What exactly should startups consider, where exactly can investors support founders in their work and which topics will become more and more important.
10 practical tips for startups
1. Focusing on your own product solutions instead of relying on ready-made business ideas
Focusing on evolving market needs when adapting products is critical to long-term success. To keep the product relevant, customer feedback should be collected regularly and necessary improvements made. A prime example from practice is Airbnb. Originally conceived as a simple accommodations platform, it quickly saw the potential to solve an even bigger market problem: enabling travelers to find and book unique accommodations. In order for such a conversion to succeed, the first focus is on building a robust, scalable business model. To ensure this, founders must rely on controlled growth and adaptability instead of rapid expansion. Efficient process management, tight processes and a flexible organizational structure form a strong foundation for this. Startups also generate significant benefits if they establish a data-driven culture in their company in such a way that their employees become fully familiar with it. Special data-driven analyzes and processes not only optimize business decisions, but also drive both processes and new innovation opportunities.
2. Control the company’s development step-by-step
The focus for founders is initially on identifying and formulating the market problem. Procedures such as the ACTUAL process can be helpful for the subsequent needs analysis, as this forms a good basis for the development of a Minimum Viable Product (MVP). The aim of the MVP is to reach the first customers and get their feedback. Only when a clear added value for the target group and an effective go-to-market strategy (GTM) can be identified by means of proof can a broader customer group be addressed. Step by step, founders explore their way and then carry out a well-founded market analysis in order to better understand the potential of their idea and the target group. Airbnb has successfully filled a gap in the market by meeting travelers’ needs for alternative and affordable places to stay.
3. Always keep an eye on: The relevance and dynamics of the core team
One of the biggest challenges for a startup is the careful selection of the right team. In the early phase of a startup, it is important not to make any compromises and to put together a competent team. This is especially true for key positions such as CTO, CFO and project manager. The team must have the right skills and knowledge, both technical and commercial. In the best case, the specialist areas of the founders complement each other and do not overlap.
But employees also bring their own ideas to the company and expect freedom, trust, responsibility, flexible working hours and locations, fair pay, individual training opportunities and appropriate work equipment from their employers. Startups that meet these needs and desires promote the creation and maintenance of a healthy corporate culture that is valued and recommended by all team members. Other benefits such as gym subscriptions, continuous training programs, subsidies or the assumption of travel expenses are certainly not wrong, but the fruit basket or free drinks are passé and no longer a decisive argument.
4. Leader instead of boss: Cooperation and trust strengthen modern management culture
Founders draw from a management style that focuses on transparency and consistency. Open communication, active listening and the willingness to engage in dialogue promote the initiative and commitment of employees. Managers in particular are responsible for creating a working environment that is based on trust and stability by promoting a “we” mentality, ensuring psychological security and appearing predictable in their behavior. Business success requires continuous learning, adaptability and collaboration. In addition, essential leadership qualities of the modern working world such as the development of skills, ethical values, team spirit and strategic thinking are proven to improve cooperation.
Google, the US technology giant, exemplifies this management culture with flat hierarchies. The managers there see themselves as coaches who support their employees. They are encouraged by their team leaders to use time for their own projects and work in a creative environment that motivates and inspires them.
5. A successful pitch deck needs to be well prepared and structured
Starting with an intro, an excellently crafted pitch deck covers the five essential questions: what do you do, why do you do it, how do you do it, where do you want to go and how do you get there? In pitches, the problem, the solution, the USP must be immediately recognizable. The decks should be specific as to what exactly solves the customer problem and why is it better than the competitive product and how does it make money. It should not be forgotten that founders can also answer other potential questions about their project in their presentation. These are based, among other things, on aspects such as growth potential, important milestones and goals, break-even analysis, dealing with risks and the sustainability of the company. In principle, it must be ensured that the capital investment accelerates or stabilizes the growth of the start-up and that it meets the expectations of investors who expect a return of at least three times their capital.
6. Take fundraising as an opportunity to invest in a vision together
As a startup, it is important to communicate the value of your product or service and show the potential to solve concrete problems and meet a specific need in the market. Fundraising is the chance to share your idea with others and inspire them to get involved. The consistent and regular exchange of investors gives founders the opportunity to build up a network of supporters who can help the startup to continue to grow. Today more than ever, startups need this direct access to experienced experts and a global network. The close contact allows a realistic assessment of the status quo and future potential. Because fundraising means sharing an opportunity, not asking for charity.
7. Success starts with the right prioritization
Success does not come about by chance, but through conscious decisions and targeted prioritization. To build a successful business, founders need to set clear priorities and focus on their customers’ needs and the market problem. By constantly communicating with customers and collecting feedback, founders can ensure that they understand the needs of their target audience and develop products and services that meet those needs.
Tesla, for example, recognized the niche potential of the electric car market and the many concerns about electric vehicle performance, range, and longevity. As a consequence, the company is developing electric vehicles that match the comfort and performance of petrol and diesel cars.
For maximum success, it is essential for founders to use resources wisely and prioritize the areas that have the greatest impact on the success of the company. To stay with the example of Tesla: The company does not only consider customer needs when developing its products. Tesla also addressed the limited range of electric vehicles by offering a fast charging option through a network of Supercharger charging stations.
Setting clear priorities always means that founders have to be flexible and adaptable. Yes, companies must even be able to evolve in order to be able to meet the changing demands of the market. Tesla’s focus is based on the flexible development of electric vehicles and at the same time focuses on the continuous improvement of battery technology.
8. Don’t lose sight of goals
Clearly defined and measurable goals are essential for startups to evaluate strategy success and avoid wasting resources. Efficient resource allocation and, over time, better visibility of progress are only possible with focus. On the other hand, if you act too rigidly and inflexibly, you will find it difficult to adapt to new challenges and changing market conditions. For example, Tesla was also forced to invest in its own battery production because there were no suitable batteries for electric vehicles. The company was only able to increase the range of electric vehicles by developing its own batteries. In addition to more satisfied customers, this has helped Tesla position itself as a technology leader in the field of electromobility.
9. Use the crises as an opportunity: Innovative ideas are needed more than ever
Current challenges such as war, inflation, loss of trust in banks, ongoing supply chain problems or the climate crisis require young companies and their founders to find the right answers. This also includes, for example, the search for concrete alternative solutions to reduce emissions in order to tackle the high carbon footprint of food production. So every crisis can always be an opportunity. During the pandemic, online retailer Zalando managed to expand a partnership with local shops to help them market their products while expanding their own platform. Through this initiative, Zalando was able to expand its presence in local markets and help smaller companies survive the crisis – with the nice side effect of a 30% increase in sales to EUR 10.7 billion in 2020. Sustainability practices and goals in Business models that contain a clear vision and implementation strategy are increasingly preferred. Investors are now more active than ever in supporting.
10. Topic potential for founders is almost endless
The entire FoodTech segment, from the production or cultivation of food to consumption, through transport, tracking, storage and sale, is becoming increasingly important. For example, farms are looking for solutions to save water or to produce food that does not cause any ecological disadvantages for the environment. Telemedicine (MedTech) also offers potential; it is an effective solution to the challenges of healthcare – especially in rural, underserved areas. New and more efficient technologies in the fields of solar, wind and hydrogen offer good growth opportunities, especially for young companies. New and more efficient technologies in the fields of solar, wind and hydrogen offer excellent opportunities for disruption.