You might have been told that to be a great CEO or a successful founder is the most tedious and complicating job ever, and you’ll need an MBA or attend a business school if you are ever going to succeed. Startup success sounds too many like rocket science, which must never be dared.
Fortunately, we at Ready Apples are going to assure you through this article that all those qualifications are not needed for startup success as long as you understand and operate by the five key business concepts explained below:
5 Important Concepts to a Startup Success
Customers
Never be surprised that we decided to start with this straightforward term you probably think you know.
The word “customer” or “client” or “consumer” is so commonly used nowadays that very few people understand what it means and should mean.
Customers are businesses bloodstream that keeps any business alive. Like it or not, the customers are, and will always be, an essential part of any business. Only customers, not capital or profit! So, on the journey of startup success, the number 1 ingredient you need is getting the right customers.
It is of no use when you rent the best office space and location, hire the best engineers and salespeople, create pleasant and well-packaged products, as long as there are no customers, there is simply no business.
Irrespective of how beautiful what you are offering is, if there are no customers for your products, you are out of business before you start.
This is the reason why it is being said that “The Customer is King.”
Now that you know that Customers are king and businesses’ bloodstream, the first thing you must do to succeed is to identify your customers truly. This is a crucial point where many get deceived and mistaken, which has brought about the doom of many businesses even more than the world wars.
Never assume too much!
Honestly ask, who are the customers for the product or service business I’m about to start? What do they want? How, when, and where do they want it? What don’t they enjoy about the current provider they are using? Where do they live, work, and have fun? How much can they afford? Will they be more sensitive to the quality above the price? How well can they do without the service or product?
The closer you are to startup success, the more truthful, accurate, and positive these answers are. When most of these answers tend towards the negative, please rethink your business idea before starting.
Furthermore, I believe the more you understand your customers, the more you should always look at your business from the viewing point of the target customers. Know that your tastes, likes, preferences are not the business, but what customers want.
If they don’t want it, they won’t buy it, and if they don’t buy it, your business will die!
Read Also: Things to consider when naming your business
Supply and Demand
Every business has its market, and every market has its participators: the sellers (Supply) and the buyers (Demand).
The day you decide to start a business is the day you choose to join the supplier chain irrespective of what you are going into, whether products or services. In simple terms, all entrepreneurs are suppliers by nature.
For you to be in business, you must be providing or supplying something, whether a product or service. The earlier you make way for this fact, the closer you are to startup success.
If you are ever going to generate any revenue, you must supply something that customers are willing to spend their money on. This brings us to the importance of demand.
The concept of “demand” describes a customer’s willingness to pay the price for a product or service you’re offering. Demand is different from “wishes” and “wants.” Anyone can wish for anything, but it doesn’t translate into demand until they are willing and ready to part ways with their money for the product or service. This is an essential thing to understand before starting.
Customers or consumers might want something but not willing to pay for it, whether due to overpricing or sometimes complexity, among many others. So, understand that you are in business only because of the customers. If they are not ready to part with their money for your product or service, rethink your business strategy.
We believe that every startupreneur must understand the Principle of Supply and Demand. This principle states that when supply is higher than demand, prices usually fall, and when demand is higher than supply, prices mostly rise.
Competition
How would you feel if you owned the only business that sold cars in your country? That would be great, wouldn’t it? It means you could sell any cars you want, at any price and time you like. You could decide to sell only blue-coloured cars because blue is your favorite color. You could choose only to sell, starting from 12 pm to 4 pm, because that is the time convenient for you.
You might not care much about what the customer wants? What other options do they have if they don’t like the quality, color, or price of your cars? You’re the ONLY business they can buy from. They can hate, blame, and groan about your terrible customer service, but it won’t affect your business. As long as they need cars to travel, you’ll always be in business!
Economists refer to this type of business as a ‘monopoly.’
Unfortunately, most of the countries in the world now operates a ‘free market economy’ where anybody with the means can start a business, and prices of goods and services are determined, not by a single company or individual, but by the interaction of supply and demand in the market.
Simply put, the market is a race, and every business is trying to outrun the other to win more customers.
Every day you wake up as a business owner, there is another business somewhere that is trying to compete against you and run ahead of you. And what is the prize businesses compete for? Customers! Remember, customers are the most critical element to a startup success.
Every business continues to look for new and effective ways to be more attractive to customers. If they are more attractive, they can win over customers from their competition.
By providing products that are of higher quality, services that offer more value, convenience, and greater satisfaction, your competition is likely to ‘steal’ your customers. If your customers find out that they can get a better deal and enjoy more friendly services at your competitors, you may lose them forever.
Your competition will always look for weaknesses that they can exploit in your products and services. This is why every business should have a ‘competitive advantage’; a quality that makes it difficult for other businesses to exploit its weaknesses or copy its style.
A famous trademark brand, a patented product, or ‘mind-blowing’ customer service are just a few examples of competitive advantages a business can have for startup success.
In the world of business, only the strong survive, and competitive advantage is a strength that you have that keeps you alive in the market. It is something unique you can provide to customers that they can’t get anywhere else. And as long as this advantage aligns with everything your customers want, you’ll remain successful in your business!
If your business can’t compete, it’ll die. Find your competitive advantage, and keep improving it!
Also Read: Making money online just got easier
Return on Investment
Yes, let’s get a bit more technical with the terms.
‘Return on Investment’ or ROI is a popular term with investors, bankers, and professional business people.
ROI is commonly used when an investor or entrepreneur is considering several businesses or investment options. ROI is one of the practical tools that can help business people and entrepreneurs choose the best and most rewarding option out of several options. And don’t be scared, the calculation for ROI is quite simple.
In simpler terms, you must decide which of your available options gives the most return on investment in the long run. This is something you must be careful of as an entrepreneur focused on startup success.
Fixed and Variable costs
To make money, you need to spend money!
Costs (or expenses) are everything you spend on or pay for to start, run, and keep your business alive. Rent, equipment, salaries for staff, internet bills, transportation, advertising, and bank charges are just a few of the costs that most businesses have to bear.
Unfortunately, most small businesses are suffering from a lot of costs they could have avoided or significantly reduced.
Understanding your costs is one of the critical elements of success in any business. Cost is significant because it is one of only two factors (the other being ‘Revenue’ or ‘Sales’) that will determine if you make a profit or loss in your business.
No matter how much revenue your business makes, it would be impossible to turn a single profit if your costs are higher than your income.
Startup success is not achievable when you keep your cost and expenses more elevated than your revenue.
We always advise entrepreneurs who are conscious of startup success when starting their business never to take on too much-fixed costs when starting; it makes your starting investments disappear with no business impact trace.
