7 Tests most Startups need to Pass to assure Success in your Business
“The best Entrepreneurs are not the best Visionaries. The greatest entrepreneurs are incredible Sales people, because they know how to tell an amazing Story that will convince job candidates & investors to join them in on the journey.”
Startups Tests: Legal Issues, Niche, Goals, Customer Acquisition & Retention, Cash Flow, Team, Credit Terms.
As more and more organizations continue to encourage young people to launch startups, it ‘s hard to ignore the fact that startups are faced with numerous challenges in their early stages. The most common challenge is coming up with the required capital ($$$). But even when capital is not the problem, there are still other tough issues to navigate as you set out on your entrepreneurial journey. Here are some of the top challenges that most startups face:
1 Legal Issues Tests faced by Startups. As the CEO of a legal marketplace, I’ve seen how the lack of adequate early legal planning can cause a startup a lot of problems in the future. Certain situations may need the services of an experienced business Attorney to navigate. Here are some of them:
a) Business Formation. It is important that you choose the best entity structure and state of incorporation that suit the objectives of your business. Some of the most common considerations include Limitation of Liability, the number of Founders, Tax treatment, Employees & procedures for raising outside capital.
b) Intellectual Property. Most startup businesses are likely to produce Intellectual Property [IP]. Issues can arise if a company fails to protect its IP, thru Trade-marking its name or logo or forgetting to assign IP. An experienced Business Attorney should help you protect all your IP interests.
c) Vendor/Customer Relationships. Without the presence of a attorney, it is easy to ignore some of the details contained in the fine print of contracts. An attorney helps to structure the agreement & protects you from unexpected (-) outcomes.
d) Founders. When entering into an agreement with a co-founder, issues such as ownership details, vesting of equity & roles of each founder, should be thought through very carefully – to avoid unnecessary conflict. Accordingly, develop a Founder’s Agreement that spells out all these issues.
Other Tests to “prove” your Business
2. Niche Test. Delivering a product that meets a particularly critical need – like no other product can – is not as easy as it sounds. If you have a perfectly designed product that satisfies an urgent need, your business will flourish – even in a not-so-good economic climate. When the execution of your business is perfect, raising capital is not hard.
3. “Realistic” Goals Test. Most early startups only think of the best case scenarios and end up failing to prepare for the worst scenarios. Have a skeleton of a Backup Plan for each possible contingency
4. Customer Acquisition & Retention Test. If your product it recurring, it is the clients who you can “keep” (or refer others) that guarantee you a continual income each month. This is a fact that is lost on many startups. Don’t just chase after new customers. Try as much as possible to keep most of them, because it cost one tenth to retain a customer – as it does acquire a new one.
5. Cash Flow Test. Managing Cash Flow in the early stages of a startup is vital as startups face different problems compared to well-established companies. In fact, statistics show that poor Cash Flow is the main reason why 90% of small businesses fail. If you don’t have an Accountant, there is “free” or low-cost Cash Flow SW.
6. Outstanding Team Test. Finding a team is one thing, but finding a team that shares your passion & zeal is another. For any early stage startup, filling the staff can be tricky as each selection is a potential make-or-break choice. The lack of capital is a challenge as it means you have to sell candidates on the potential of your product. If you don’t have a lot of capital, you have to operate lean. You have convince your candidates they have accept lean for potential big rewards in the future.
7. Unfavorable (& unfair?) Credit Terms Test. Startups receive unfavorable credit terms in their early stages compared to existing businesses. This is because they lack an established business credit. Landlords, vendors, suppliers, etc may require you to pay upfront until you build a relationship with them.
Quotes on Starting a Business
“Starting your own business is like riding a Roller Coaster. There are highs & lows. At every turn you take is another twist – problem to solve. You have to be strong and persevere to get to your Vision.”
“You need three things to create a successful startup: good people, make something customers really want, easy to use and some value/s worth the cost.”
“I made a resolve then that I was going to amount to something if I could. And no hours, nor amount of labor, nor amount of money would deter me from giving the best that there was in me. And I have done that ever since, and I win by it. I know.”–Harland Sanders, founder of KFC
“One of the big advantages of smaller, rapidly-growing markets is that customers are usually pretty desperate for a solution, and they’ll put up with an imperfect, but rapidly improving product”.
“Entrepreneurs see what others can’t, do what others won’t, and accomplish what others only dream about.”
“Each year about 600,000 start-ups are launched. Less than 1/2% attract Investors. Of the 500 fastest growing companies in the United States – assessed over past decade < 20 % of companies were Venture backed or CrowdFunded.”
“One of the exciting things about startups is that they are a surprisingly even playing field young & inexperienced, or old & war vets”.
Your goal is to build something that users really love. Very few companies that go on to be super successful get there without first doing this.
Comments: Do you any other Tests to “prove” a Startup?
from Quora.com 20 Jan 17 enhanced by Peter/CXO Wiz4biz
For more Info, click on Startups, Success, Starting a Business.