“Thank you for listening to our presentation, any questions?”, finishes Jill to her ten-minute long startup pitch. Standing next to her, partners Mike and Alan put a forced smile on their faces. With wide-doe eyes, they eagerly await to hear any positive remarks from the two middle-aged investors who are sitting cross-legged on chairs from across the room. Their intense smoldering faces haven’t been any comforting since they first met; their brooding eagle eyes set fixed firmly on the presenters as if they were live prey. But now, the long silence has sent a cold shiver down the three entrepreneurs’ spines, and things look anything but hopeful. And after a few questions from the investors, the funding pitch gets rejected...quite harshly. Ever found yourself in such a scenario? In all the startup pitching sessions I have attended, the main reason most startups get rejected for investment is because they don’t have a well-thought-out startup growth strategy in place.
Investors are not interested in how dynamic the idea is or how much potential it has to change the world. Rather, they are interested in finding how its growth potential, strategy, and business plan can provide them with recurring returns later on.
As most startups are the brainchild of IT graduates, they don’t have a concrete idea about the business aspects of running a startup. And that’s why most of them never pass the early stages of incubation. But since you don’t want to fail like every other startup, in this article, I offer 8 hacks to boost your startup growth to spearhead success. Here it goes...
#1 Identify Your Ideal Customer
For a successful startup growth strategy, always begin by building a buyer persona, not the product or service. Defining your target audience is the base of any marketing strategy. Why? You may ask.
Well, if you start with WHAT the product is first, you run the risk of overlooking WHO you’re going to sell to. And naturally, your product is going to fail. A buyer persona helps you identify your ideal customers: their demographics, their age-group, their preferences, their wants, and, to an extent, their thoughts. From then on, you can easily modify the product as per their needs. Try Alpha And Beta Tests It is always better to test the product on a small audience to gauge results earlier. This will equip you with enough data and direction to determine the viability of the idea and if it has a potential for other opportunities. Only when you become satisfied with the results, do a soft launch. After you launch the product for the wider audience, let them use it for some time for beta tests. This will provide you even better insights of the audience and ways to optimize it further as per their needs. Nowadays, most IT startups directly launch their products on crowdfunding websites. These websites have both the early adopters and funders available to provide initial funding for the product. Many successful products have launched in this way, and these platforms are great testing grounds for those who aren’t sure if investors will greenlight their ideas.
#2 Construct a Business Model
You can easily come up with an idea based on simple business models by yourself. But in the case of complex models, you need technical help and legal consultancy. The first thing you need to decide is to choose the type of payment model that will suit your product. For this, you need to keep a few things in mind, such as the customer-satisfaction threshold, product-attractiveness analysis, and lifecycle. Then determine if it is a recurring purchase or a one-time bargain? Is it a rent-out model or a purchase model? If it is a service, ask if it has a fixed price or if it comes with price packages. A few years ago, it was still ok to have a startup without a business model as investment was flowing. However, this isn't the case anymore and it is now imperative to have a business model as soon as you start building your startup.
#3 Focus on Your Strengths
“Focus on your strengths and not weaknesses.” Startup owners that have, what I call, the “be-perfect-syndrome” end up becoming nobody. Let me tell you: the word ‘perfect’ doesn’t exist (at least not in the business world). The concept of a product should make itself standout, or as Seth Godin says, ‘a great product markets itself.’ And you can only do that by focusing on its strengths. Let’s take the example of two very similar startups. Both of these are successful and are part of our growth hacking examples' article, but the secret to their success lies in their unique strengths.
Uber and Lyft are two startups that have similar business models. Both of these act as intermediaries between drivers and passengers through the use of an app and get commission for their services.
But what makes Uber stands out? It has variety. You can choose a limousine, a sedan, or even a hatchback depending on your needs - all from its app.
For Lyft, on the other hand, its plus point is availability. Drivers are available at 3am at night. Its prime prices are lower than Uber’s, and Lyft is easily recognizable from afar (thanks to its ‘moustache’ logo). Now ask yourself: “Would Lyft really have been able to survive if it had focused on diversity to compete with Uber?”
No, of course not. And the same is true if Uber had marketed its availability.
So while making your first startup growth strategy, know your resources and strengths and only then plan a market to target.
