When we established Ready4S back in 2012, the tech startup scene looked completely different than it does today. The 2008 financial crisis was still fresh on our minds and people were more careful when taking each business step.
The series of recent spectacular successes and lucrative exits in the tech industry inspires many professionals to venture into the sector. But if you’re considering setting up a tech startup right now, you should know that it still presents a huge challenge. In fact, 75 percent of venture-backed startups fail.
So how do you make sure that your startup makes it through the first few years on the current market? Here are six ways to help you make a name for your startup on the tech scene right now.
1. Develop a viable proposition
Fortune conducted a careful survey of failed startups, revealing that the top reason for failure (reported by 42 percent!) was “lack of a market need for their product.” Many of these failed startups created a product nobody needed or wanted.
According to David S. Rose of Gust, roughly 1,500 startups get funded by venture capitalists, and 50,000 by angel investors in the United States each year. No wonder that the niche is still so attractive, despite being so overcrowded. That makes it even more important for entrepreneurs to come up with viable propositions for their business.
A viable business idea needs to be innovative and unique—but don’t expect to come up with it early on. Smart startups first delve into an in-depth market analysis where they learn more about their target audience and its pain points. If their solution can potentially meet customer needs, startups should create a minimal viable product (MVP) that captures their idea and brings it to market as quickly as possible. That’s how they can validate the potential of their project and gain feedback from users to make their product or service even better.
In today’s fast-paced reality where consumer trends change quickly, delivering a finished product to market carries a huge risk—you might simply deliver a product that has none or very low market value. That’s why it’s smarter to embrace the agile approach and constantly test your idea on the market to learn about the needs and desires of your target.
2. Choose the right location
Starting your business with like-minded people turns out to be more important than many believe. Since you’ll be operating in the tech world, you need to get on well with people in the niche.
That’s why the location of your startup matters so much. Our marketing specialist Izabela Majocha recently lined up some of the most important factors in choosing the location for a tech startup: the availability of talent, funding opportunities, and proximity to other tech startups.
Running a startup in New York or Silicon Valley is very expensive, so no wonder that recently, there has been an explosion of new locations starting to see growth in tech startups. European cities like Berlin, Stockholm, or Amsterdam were on the list of the top locations for tech startups in the global Startup Ecosystem Report 2017. Nations such as Estonia or Poland have made a name for themselves as well.
Other interesting locations that are startup-friendly include Tel Aviv (with an impressive level of investment in technological innovation), Toronto (business-friendly legislation), or Bangalore (thanks to the availability of cheap local talent).
How do you pick the right place for your startup? Most importantly, you need to make sure that your future headquarters location offers a well-developed tech startup ecosystem to lean on, as well as access to resources startups require to succeed, be it funding opportunities or vast talent pools.
3. Surround yourself with talent
To position your tech startup on the cutting edge of the industry, you need the knowledge and expertise of the right people.
That’s why you should strive to source and engage the best talent in your niche. Building a well-organized team of competent and dedicated employees is critical for the life of your startup. A strong group of talent ensures that your business gets closer to its key objectives.
Work on your employer brand early on to show people why joining your startup is a great idea. Running a company blog where I shared case studies and stories from company life has been a smart move. It also pays to develop a recruiting system that attracts talent in your field—specifically, one that is on-point and efficient. Nobody has the time to waste on a badly-organized and unclear recruitment process, especially not valuable talent.
4. Get inspired by industry giants
It’s hard to make it in the tech industry, so you should try to absorb as much information as you can from key influencers and mentors in the niche.
Start with LinkedIn—it’s a great place to get some valuable advice and keep up to date with industry trends. If your startup lags behind the industry, you simply can’t expect it to succeed. You need to be at the cutting edge of your niche, boasting a trailblazing product or service.
Strive to learn more about your niche and the future of the industry. Learn more about new business approaches and management software. Keep your eye on your critical competitors as well—that’s how you stay in the game.
Set up Google Alerts for keywords that define your niche best, follow companies and individuals on LinkedIn, and participate in events that bring together people in your sector. You’d never believe how much information I got the pushed my business forward while grabbing a beer with people I met during conferences.
5. Build a solid online image
81 percent of shoppers research a company or a product online before making a purchase.
Reputation will be as important as ever in 2018—only now, it’s more about your brand identity spread through digital channels.
Consumers interested in your product will search your company on Google and social media. You can’t run a successful business without an engaging online presence that perfectly captures your company culture and makes your brand attractive to your target audience.
Check out your competitors to see how they engage their target. Carry out market research to learn where your audience hangs out to meet them halfway. It’s pointless to have five social media profiles—pick one to two networks that bring you best ROI and keep on interacting with users. Use scheduling software for social media and be consistent. Run a company blog where you share project news and show the company life at its funniest or most exciting.
6. Manage your growth
Premature scaling is a deathtrap for startups.
Many people overlook the problem of premature scaling in startup development. That’s a huge mistake because it’s one of the most consistent predictors of startup failure.
So what exactly is premature scaling?
Let’s talk about scaling first. Scaling is a particular point in the life of a startup where it experiences positive growth. Scaling can mean many things, from acquiring new employees to increasing the marketing budget. More sales is an indicator of scaling as well. Scaling drives a startup’s growth.
Problems start when startup owners begin to focus on one area of their operation and advance it without proper synchronization with other parts of their startup. Premature scaling is a problem that touches 70 percent of businesses, and it contributes to the failure of 74 percent of tech startups.
If you notice the early signs of premature scaling (for example, too many employees on board), act immediately. Start focusing more on your customers, gather their feedback, and change your product or service in response to consumer needs.
How to avoid premature scaling? In my experience, in-depth market forecasting is a must before taking any steps to scale a product or service—that’s how you make sure that you’re not outgrowing yourself.
According to recent research, now is the best time for professionals to set up their own companies.
The tech industry offers many exciting prospects to startups with unique business propositions and solid products or services. But it’s hard to stay afloat in such a competitive sector, so buckle up and spend time focusing on these six essential aspects that contribute to building a successful tech startup.