12 Winning Factors for Successful Development of IT Startups
Launching a business has become an uphill task in the present economic turmoil. Most businesses fail to align with their niche making it difficult for them to survive. In the United States, the failure rate of startups is high, with stats revealing that 50% fail within the first five years and 65% fail within ten years. Lack of capital, choosing the wrong market, and inadequate research are key reasons behind the failure of startups.
Startups should therefore know the crucial factors that can make their venture successful. Setting robust goals, doing the proper research, and having a persevering attitude are essential. One of the ways to ensure effective results is to avail of the services of one of the top software development companies for startups.
In this article, the startup success factors will be discussed in detail. This well-researched guide about startup success factors will ensure IT startups sustain their momentum and see phenomenal growth.
For a successful IT startup, many influencing factors come into play. Here are the factors explained in detail.
Startup Success Factor #1: The Right Time
It is said that 'Time and Tide wait for none." This is true in the IT startup industry. Since technology is the driving force for the sector, ever-changing technological advances need to be considered. Look at how the Internet of Things, Wi-Fi, Bluetooth, Blockchain technology, and Artificial intelligence have improved the technological industry.
The success of a startup idea depends on how well it caters to current and future trends. Another aspect to consider is its target audience's acceptance of the technology. Only when these two aspects are satisfied can a business see adoption and progressive growth.
During the conceptualization and development phase, a startup needs to evaluate the maturity of its idea or product. If the product or service does not have a standard usage protocol, it may not reach the target audience as intended. In such a case, it is too early to launch it. Having sufficient resources to sustain until launching the product when the time is right is a way to avoid failure. Planning ahead and knowing the burn rate will help to avoid pitfalls.
Startup Success Factor #2: Business Idea
A business idea should provide the solution the target customers seek. It should
- Address a genuine market need
- Offer unique value
- Have scalable and profitable potential
- Be achievable with the help of available resources
- Be adaptable to the changes in the market
A business idea should focus on the market it targets. A startup idea should answer questions like
- Who is the most likely to buy the service or product without much convincing?
- Who is spending money on similar services or products, and what are the defining aspects?
Some efficient ways to ensure a business idea is targeting the right customer base are
- Analysis of competitors to identify the right solutions needed for the potential customers of the startup
- Assess similar products in marketplaces like Amazon to determine the market size and the best pitch for prospective customers.
- Host focus groups or interview target customers to understand their needs and wants.
A business idea with a well-defined opportunity and audience can be easier to develop, market, and sell. The profitability of the idea is dependent on how it allows the business to draw more value from the customer base than the amount spent on acquiring it.
Startup Success Factor #3: Skilled team
A suitable set of skilled and professional teams is vital to ensure the business idea is converted into a successful product or service. Team members should share the vision, passion, and dedication to power the business and take it to new heights. While leadership is crucial, it is difficult for a business to succeed without the right team members. It is the talented team that takes care of vital tasks like
- Maintaining the company
- Introducing innovative methods
- Execute the premium goals
By hiring the right team, a business can ensure a smooth progression from the idea to the final product delivery to the customer. To start with, focusing on adding team members who are dedicated, skilled, and ready to work is necessary.
Many businesses struggle to gain a strong foothold initially due to the lack of compatibility between team members or the lack of strong leadership. Team members should know who is in charge of the leader who can make tough decisions or issue a series of commands effectively.
Startup Success Factor #4: The plan
A robust and sensible plan helps in the effective development of a startup. It helps in many ways, such as
- Identifies the development approach
- Monitors the progress
- Ensures timely adjustments are made.
An organized approach is necessary to overcome the various obstacles that a startup can face. Thus a plan should have the following:
- Should have clearly defined objectives for product development, marketing, acquisition of customers, and support.
- Key performance indicators (KPIs) help to monitor the progress and identify under-delivering or failing processes and fix them.
- A dynamic growth approach helps to define the development direction the company should take. Businesses can be organized and pursue their goals accurately with the right growth strategy.
- Funding is a crucial part that a business ignores at its own peril. Startups rarely are self-sustaining hence knowing the funding sources can make a huge difference in the success or failure of the business. Revenue goals and meticulous planning of finances help in profitability and achieving sustainability
Startup Success Factor #5: Funding
Access to funds is a key factor influencing the fate of a startup. Many startups have failed because they lacked sufficient funds.
To ensure adequate capital, a startup must identify the various funding resources and start forging a healthy relationship before requesting funds. Angel investors, financial institutions, and other related groups can help a startup achieve its goals. Other key sources startups can reach out for their funding include
Crowdfunding
Crowdfunding originally constituted offering first-run service, product, or other incentives to gather funds. The contributors will not get equity, and they need not be repaid. Now equity crowdfunding is popular, which allows contributors to gain a share of the business.
Incubators
Incubators or accelerators provide startups with business advice, potential funding, training, and workspace assistance. Universities, individual companies, or industrial organizations often sponsor these incubators.
Venture capitalists
Professional investors funding startups are called venture capitalists. Such investors require quick growth and returns.
Bootstrapping
Self-funding or bootstrapping is where individuals starting a business fund it with their own money. The advantage here is there is no need to keep the investors happy, and the profits need not be shared.
Partnerships, bartering, small business grants, and loans are other means of acquiring funds.
Startup Success Factor #6: Market research
The longevity of a startup rests on market research. Businesses must conduct meticulous market research as it helps to
- Understand the target market.
- Find out the problems faced by the consumers.
- Identify realistic competitors
- Keep updated on market trends.
