Success these days in all forms is measured in monetary value- be it the net worth of a FTSE 100 corporation or the gross revenue of a new film. But for a start-up business, is profit maximisation always going to be the primary objective or is the truth a little more complex?
For Emily, the founder of a start-up interior design store called Aerende whom I interviewed yesterday, success is not measured in sales and revenue but rather in the knowledge that she is enabling people facing social challenges to produce ethical, sustainable homeware. She is against the idea of allowing investors to hold shares in the company for fear of losing the values that make the business so unique and becoming more profit centred.
Whether your definition of success focuses on revenue or if like Emily it is much more social responsibility-based the question remains- how can a start-up firm ensure it is successful?
Primarily it all starts with the idea. There must be a gap in the market that the product or service would serve a purpose and it must ideally be in a market that does not see a substantial amount of innovation if the new product or service wants to be competitive from the get-go. The company must understand who its target demographic is and be willing to adapt the nature of the good to suit the consumer. For example, if a firm produced a chocolate bar aimed at an older demographic but it appears to be a bigger hit amongst school children, a successful start-up would see this new market and tailor the goods packaging perhaps to entice a younger population.
Of course money is a huge factor in the potential success of a start-up firm. Emily from Aerende suggested that “in 95% of situations you have to be privileged to successfully start-up a business”. In fact, the average start-up requires £24,000 to get going and the vast majority of funding comes from personal assets and investment from family and friends. Furthermore, if enough money is pumped into capital or office space, for example during the development of a firm, then this will result in a stronger-looking business model that can be used to attract further investment from VC’s and loans from banks. Not to mention, a start-up founder from a wealthy background will be much more likely and able to take risks which could massively benefit the firm (eg. pouring all their savings into the business with the knowledge that if it doesn’t pay off their wellbeing and lifestyle is not at risk).
On the other hand, there is no denying that talent is a key factor of success in a start-up business. Talent must be prevalent in the workforce in order for it to succeed. If it is a team project then there must be a diverse skill set spread among the workers so that there are specialists in web design, marketing, innovation, etc. Ideally investors would not just pump money into the firm but also supply the start-up with their expertise in order to give the business some direction and the best possible market placement.
Finally, attitude to your business will always affect the overall success of the business in the long run. I spoke with Tony, a co-founder at Attest- one of the world’s leading consumer growth platforms and he emphasised massively the idea that persistence and resilience are key in making it as a start-up. It was persistence that led him to an event in which he met the man that would co-found and develop his service and would also invest his own money in the idea. While some might call this luck, I would argue it was a result of Tony’s determination and belief that his idea was a great one.
Overall what I have realised while working with Chrissy at TheBigThinks is that what makes a start-up successful cannot be condensed to be one individual thing. Instead it is a number of factors that work together with the original idea and founder to create a unique product or service with a set motive that fills a gap in the market that needed to be filled.
From my experience at TheBigThinks i have taken in numerous pieces of useful information ranging from the idea of Doughnut economics to the creation and backstory of product names to the variety of factors that play their small roles in the overall creation of start-up firms that Chrissy Totty works with. I was surprised to learn of all the people Chrissy works with including graphic designers and PR specialists and of course the founders and CEO’s of the businesses that she consults with. My experience here has been great, much more useful than I imagined it would ever be, and I look forward to writing all about my experience as a means of inspiring me in the sector of economics and management in my personal statement for university later this week.