based on these following five factors:
1. Timing of the Start-up
According to his research, timing is the biggest factor that determines the success of a start-up. It might be a common conception that the idea or the execution could be the biggest factor, but it is not. Here’s the theory, no matter how great an idea you have or a company you build, your potential customers and the world must be ready to accept your product/service. They need to connect the solution you provide to the need they have. Sometimes, an idea could be too early for which the world needs to acclimatize. Other times, it could be too late when there are already too many similar start-ups in the market.
2. Team and Execution
A good team is another strong factor that determines a start-up’s success. Throughout the journey of a start-up, there will be multiple unforeseen situations. The team must be able to steer the company through them by constantly coming up with creative and effective solutions. This ability comes from the skills of the members and their passion for making the start-up succeed.
This is the one factor that most amateur entrepreneurs think is more important. Yes, an idea is a starting point for sure as, without it, there won’t be any company. But the success lies much beyond that in the hands of the customer and the team executing it. Coming to ideas, they need to solve something for the user. Most importantly, the user must know that they have a need and they need a solution to fulfil the same. This makes ideas more effective and is the first step to success.
4. Business Model
The business model is vital but there have been many instances where a start-up has survived despite it. But as the demand for your product/service increases, it is essential to plan how to consistently make money from it and how to grow it in the short and the long term. That is done through a business model. Also, a business model is an important document required to procure funding for your start-up.
If your start-up has the potential in terms of its idea and has timed well in the market backed by skilled and passionate team members, it might not be very hard to procure funding. Some ideas are of the nature that they need funding to grow in the long – term. Funding can come in multiple stages of the company starting from the seed stage until the IPO. Once your product has the demand in the market, get started with looking for potential investors and venture capitalists.
No matter what field or domain the start-up belongs to, these are the fundamental factors that determine its success. Come up with an idea that solves some real problems in the world, but more importantly, the time it well and have a great team in place.