- Maintain a competitive edge.
Market research is possible at different stages of the life cycle of a startup. Conducting research from the initial stages will help form a solid business approach, establish the business, and develop it competitively.
Initial market research should take care of aspects like
- Monitoring sales effectiveness
- Confirming the service quality of competitors
- Understanding the communication channels that competitors use
- Evaluate the level of competition in the market
Later stages of the research should cover data from published reports, existing studies and surveys, government data, etc. After having all the necessary research materials, it is essential to interpret the data correctly. To check the feasibility of a business idea, it is important to test it against the products already present in the market. Placement of the product is vital for maximum exposure.
Startup Success Factor #7: Analyze the competitors
Focusing on competitors is a potent way to get better insights into the target market and the business environment. Knowing the competitors will help startups to learn more about their approach and develop using their successes and failures. Some of the areas that startups can get insights into include:
- Product development
- Pricing
- Marketing strategies
- Sales approach
Moreover, the information gleaned can help startups to offer unique value propositions that will be received well by the target customers. When used along with research info on customer preference and purchasing behavior, the data on competitors helps in creating new and effective approaches.
At the budding stage of developing a business, it is vital to know the current market events and the info related to the entire industry. Comparing the startup's processes with that of the competitors will be useful to know where the startup stands in the market. In short, with proper competitor analysis, a startup can
- Decide on how to move forward with its product development
- Establish the unique aspects of its product
- Learn from the mistakes of competitors
Startup Success Factor #8: Determining the market fit of the product
Finding out whether a product offers a perfect solution for the target customers will ensure the product's value is successful when launched. When customers use the product, they help promote the product and help in developing the product further and expanding the customer base.
Determining the fit before launching a product is vital, allowing the startup to market it effectively to the target customers. Surveys form an excellent method to assess the product fit and know about the consumer outlook of the product. Surveys also help to test the product's usability, viability, and desirability.
Since customers' needs keep changing, reevaluating the market trends will ensure the product always meets their needs. By achieving the right fit, the startup's work is minimized as all stakeholders, including the customers, will play a big role in the marketing. Customers may share their stories and become product advocates, leaving the startup to focus on providing a better experience and scaling up the operation.
Startup Success Factor #9: Developing the product
A business idea and plan may be impeccable, but startups cannot sustain the momentum without developing the product into a versatile one. Products have to grow and be capable of adapting to the changing market needs and user preferences. To achieve this, a startup should
- Work towards constant product improvement measures
- Heed to customer needs
- Take the necessary steps to satisfy customer needs
To ensure the product is developed as per the business idea and plan, begin the process with a prototype, test the product, make any changes needed, and the product will be ready. While the product quality is tested, the branding and other approaches formulated during the analysis phase should be tested.
While product flexibility may seem like compromising the values and vision of the startup, it is not. Looking at the bigger picture is vital for a startup to sustain the changing market trends and customer needs. The greater the flexibility of a product and the approach used, the better will be the chances of the product being successful.
Startup Success Factor #10: Determining the price
Pricing is not given; it's due by most startups. The failure of a product is mostly attributed to an inadequate service or product rather than the pricing. Pricing should always be approached keeping in mind the following factors:
- The cost of making the product: The business will fail if the cost is more than the revenue generated. So, ways to reduce costs and increase prices to ensure positive returns are necessary.
- Customer influence: The price should be within a range that customers can purchase. So, the market influences the price. Analyzing competitor pricing and getting customer feedback can help you decide on an agreeable price range.
- The price and quality link: When the price is high, it increases expectations of the quality of the product.
- Manage cash flow: With strategic pricing, the cash flow will increase, avoiding the need to procure more funds.
Some of the common pricing approaches used by startups are:
- Market penetration: In this approach, the product price is low initially, and once the company is established, the price is increased. While this may cause some loss initially, the market share the startup attracts will take care of the deficit.
- Premium pricing: Rather than lowering the price, selling the product at a premium rate will attract interest, making it a premium product. Many businesses use a free trial and a premium version to help customers realize the product's value.
- Maximization: In this strategy, startups use the maximum price that users would pay. This method is perfect for products that have minimum competition. Due to the high demand, users will be willing to pay the price.
- Skimming: Using this approach, the product's price is gradually reduced over time. This will help the business to retain its market even when the novelty fades.
Startup Success Factor #11: Business model
Customers can know an organization's value by its business model. The model decides the company's relationship with its customers, partners, and suppliers. It shows the skills and resources needed to:
- Create, market, and deliver value
- Generate sustainable and profitable revenue
With a proper business model, a startup can maximize returns and make the business scalable. To create a unique model, the business can do any of the following:
- It can change the revenue generation methods by using new pricing or value proposition
- Make changes to the business processes to provide better value
- Redefine the current processes and switch to a new industry.
Startup Success Factor #12: Growth strategy
The growth and expansion of a startup depends on the path chosen by the company. Rapid growth can put undue stress on the business process. On the other hand, sluggish growth will prevent the company from making good profits. So, it is necessary to find a middle path that helps the company meet its long and short-term objectives. A good understanding of the various growth factors can help achieve desired results.
Startup Success Factors: Final thoughts
From the above startup success factors, it will be clear that attending to the necessities of business success, like timing, funding, idea, planning, research, development, pricing, and growth strategy, can make a startup sustainable in the long term. The startup success factors help to boost the customer base, maximize conversions, and help the startup find hidden opportunities. Using advanced technology and development services for analysis and other aspects can put the business on the success path.
