It seems that everyone wants to jump onboard the startup hype that continues to dominate popular culture. When you see Snapchat getting a billion dollar valuation for a disappearing photo app, you believe that you can do the same thing. You may be thinking that if making a ton of money is that simple then you should have no problem doing it yourself. The problem is that you may not truly understand what defines a successful company.
So you create an app and have a million people using it. More than likely these are not customers who are paying to use your app. These are just users who have downloaded your app because it was free and they were interested in seeing what it was about. On the surface, it looks like you have a successful business. In reality, you are operating a business that has no way of making any money. You are spending money to attract users but have no way of converting them into customers. This is not a successful startup. You have no connection with a specific group of paying customers, only non-paying app users.
People confuse attention with success. Just because people know about you and your company it does not mean that you are producing successful results. It is just like social media. You may have a lot of likes but those likes do not equate to dollars being deposited into your bank account. Therefore, for all the attention you are getting, you are still desperately trying to earn money.
The problem is that people do not know what defines a successful startup. Media attention, social media followers, and millions of downloads mean nothing if you do not have a business model that generates money. For all the marketing that you are doing, you need to have actual sales to validate the real value of your startup.
Ask yourself what constitutes a successful business. Do not be foolish and believe that a popular free app with paid upgrades equates to a successful company. Unless that company has a substantial number of users who upgrade from the free app account to the paid app accounts, that company is not successful. Companies that operate using this model have a hard time trying to convert users into customers. This is because users become used to all that is being offered in the free version that they see no use in paying for extra features. This is when the freemium model becomes a burden. It can attract a lot of users but these users are only here to use the app for free if they even use it all.
This is why if you are thinking about creating a startup, you need to make sure that you are developing a business model that helps you generate money, not just a lot of users. Take the name ‘users’ for exactly what it means. These are people who use your products and services and do not pay you for this use. You do not need to focus on acquiring users. You need to be focused on acquiring customers. Customers are people who will pay you, which leads to your business growing and being successful. Success will not be garnered any other way.
In order to create a successful startup, you will need to know what criteria go into creating a successful company. Without knowing these criteria, you will waste a lot of time trying to find out how to make your startup successful, rather than following the right strategy that produces a successful company. If your goal is to create a successful startup that actually makes money, continue reading to learn more.
1) Products that solve real-time problems
Aspiring entrepreneurs tend to make the mistake of having the attitude “If I build it, they will buy it.” This leads to them creating products or services that look good but are ignored by their target customers because no value is being provided to them. Value is when real problems are being solved with real solutions. If your products or services are not doing that, then you will find it impossible to acquire customers. Even if you were to acquire some customers, you will find that they are only one-time buyers who will probably never make another purchase. This is because your offer did not provide them with the value that they needed to become a loyal customer.
In order to know how to provide value to your customers, you will need to completely understand what their problems are. When you know their exact problems, you can then create the solutions that are needed to make them loyal customers. As long as their problems are being solved in an effective manner, they will have no problem purchasing your offer. This is why you must focus on getting customers to pay you for the solutions provided by your product or service, rather than getting as many people as possible to download your app for free. As you grow as a business owner, you will learn that it is better to have 1000 customers, rather than 1,000,000 users who pay you nothing.
Related Article: Using technology to stay competitive
2) Customer traction out of need and not multiple advertisements
This can seem a bit confusing when first read. Of course, you need to advertise your startup to attract leads to your business. This is especially true when you are first starting out. The marketplace is not aware of your startup’s existence and you need to gain attention if you are going to acquire customers and grow. The problem that occurs is when you are too dependent on advertising to bring in customers. This means that your existing customers are not making consistent purchases for one reason or another. Therefore, you start spending more on advertising to keep bringing in new customers. This increases the costs of customer acquisition, money which could have been spent converting customers into repeat customers to achieve a better cash flow.
After a while, the initial advertising that you create needs to develop organic leads if you want to bring down your advertising costs. These are people who find your website and show interest in becoming a customer without being advertised to. The selling point that turns them into hot prospects is having great content. Great content sells your value by communicating to readers the problems that exist and how your company provides solutions. You sell your value without being spammy. As people begin to recognize the level of the value your products or services provide, it will not be difficult to turn leads into prospects, then into customers and finally into brand advocates.
3) Steady inflow of revenue and profits
This is a very important factor for any startup that wants to grow into being a highly successful company. You need to make money and lots of it. What you will need to understand is the difference between revenue and profits. Revenue is that amount of money that comes into your business from the sales. Profit is the amount of money remaining after business expenses have been paid. You must know the difference because there are instances of companies who earned a lot of revenue but their expenses exceeded their revenue, which means they could not remain in business. This is why most startups now focus on the ‘lean’ model. The model allows them to get the product or service to the customer fast, without having to spend large amounts of money.
Your startup creates a steady flow of revenue and profits by focusing on sales. This involves various marketing initiatives that have strong calls-to-action to make a purchase. Too many startups try to avoid making the sale when the very purpose of operating a business is to provide value at a price. Spending too much time on product development only leads to money and time being wasted. Bring in customers quickly, gain their feedback on what could be improved, and improve your product or service to acquire more customers. This is how your startup will produce revenue and profits.
Related Article: General Singapore Taxation Guides
4) Customer retention and the ability to get referrals
Do not get happy just because someone purchased your product or service. Real achievement is when that person becomes a loyal customer, rather than a one-time buyer. One-time buyers are people who bought your product or service because it fit a need that they wanted to solve. They choose to forgo making any other purchases from you because your offer did not completely satisfy their needs.
This is why your startup must focus on providing exceptional value through the products or services it offers. Value provided develops loyal customers, which leads to new customers being acquired. This is how you grow your startup quickly because customers are so happy with the value that is being provided to them that they do not scrutinise pricing too much. Keep your customers happy and you will produce a thriving company as a result.
Related Reading » Accounting Tips for Startups
Focus on achieving startup success. Leave the rest to us.
Singapore Company Incorporation is the leading force in company registration in Singapore. With a gamut of services including Work Visas & Relocation, Accounting & Taxation, Business Licenses, Company Secretary and Trademark Registration, we are well-positioned to support your business.
