Managing a startup is a task that requires dedication, precise calculations, and a stroke of luck. Every year, the world welcomes several promising startups. But what the public doesn’t see are the other failed startups. As it stands, only 10% of all startup ideas succeed.
So, what happens to the remaining 90%? And why do so many startups fail?
Let’s say you have a startup idea that you want to explore. You need to find out how the product will perform in the market. You also need human and financial resources to grow at a steady pace. And if any of these resources are absent, the chances of your startup idea failing will increase.
Therefore, if you want to join the ranks of the 10-percentile mentioned above, you must master the essential tips to grow your startup.
Why Are Startup Growth Metrics Necessary?
Data and analytics are essential for any business decision, no matter how minuscule. But how can you monitor a startup’s growth throughout the product’s lifespan?
The answer: KPIs — a set of metrics that measures a business or startup’s performance over a specific period.
Key performance indicators (KPIs) provide in-depth insights into every aspect of your business. KPIs show your startup’s market performance. This key metric also indicates the productivity of individuals working towards the growth of the startup.
When tracking specific KPIs, set an objective to determine the scale of success. For example, the KPI for revenue growth can be set to a specific figure. Any number above this figure signifies a profit, while any number below it indicates a revenue loss.
However, KPIs are not limited to financial decisions. Startups can apply this metric to any aspect of the product’s life cycle. With that in mind, various growth metrics have become part of the conversation over the years. Although you need to track all of them, pay attention only to the most relevant KPIs to your startup’s objectives.
Here are the main categories of growth metrics every startup owner must track:
OMTM (Similar To the North Star Metric)
The aptly named “one metric that matters” is the startup’s guiding light — the mother of all metrics.
This growth metric is often reward-based. In essence, you are trying to convince the reader to reach a specific benchmark in order to access more services.
For example, a tech startup can focus its OMTM on monthly app usage. And to achieve this goal, they need to set up a path for the consumer to reach these numbers within that time frame.
Similar to OMTM is the North Star Metric, although both growth metrics are often confused. The key difference is that while NSM is the company’s overall target, OMTM is mission-specific.
A startup’s survival is dependent on the revenue flow. To stay viable, every company must monitor its finances. This will indicate when to change the business strategy or pull the plug on the project.
Some key financial metrics include:
- MRR (ARR) — Monthly (Annual) Recurring Revenue
Without consumer data, your startup is shooting blindly, which often leads to revenue loss and eventual startup death. Track the most effective acquisition, retention, engagement, and retention data.
Here are some key indicators to track:
- User engagement
- User retention rate
- Conversion rate
- Churn rate
Human Resources Metrics
Startups can only rely on humans until AI can generate, realize, and market original ideas to users. With that in mind, you need to track the performance of individuals and teams working on the startup.
Monitor the staff’s performance based on the following:
- Employee productivity (periodical)
- Team value
- Task success rates
Several other intricate KPIs exist, depending on the industry and the company’s specific objectives. Check out the most important growth metrics according to Railsware.
How To Grow a Startup Consistently
We have already told you that an overwhelming majority of startups fail, mostly in the first year. Now, let’s find out how your startup can avoid this pitfall and grow at a consistent pace.
1.Focus on a Specific Niche
Most startups fail because they are too scared to limit their product’s reach. They want a product that can do everything and reach everybody at once.
In reality, niche-specific products are more likely to succeed in any industry. You need to specify your startup’s direction. And by doing so, you will streamline a straightforward message for investors and limit miscellaneous expenses.
In essence, always start small and seek opportunities to scale eventually.
2. Ensure That the Product Is Viable in the Market
Before pivoting on a niche, conduct extensive market research. Delegate enough resources to gather information on consumer interests and market trends before finalizing your decision.
Reach out to potential consumers and find out their interests. Conduct interviews and use questionnaires for a data-intensive fact-finding initiative.
Does the market need the product? Can you break the stranglehold of massive competitors?
Also, you need to address any possible monopoly that has a stranglehold on that market. For example, a browser startup would have to go through fierce competition against Google, Apple, Opera, and Microsoft. Now, those are some heavy-hitters. Consequently, your chances of failure are quite high unless you find a miracle investor.
3. Seek Funding From Investors
Although throwing money on the problem is not a surefire solution, it helps keep your startup afloat. Financial backing from investors can save your startup from fading into obscurity. But before an investor can bank on your product, they need to see its promise and viability.
What can you offer them? Does your product have any promise?
The answer to these questions lies in your startup’s value proposition. Figure out your startup’s best selling points before reaching out to any investor. Your chances of landing more funding always increase when you approach potential sponsors with a clear business plan and budget.
4. Follow a Strict Budget
A budget is useful when applying for funding, as well as in making business decisions. For instance, your startup’s marketing and hiring policy depends on the available funding.
Contrary to popular belief, a startup does not need unlimited funding. A more stringent approach to funding will help you build a tech product with minimum marketing and hiring budget. You just need to identify the most expensive and labor-intensive aspects of your project.
5. Delegate Tasks To the Right Teams
At this point, you should have already figured out that the growth of ‘one person army’ startups is unsustainable. No matter how skilled you are as a multi-tasker, you cannot do everything on your own.
On the contrary, your startup’s productivity metrics improve when you delegate tasks to the right people because it helps you manage your time efficiently. So, give your startup the opportunity to reach its full growth potential by hiring a team of experts. Surround yourself with the best people for the job, but keep an eye on your budget.
6. Work on a Solid Marketing Strategy
If your product is experiencing stalled growth, then redressing your marketing strategy might be the startup’s last hope of survival. You need to review and update the business model to put your startup’s growth back on track.
To this end, ensure that the product reaches the right audience. Use proper marketing channels and reliable social media campaigns to expand your reach. In the same vein, come up with innovative ideas to distinguish your business from other cookie-cutter startups. And most importantly, communicate with users and gather feedback.
In general, the risk of failure is ever-present when running a startup. But you can’t cower before this obstacle: use the right metrics to monitor areas of improvement. Also, don’t hesitate to make changes when necessary. Survey the audience and find out current market trends.
Moreover, don’t throw money on the problem. Limit your spending to essentials. Hire the best team for the job, and focus more on sensitive projects within the startup. In the end, following these tips will increase your startup’s chances of growth.
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