New Business Development Strategy Guide for Startups
New business development strategy planning can be challenging, especially when it’s for the first time. Starting your own business is a dream for almost everyone. The ability to be in control of everything and the sense of accomplishment that a startup may bring can be hard to resist. However, the reality of a startup may not be how you imagined.
There are numerous misconceptions associated with the new business development strategic planning. Like any other job, being a business owner requires full-time dedication and efforts. Plus, you have the responsibility to cover up for your financial investment to prevent it from sinking and increasing debts.
While there is no rule of thumb to becoming a successful startup owner, there are multiple things you should know before starting a business. Read on for the three simple new business development strategy guide facts, that will help you understand how the startup companies roll.
1. Not every idea is unique
A product or service concept is essential to offer the customers. While you want your product or service to be unique and stand out from your competitors, you also want people to have a need for it.
Multiple people brainstorm an idea and then completely change it after seeing cut-throat competition for that niche. There is no need of doing that. You may offer the same product/service as your competitors, by adding some ‘extra value’. Majority of the cool ideas and products are already existing in the market in some form or shape. It is almost impossible to discover or invent something that people have never imagined! Instead, focus on your ‘value proposition’.
Case Study 1:
If your competitor is generating profit from a product, you can do the same by making it cheaper, better, different or more productive.
Nintendo decided to be in the exact same market by identifying a gap left by their competitors. Nintendo released the Wii in Nov 2006 which competed with the then Sony Playstation 3 and Microsoft Xbox 360. Besides introducing a pointing device which detects motion in three-dimensional space, it targeted a broader demographic than the two others. Nintendo added a fun factor to the gaming experience, which is not necessarily connected to the hardware performance competition.
Furthermore, Nintendo Wii caters to the non-gamers, parents who wanted their children to play active games, the elderly, and very young children. According to the NPD Group, a market research company, the Wii sold more units in the United States than the Xbox 360 and PlayStation 3 combined in the first half of 2007.
Case Study 2:
Till late 90’s, CRM software solutions were available in ‘on-premise’ delivery model. Companies who wanted to use these had to install licensed software on their in-house servers and had to themselves deal with the related IT infrastructural hassles. Salesforce with its ‘cloud’ CRM solution and has changed the face of the CRM industry.
As the Gartner Magic Quadrant emphasizes that, Salesforce is leading the customer engagement aspects compared to the established CRM players. Salesforce is fairly new compared to SAP, Oracle, and various other CRM leaders in the market. However, with its unique cloud computing and marketing automation functionalities, has overtaken everyone.
According to a report, Salesforce has an 18% market share, which is much higher than its competitors such as Oracle and SAP. The company has been on the top of the CRM market ever since its launch in 2005. The industry trends are shifting towards the cloud, to gain flexibility and accessibility across the globe.
2. A product can be modified
When starting a business, it is vital to prioritize planning for things that will make an impact. Picking the ‘need to have’ over ‘nice to have’ is a better perspective. Focusing on the core features and getting the product out in the market is more important than brainstorming over advanced functionalities.
In short, improvement is a very common process for all the businesses, not only startups. One advantage of product improvement is, that you can integrate better functionalities with customer feedback.
A majority of the startups tend to use the 80-20 rule to guide their new business development strategic planning. The 80-20 rule states that 80% of the results come from only 20% of our efforts. To be precise, it suggests that if our greatest returns come from only a few of our investments, then we should focus more on investing in the direction which returns significant rewards. Therefore, complying with such strategies helps in the early business development phase. The other ‘nice to have’s’ can be a part of the later updates.
Even well-established companies like Facebook implement changes for a better customer experience. In spite of being a leading social media company, Facebook added four extra emoticons to its reaction feature in February 2016. Based on the user response, Facebook had analyzed that users preferred a wide range of emoticons for reacting to a post instead of just liking it.
3. Funding in later stages
An important new business development strategy recommended by the experts is late funding. Funding the product is advisable at a later stage once you have your product out in the market and prove the demand.
You need the capital investment to keep the product in the market and meet the growing demand. To be specific, the entrepreneur will be spending the 50% funding out of his savings. The average startup costs can range between $30,000 to $40,000. Procuring funds after proving the demand can be way more rewarding.
Taking investment would still be too much risk to an investor and they would demand too much equity in your company. Hence it would be challenging for the investor as well as the startup. Besides, investors voice may also affect the product development.
Early funding, for bringing the deliverable to the market is not even recommended. According to a Quartz Media Survey on startup failure, it is clear that funded businesses end up running out of cash. The survey clearly states that the funded startups end up failing if they don’t have a feasible business model, or by cut-throat competition or shortage of cash.
While funding is an important aspect of starting a business, it is essential to focus on the business plan and the product features in the initial stages. Try not to be distracted worrying about the funding and thus not solely focusing on the technicalities and market research. It is in the later stages, that you need to analyze the value of investors such as angel investor, Venture capitalist or family members.
Research suggests that conceptualization of a startup should start in the school. This enables the availability of formal educational resources, mentorship, and competition among like-minded peers. Hence its a perfect setup for developing a creative business model.
Solving a problem and brainstorming an idea with team collaboration is the most significant indicator of a successful startup. The more passionate and open-minded your startup team is, the higher are the chances of success.
Besides the 3 simple things you should know before starting a business and the resources, there is not much one can control. Have an open mind, prepare a business plan and leverage your resources.
Starting your own business is not an easy job. But if you have the courage to pursue opportunities without fearing the obstacles, the sky is the limit.
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