Startups are the equivalent of small fish in a shark tank. They are the most vulnerable in the business world and are highly likely to fail. Unsurprisingly, most startups cannot make the product-market fit. As a result, the startups that do not have a clear path and a roadmap to success cannot grow effectively. Moreover, they need a viable growth strategy to sustain themselves and maintain their competitive edge. Hence, our experts have compiled a list of the best growth strategies that are highly likely to stay relevant in 2022.
Understand Your Value Proposition
To develop and build a strong growth strategy, it is important to understand the value proposition of the company. The value proposition explains why and how your startup will meet or exceed your customers’ expectations. Solidify and establish your company’s value proposition in the early days to secure the right kind of customers and investors at the right time. Countless entrepreneurs lose their business ventures because they fail to identify their business’ value proposition and effectively convey it to their customers. It will not only improve your business quality but also help you generate positive cash flow and become the market leader. The ideal value proposition will require a careful analysis of audience behaviour, preferences, and more.
Identify the Target Audience
The next step in generating a viable growth strategy is identifying the ideal customer. Identify the target audience and how your business can effectively serve them. Without the right customer information and preferences, you are likely to develop a product with product enhancements that do not cater to anyone. It will lead to wrong marketing messages and can cost you thousands of dollars.
Fortunately, there are several methods to identify the right customer. Some of them are listed below:
Surveys: feedbacks and surveys are effective methods to gain valuable customer data that elicit their preferences, needs, and demands. For startups gathering such a large amount of data might not be easy. Hence, many startups associate with established market research firms to gather the said data.
Analyse the Available Market Data: regardless of how small your business might be, you will have some kind of idea of the market. Some methods to gain market data would be to look at your competitors and identify where they sell their products or the people they market to.
Compile the gathered data and generate buyer personas and profiles. Use these personas to identify the best market and the ideal customer for your startup.
Establish Key Performance Indicators (KPIs)
Most startups fail because they cannot estimate their success or failure. They often get lost in micro-managing their product and fail to identify their shortcomings. Too often, startups get involved in advanced strategies such as lean marketing and lose sight of their product and their offerings. Establishing KPIs is a best practice as it helps you identify your business goals and measure success. There are many KPIs that a business can use. However, every company will have different KPIs. Some of the commonly used metrics include Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), burn rates, gross profit margins, etc.
Keeping an eye on the competition is important for several reasons as they will help you gauge your performance. First, competition analysis is important as many of them has already solved most of the challenges that you are facing right now. You can gain meaningful insights from competition analysis and indirectly gain a shortcut to success.
However, it is evident that startups are reluctant in analysing the competition. There can be many reasons for the same, but the prime reason is the fear of discovering that their product is sub-par and not up to the market standard. Another reason is that they simply don’t know how to analyse their competitive landscape. If you don’t analyse your competition and their offerings, they might innovate and provide better offerings.
Hire the Right People
Any startup requires manpower to succeed. However, the number won’t matter if all the hires are sub-par and unfit to work for you. According to a survey, a bad hire can cost the business about 30% of the person’s first-year salary. For a larger firm, some bad hires would prove insignificant. However, some bad hires could prove detrimental to the company momentum, profits, and traction for an early-stage startup.
The work culture should be acknowledged during the hiring process. The correct fit should be pursued, and the core values of the company should be upheld by the employees.
The last piece of advice for a growth strategy is scaling responsibly. Startups have a long history of expanding rapidly and gaining a name for themselves in the industry. Such an exponential growth curve might be great for startups that are ready for it. However, many startups try to emulate these growth charts prematurely by scaling before their company is ready for such a step. They fail to monitor their spending habits, avoid debts, and limit their overheads. As a result, they spend too much money on scaling before establishing the right product-market fit.
Hence, startups should evaluate the market space and their product efficacy before scaling up or down. A good strategy to save your company from starving when scaling up is to rent co-working spaces. Companies that rent co-working spaces instead of traditional office spaces save a lot of money. The saved capital can be used to effectively scale up or down without spending enormous amounts of the critically required money.