So you have a great idea and are all set to launch your startup finally! But make sure to tick this list to ensure your business does not go bust.
Target an Optimal Market Size
Even before you start your marketing, finalise on what kind of audience you want to reach out to. A lot of start-up entrepreneurs tend to envisage a small niche market, extremely valuable to him or her where the consumers understand the value of the product. Nevertheless, there are other stakeholders and VCs who might think otherwise. If you have decided on a niche market, raise money accordingly. Spend thriftily. A big loss very soon into your niche market business will make VCs blacklist you.
Decide on Market Structure
While the size of the market does matter, market structure is equally important. It is time to go back and revisit your economics classes. Are you entering an industry where there are few players who control most of the market? Study the fragmentation of the market. Your strategy must depend on what kind of fragmented domain you enter. It is easier to enter a very fragmented sector than one that is controlled by a single digit number of players.
Study Incumbent Strengths & Weaknesses
Understand each segment of the value chain where the value is controlled. In a competitive market, understand how other players would respond to your strategic moves. Businesses can’t continually lower costs beyond a limit. And there cannot be groundbreaking add-ons in the product features every week. Each player has his strategy to stay in the market.
Study hidden costs
There is no business which has stuck to its cost estimate plans. There are hidden costs here and there and everywhere. Your budgeting has to have leeway for all these unplanned costs that can crop up anywhere during your business cycle. Some factors might seem ‘unpaid’. In reality, they are just hidden costs. PR, SEO and other marketing might seem cost less. But they will, when you factor them in the end. Nothing comes free.
Competition
The most important part of your business study is competition. A good strategy here can make your business. And a bad one can break your business. It is highly unlikely that one enters a business sector with nobody else present. Study how different your product is, how cost effective yours is against that of other competitors’.
History
Finally, study history. If you want to launch a company that competes with a certain competitor, you need to study both why they are successful and what happened to the other companies that tried to compete with them. This will give you a best case vs worst case scenario of the business. Every market has had several companies that came before you. That doesn’t mean you won’t succeed. But it is important that you ask questions like “what went wrong there” and “what could we learn from it”.
