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How to build a successful startup?
PODCAST # 09
In the ninth episode of the podcast, Aamir Qutub talks about how you can increase the value of your sales to ensure that you can fund expansions and build a successful startup.
Watch the video or keep reading below to find out how you can develop a plan to build a thriving startup.
Here's the video
How to build a successful startup?
What's the difference between Small Business And Startup? (1:15)
- A small business is an autonomous entity that generates revenue from the first day of its opening. They don’t need substantial investment and time to build a working company.
- Typically, a small business brings a comparatively small amount of sales, enters a local or regional sector, and has a small number of employees. For example- a cafe, a restaurant, and other types of hospitality businesses come under Small Business.
- While there are no stringent rules to determine what startup is, the general definition of a startup is any company that is in the early stages of operations but expects significant growth in the near future.
How to get startup funding from investors? (6:40)
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Investors usually ask five questions before they decide to invest in your startup.
- What problem are you solving? What is it exactly you’re solving?
- Whose problems are you solving? Who are your customers/target audiences?
- Who are your competitors?
- How are you better than your competitors? How are you faster than them? How are you better than them and cheaper than them?
To get funding from investors, one need to prepare answers for these questions that can impress the investors.
How to generate good ideas for a startup? (12:29)
The best way to develop a sound startup idea is to:
- Find out everything you can about the industry where you want to pursue a startup,
- Speak with as many target consumers as possible,
- Identify a common problem among your target market,
- Think of business ideas to solve the problem,
- Brainstorm to uncover the strengths and weaknesses of your solution,
- Settle on an idea,
- Take the next steps towards launching your startup.
How to pitch your startup idea to potential investors? (14:47)
- The first step is to nail your elevator speech. Your elevator speech is a 30 second or less summary of what you do. It should explain everything someone would need to know when they first meet you.
- Before doing your pitch, do some research on who you’ll be presenting to. Good sources to find out about angel investors are AngelList, Flashfunders, and SeedInvest.
- When you’re pitching to investors, you need to provide factual data. Investors care about what you’ve already accomplished and how that can make them a profit in the future.
- Know your revenue model. A revenue model, or business model, just means how your company plans to make money and be profitable.
Why exit strategy/PLAN B is needed to rescue you from a startup failure? (19:39)
- Your exit strategy/PLAN B is crucial because it helps you define the success of your company. When entrepreneurs have not formulated an exit plan, it could be an indication that they are not focused on the potential transformation of the company. There’s a saying among venture capitalists, “It’s easy to make an investment, but how do we get out of it?”
- And investors don’t want the exit plan to be complicated or messy. Essentially, having a harvest goal and a plan to achieve it is what distinguishes successful entrepreneurs from the rest of the group.
How PLAN B rescued Flickr from failures?
- Today, we connect Flickr with high-quality online photography, most of which is available for sharing on the Web through a Creative Commons licence.
- But when Flickr first launched in 2004, it was something completely different – Game Neverending, a massively multiplayer online role-playing game from Ludicorp that allowed users to buy, sell and create objects, explore the map and communicate with other users in real time.
- And of course, the role-playing game included a common photo-sharing tool that eventually became the base for Flickr.
- The success of this feature persuaded Ludicorp to focus explicitly on online photography. That Flickr was able to turn a confounding mix of features into a successful product paved the way for Yahoo ‘s acquisition in 2005.
Why 90% startup close down within the first 5 years? (21:38)
- Startups often collapse in the first 5 years because founders and investors hesitate to look ahead and plan ahead without taking the time to recognise that the basic premise of the business plan is incorrect.
- They assume that they can forecast the future rather than attempt to build a future with their customers. Entrepreneurs appear to be one-size-fits-all in their strategies — wanting the company to be all about technology or all about revenue, without having time to come up with a balanced strategy.
- Fortune reported the “top reason” that startups fail: “They make products no one wants.” A careful survey of failed startups determined that 42% of them identified the “lack of a market need for their product” as the single biggest reason for their failure.
How do investors get their money back from startups? (25:12)
The investors who invest their money in any company in the form of equity receive:
- Annual Dividend
- Interim Dividend
The annual dividend is the dividend which is declared once in a year. An interim dividend is a dividend that is declared anytime in the year.
Other than that, shareholders can sell their shares anytime when the price increases.
Wrapping it up
Startups are changing the world by developing a fast-learning environment with a secure opportunity for failure in a competitive, fast-moving market. It’s about the sweet spot of cultivating the client, but it’s also about employee satisfaction. Fast thinking means quick change, which is how startups transform the world by being 20 steps ahead.
Success is not final; failure is not fatal: It is the courage to continue that counts.