This article is written by Munira Hussein, a Contributor Author at Startup Istanbul.
We are fundamentally redefining the way the money works and people work. It is an exciting time to be an entrepreneur. It is a blessing and a curse. We’re nearing mass extinction of business. We tend to think of think of being fortune 1000 or 500 company as a defining character. Being a fortune 1000 or 500 CEO seems like success in business. However, 70% of the companies on the fortune 1000 are new within the last 10 years.
A professor at Yale projected that by 2020, ¾ of the companies on the fortune 500 will be companies that we haven’t heard of yet. The average life expectancy of a fortune 500 hundred company used to be 75 years. Now it is 15 years and it is projected to be 5 years if things keep going the way they are going. Your company could be the next on the fortune 100 companies. You just need to understand your model, create value and build towards something unique, credible and sustainable.
Things you need to do as a startup in order to stay in the race include:
Getting product market fit
Get the product market fit. Before you start thinking about the product or the solution, make sure you define the problem. Be able to give the story of your startup. It is not what the product is, it is what it is doing. What is the users story? Take it before you make it. If you can’t describe what you are doing to an animator, you need to think harder. Define the target market. You can’t acquire customers faster than you are losing them. It is not just about why somebody is using your product, it is also about why they stopped and why you failed. Figure that out and you’ll get better.
Getting the Math to work
How healthy your business model? Track your incomes and expenditure. Whatever amount you spend on the product should be brought back with some profit, by that product. Can you acquire customers for x and get at least 3x in return?
Getting the math to scale
Are you a startup or a scale-up? The market determines that. You should be customer focused. Look at your pricing models in line with your customers? Do you have resources? Avoid adding complexity where there is none. In scale-up, you need to do the simple things repeatedly. Focus on doing one thing exceptionally well. The customer is often wrong. Customer is the unit of economic value that your business is meant to solve for. You can lose money to acquire customers. The better your customer retention, the better leverage you have for your business. It is not just about a beautiful model; it is about taking it where it is needed.
What is good for business today can be what kills you tomorrow. You can survive disruptions. Avoid turning your trophy into an anchor that drags you down.