Michael Goldstein is the founder ofExhilarator, a startup accelerator that helps consumer Internet startups get traction and funding. He is a serial entrepreneur with 15 years of experience focused on e-commerce, online content, and subscription businesses. Michael’s passion is for growing startups, and he has been involved with multiple startup businesses as an advisor and mentor
The old formula for startup success is out. Instead of the traditional plan-pitch-present-sell method, successful startups increasingly use a more straightforward sink-or-swim approach. These entrepreneurs jump in right away with their ideas to test them with customers.
Many entrepreneurs take a more conservative approach to building their startups, believing an extensive business plan increases their chance of success. They develop a business plan and look for financing. Once their plan has been vetted by investors, they put together a team, introduce a product, and only then begin selling their product.
A business plan created without any real data or feedback from customers is ineffective. Moreover, this approach can take months or even years to go from idea to product. Meanwhile, technology races ahead.
The best path a startup can take is creating value for its customers as quickly as possible. Once you’ve developed a minimum viable product, you can use feedback to determine your startup’s business plan. A startup needs powerful internal motivation to get moving before external momentum kicks in.
Building a Lean Approach
Here are a few ways to increase your chance of survival in the startup world:
1. Create value. Prioritize value first, then revenue. Increasing the worth of services or products means creating something your customers need and want. People will appreciate you offering something truly valuable to them — and they’ll invest in it.
2. Get to revenue. Revenue follows value. Building revenue buys you time to come up with a good business model. The success of your startup depends on making money from your idea. Use your startup’s first steps to take your product to your customers.
3. Stay slim. Keep your startup’s business as lean as possible. It’s important to stay focused on a few high-value products, rather than many lower-value ones. We use leanlaunchlab.com, an online canvas with tools and advice for startups.
4. Find expert help. Good mentors significantly reduce the learning curve for startups. Mitigate risk by seeking guidance from more experienced entrepreneurs. Now, more than ever, experienced, successful people are willing to share their knowledge. Seek out a referral from someone you trust or leverage online resources to make connections.
5. Pay attention to details. Taxes, insurance, and compliance issues can quickly sink a business if they’re ignored. Be sure your startup has a business license, pays appropriate taxes, and buys adequate insurance coverage. These seemingly small issues can become costly if left unaddressed.
Breathing Life into a Struggling Startup
If you’ve already taken the business plan approach and are experiencing problems, don’t be discouraged. You’re never too far along to be unable to stop and take stock of your options. A great idea may need to be reworked, tweaked, or improved. If you find yourself in a rut, here are some ideas to get your startup back on track:
Regroup. Plan an offsite meeting with your team. Getting out of the office to focus on the bumps will invigorate your business and get new ideas flowing.
Ask your customers. Your product, delivery, or brand may need a readjustment. Survey target or current buyers to find out what they want and how you can improve. Sites like surveymonkey.com make this task easy and inexpensive.
Seek outside advice. Find an advisor. A more experienced entrepreneur or mentor will seek guidance to get things back on track.
Value, Revenue, Growth
The chances of success for any startup are slim. Research by Harvard Business School academics found recently that 75 percent of all new startups fail.
Those entrepreneurs who take the typical business plan approach may not be ready to jump in all the way. Entrepreneurs who work from a lean startup plan to create momentum have a higher likelihood of survival because their flexibility allows them to meet the ever-changing needs of their customers.
Not everyone is meant to be an entrepreneur. If you find yourself among those brave people who are passionate about an idea and can tolerate the rollercoaster of risk, be sure you’re keeping your priorities in order: value, revenue, and growth.
Michael Goldstein is the founder of Exhilarator, a startup accelerator that helps consumer Internet startups get traction and funding. He is a serial entrepreneur with 15 years of experience focused on e-commerce, online content, and subscription businesses. Michael’s passion is for growing startups, and he has been involved with multiple startup businesses as an advisor and mentor. Connect with Michael onTwitter andGoogle+. Because this article was published, one book will be donated to Reading Is Fundamental.