There are many growth and performance-related indicators that help to distinguish if your business idea and its execution plan can be considered as a well-run startup. Here are the most common characteristics of successful startup business are written as follows:
High growth potential
As a founder, your business idea might be based on a shaky hypothesis, but you have clearly indicated the need on the market and if the execution works out as intended, the product or service has an impact on many potential customers. High growth is also potential and is also related to quick implementation, meaning that the product or service can be launched quickly and brings massive traction at once.
Your business model is built up so that the product or service can be offered in many different markets at once. There might be some customizations in the customer acquisition model (e.g. customer support, language, logistics, marketing activities), but in general the global market can be tackled at the same time with the same core product or service.
See also: 7 Elements of Best-Selling Product for Startups
High risk of failing
Your startup idea is unique or different/better than the competitive solutions on the market. This makes the implementation uncertain and naturally quite risky, said Johanna Puhtila, Growth advisor at Turku Science Park Ltd. There are startup companies that are following the success stories of other companies, such as using the same business model, entering the same markets, having a similar product or service features. In this case, the traction takes longer but some risks connected with sales and marketing can be reduced as well.
Lack of resources
Startup companies are always lacking the resources (mostly time and money) because their target market is large and the product development requires a lot of testing and redeployment. The key is to find a correct balance between development and implementation. Your ultimate goal is to reach the revenue phase as quickly and cost-efficient as possible.
Lots of uncertainties in the business model
Many startups are providing unique services or products to their customers. That is the main reason why the business model is not clearly defined in the beginning. You need to test your clients with various sets of business models to find out the one that fits the best. After finding the suitable model, scaling up is relatively easy.
Learning by doing mentality
There is no complete guide that helps to build up a successful startup company. Building the startup company is in constant change dictated by market conditions, investments, habits, development of technology etc. The most certain way of getting accurate feedback on your activities is to run a real-life test with real-life customers and real products or services.
Client is the king because they help validate your hypothesis, give you the valuable feedback, and eventually, pay you money for the product or service. Reaching your target customers can be a harsh process but it needs to be done as soon as possible. If you want to spare some time and money, face your clients even before your core team is happy with the MVP or prototype that has been built. Customers are willing to be part of the product development process and are really eager to give you valuable feedback.
Different growth funding schemes
Reaching profitability with your startup business can be a road with very many sidetracks. To support the quick growth and fierce product development in a startup company, there is an option to use external money. This could be in the form of a loan, an investment, a grant, a crowdfunding solution etc. Main thing is to keep an eye on the financial resources and performance ratio and to find out as quickly as possible if additional resources will be needed. Raising capital can be a long process and starting at the right time can make all the differences.
Importance of team/founders
The core team of a startup company is the biggest asset the company has. There are two things that are crucial to well-performing startup teams: a mix of different professional skills that are needed to build the product or launch the service and the similarities in the expectations and working models of the team members. As long as a startup company has not launched the product or service and has not reached the revenue phase, the value of the company can be only estimated by the performance of the team. This is the number one thing for external investors as well.
Read also: Startup Growth Stages Every Entrepreneur Should Understand