What are the challenges and opportunities for a startup?
Before you read any further you should recall Peter Drucker's definition of the purpose of a business. According to him the only purpose of a business is to create and maintain the customer while protecting shareholder's interest through two primary activities- marketing and innovation.
While the Internet has completely transformed the very fundamentals of how businesses get created, grown, and destroyed however the purpose continues to remain the same.
Let us look at the business opportunities first.
Before the internet became a viable business creation and execution infrastructure it was extremely difficult for an entrepreneur to test his idea and get started, find customers, and reach them effectively. The Internet has drastically reduced the cost of business entry from that perspective. That is your greatest opportunity.
Today all kinds of businesses flourish on the net- from niche to behemoths. Niche starts making profits very quickly as against most of the behemoths that take time getting there. The size of the company however could be as small as 1 person now.
As for opportunities, at the highest level, they can be categorized into following
a. Marketplace
b. Content
c. Services
d. SaaS platforms
e. Brokerage
f. Affiliate marketing
g. Advertising
h. Manufacturing
j. Infomediary (selling data)
I cannot emphasize enough that setting up a business could be akin to riding the roughest roller coaster. You should be able to love every moment of the ride. Because it will be rough. Your biggest challenge therefore will be whether your own passion and purpose align with the business that you wish to set up. Without that, it will be extremely difficult for you to last the course.
The next challenge will be finding the idea. Where do you start? More often than not entrepreneurs start with a product idea. And this is where the script starts going wrong. Not every great idea is a good business opportunity. The problem your product idea is addressing may not be important enough for the customer. In fact, it may not even be a problem he is looking to solve. Or even if an important problem is getting addressed there may not be enough buyers. It might be a real niche market. Or the cost of reaching the customers may prove to be prohibitive.
How do you penetrate an existing market?
So how will you establish if there is a market out there that has an interesting, large, and an unavoidable problem to solve? That is the next challenge. Going out and finding people and potential customers who are ready to speak to you. So choosing a strategy to figure out the customer problem at a shoestring budget is the next challenge that an entrepreneur needs to solve.
And if you have figured this out and have established the business need you will service putting a team of founders together who can get the initial Minimum Viable Product/ Service ready is the next problem to solve. You will also at this stage figure out how will you generate bootstrapping funds because external funding at this stage will be near impossible.
Let us say you cross this stage successfully. You should have in your earlier research created a list of go-to prospects who are ready to try your product. So start working with them and figure out what is working and what is not. Who is buying and why as well as who is not buying. This is another step entrepreneurs tend to miss out on. This is also the stage where you will start giving shape to your product road map and would build a reasonable degree of knowledge to figure out what will it take to build the business.
Your challenge will be to figure out the following at this stage.
This is your next biggest challenge because you still do not know enough. You do not have enough data. You probably also do not know how to do these activities. This is where you will need a really good coach or a mentor or even an advisor would probably do. And finding the right person or organization will be your next biggest challenge. In fact onboarding, a coach, or a mentor at the idea stage itself would serve you well and would save you a lot of time, money, and heartburn.
So let us assume that you have figured out the product road map and have at least a 60% to 70% accurate strategy, models, and plans in place. You are now entering the Product Go To Market Fit stage. So not only should your product scope start growing but you must generate significant traction in growing your customers at this stage. So choosing the right growth hacking strategy is your next challenge.
And if you achieve growth metrics that establish traction you are ready for angel funding at this stage. Remember the best investing opportunity is the one where the investors start chasing you rather than you. So building an investible track record is your next big challenge.
And if you succeed in finding angle investment your next biggest challenge is to discover the Business Model. At a very high level, a business model consists of a very clearly defined value proposition, a tested and established revenue model, and systems and processes to run your business and scale it. If you do this successfully you are ready for some really serious investing, either pre VC or even VC funding.
Who you get would depend on how effectively can you build a Marketing strategy to capture the mainstream market.
And if that happens you will be added to the list of successful and talked about startups, irrespective of whether your business is profitable or not.
If you think you have that jackpot idea but not sure how to make it a business, join our weekly FREE Startup Coaching webinar
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