When people look at major success stories in the startup world, one of the biggest things that comes to mind is luck. Yes, part of entrepreneurial success is timing, and luck often plays a slight role in the success of a venture, however when you look at the trends from the past few years it becomes apparent that there is a science to entrepreneurship which can help to improve your odds of success.
As discussed at the recent CEA Innovate 2014 conference sessions titled Startup Success Stories, top entrepreneurs from Tech Cocktail, Phone2Action and HD Radio gave insights and advice to help current and aspiring business owners increase their chances of success. Although business ownership can be daunting, by focusing on the key trends below, you can greatly improve your odds of success.
When you’re running a startup, having a company culture isn’t something you can define immediately through a company memo. Rather, developing a culture happens overtime since it’s impossible to predict the direction of your company early on. As a rule of thumb however there are a few rules which can ensure you attract and retain top talent naturally. Remember, it’s important to get this right early on because the larger a company is, the more difficult it becomes to innovate.
Avoid an Intellectual Hierarchy
In the past, companies used to embrace a pyramid model where new employees were taught to never correct employees at the top or offer suggestions unless called upon. Today however, things have changed. For your startup to succeed in a competitive marketplace, you need to ensure all staff feel empowered to provide feedback on projects. Just because someone is young or new in the field doesn’t mean that they can’t provide valuable insights.
All employees need to feel empowered to deliver the news when an idea is stupid provided they have the right facts. Aside from empowering everyone to provide feedback, celebrating achievements within your team is another way to encourage innovation. When achievements are publicly rewarded, employees are driven to constantly improve so they don’t fall behind their colleagues.
When hiring employees, you should always hire staff smarter than yourself. Additionally, your hiring decisions should be based purely on talent and employees always need to bring value to the table. These are both crucial decisions since your team will be shaped by the talent that you hire early on.
Since job interviews are virtually useless when it comes to predicting employee performance, if you want more accurate picture before hiring staff have exiting employees help with the hiring process as they know their specific job challenges in more detail than the CEO. Regardless of the position however, you should always look for talent willing to go above and beyond the position that was originally advertised.
Raising money is a hot topic in entrepreneurship because everyone needs money. Regardless of whether you choose to go the venture capital route, crowdfund or bootstrap, you need to set realistic expectations around your goals. Before you start building your product, you need to figure out which market contains customers who are willing to invest in your product – not necessarily through an equity transaction but with their time and money.
If someone is going to incorporate a new product into their workflow or switch to a new vendor, they need to be confident the offering will meet their needs for awhile. In today’s competitive markets, you can’t rely on low prices alone to differentiate your product. Rather you need to offer a service which customers are willing to pay a premium for.
Although making your startup attractive to investors is a topic beyond this article, here are some quick tips on raising funds:
*Compared to the past, entrepreneurs have more leverage when it comes to negotiating terms with investors because the cost to prototype and test an idea is much lower than in the past.
*Strategic partnerships are crucial to the success of a company. With these arrangements, you can focus on creating the product
*The most notable trait that is found in many successful people is perseverance. Specifically when it comes to raising money you can’t just hope to raise enough capital to get your business going. More often than not you’ll have to find ways around common obstacles, one of which likely will difficulty in fully funding your project with investments.
Planning for the Long Term
It’s important to embrace these trends and ideas in the early stages of your company because as it grows, innovation and agility become much more difficult. Even if you don’t have a background in human resources, by following these basic rules, you can improve your level of entrepreneurial intelligence and greatly improve your chances of success.