#4 Follow a Sustainable Growth Model
The growth model is defined as: “A growth model is an equation that tells you what are the different variables in your business and how they work together and translate into growth.” Each business should have a hook to grab visitors [top of the funnel strategy]. Some of these hooks include: inbound marketing, SEO, paid marketing, social media marketing and so on, and a magic moment that brings out the emotions in them when they visit the website, app, or software, and a core product that provides the solution to their problems. This can be repeated on each customer for sustainable growth. As a starter, look for products that are very similar to yours. Now map their growth model and replicate it for your startup. Later, once your product has passed the alpha tests, modify it as per your needs. I also recommend you to follow those step-by-step (Very detailed) growth hacking guides to sustainably grow your startup.
#5 Try What Works
Remember the saying, fake it till you make it? Do exactly that. Even profitable companies don’t have any idea about their future. Sustainability comes with planning, and planning comes with experimentation, and experiments are only possible when you are confident and have enough funding to get things done. And for that, you need to fake it till you make it. Gaps.com documented their experiment of how they got their first client for a podcast. The author said he was determined to make the product work and was honest with his pitch. Most of the people declined his offer but then he received a few who were genuinely interested in his work. You can use the same startup growth strategy for your business. Make sure you are determined and honest.
#6 Scale Vertically and Horizontally
Depending on your type of business, you will come across gigantic opportunities to scale once you get started.
Either scale your business vertically (e.g. scaling an e-commerce store by selling more of the same products) to increase email subscribers and retarget the same people. Or, you horizontally scale it by adding more products to your catalog and create niches that users can engage with and buy from. If it is a product-based business, wholesaling is a great option. The reason is simple: it will improve your profit margins and lower your workload.
Be warned though: finding scaling opportunities is easier said than done. However, through trial and error, you can reach your goals. Take the example of the immensely popular Shopify. It is one company that initially focused on e-commerce stores. But after remaining in business for a while, it found that most of its customers are dropshipping stores. So it acquired Oberlo and now its major source of revenue comes from dropshipping stores and the plugin these sites use.
#7 Invest in Talent And Technology
So far, all that I have discussed is baseless if you don’t have the resources to get the work done.
Which is why a major part of your startup growth strategy should focus on investment in two key areas - top talent and innovative technology. Top talent will help you get top-notch product quality. Whereas innovative technology automates the processes to ensure business efficiency. To get a head’s start, get rid of resources that can be replaced with technology.
For example, with Shopify’s example of using Oberlo’s plugin, dropshipping store owners save far more time. Before, it was spent on monitoring orders and shipments. Now, this is done automatically through the plugin. Similarly, you can achieve the same with websites by replacing the server administrators with managed cloud hosting solutions that automatically take care of the server setups. These are just two examples in which technology allows businesses to save and do more.
#8 Track Progress And Reiterate
Finally, track your startup’s progress. To do that, set Key Performance Indicators (KPIs). KPIs are not goals of a company’s success but they will help you reach those goals. For example, if your startup wants to sell products. The KPI should be the percentage of online conversions in a month or leads generated from social media. By setting your KPIs and monitoring them, you can easily ascertain what is working for you and what isn’t and get to the root of problem areas.
In fact, if you take your startup for incubation, then tracking is an essential part of the planning and is preferred by both VC firms and angel investors. Most investors are not willing to invest in startups that have just started working on a product, and getting seed funding is quite hard. So another way around it is to get a minimum viable product (MVP), follow the lean startup model and get your operations running. When you start to make revenue, start pitching for Series A, B, and C fundings. This way, it is possible to share stocks instead of sharing company control. By tracking the progress, and repeating the steps that work, you may not even need investor funding and your business will grow just because of consistency and through careful planning.
So, How to craft your startup growth strategy?
The aforementioned eight factors are crucial for crafting your startup growth strategy. Nailing it from the onset can be your lifeblood in a market dominated by big, established players. Get this right, and you won’t even have to approach investors for funding.
By definition, a startup is meant to grow. I recommend you to follow these 8 steps for your startup or business and you'll be on the right path to success. Growth Hackers' growth hacking agency helps startups, SMBs and entrepreneurs from all over the world grow on a daily basis. We help them with strategy, consulting and execution. Do you need more help in determining your growth model and strategy? You can contact Growth Hackers here or you can let us know in the comments below.