Creation is easy. Most ideas can take a definite shape for monetization for sure. Early deals will happen because there always are early buyers and adaptors. The challenge sets in when the business orbit ceases to shift to the next level as we do not have the means evolved to acquire the potential buyers. Two choices are possible here, stay in the same orbit, and be content or shift to the next orbit. Staying in the same orbit will create decline as the market and competition will continuously shift to the next level. The behaviors for growth are starkly different from creation. The central problem is behaviors become habits and habits are hard to change. Business orbits are a function of leadership behaviors. Many exit or windup when growth takes a downturn. This phase is the high-risk zone for all start-ups. After the first couple of rounds of funding no wonder, the Investors encourage the founders to step down or exit from the ventures because the behaviors that created successful start-up inception no longer support the expansion and growth.
Acceleration is all about demonstrating behaviors that adapt fast to market conditions and rapidly acquire customers. Adapting to the market needs and changes triggered by various exigencies is the key component of sustainable growth. However, the collective behaviors of an organization which is its culture are the dominant definers of the start-up’s success in the growth stage. Acceleration requires the entrepreneur to wear situational hats of creator, sustainer, and destroyer. It’s all about continual innovation, sustaining all that is doing well, and destroying all that is redundant to cut waste and flab. The team therefore at the formation stage also must be such that it supports the transition from inception stage to the growth phase. Look for people who have a passion for the domain and are able to adapt to changing times fast. Look for the diversity of repertoire and not niche experts alone.
The acquisition of customers is a wicked problem. Interestingly the reality is, the first couple of customers happen easily, but the next phase is ambiguous. Also, research has it that the cost of acquisition rises in the organization’s lifecycle. This is the paradox of customer acquisition. Customers of today have numerous alternatives and options thus a loyal customer is a myth. Few organizations have created devout customers because of the experience and prowess of the product and its eco-system. Consistent acquisition of customers is crucial because customers are also operating in different states of priorities and life cycles at different times. Build a sensitive radar system in the organization that keeps you informed at all times on customer’s priority, pain points, and desires. Customer Lifetime Value is a function of the portfolio of products, human and technological experience. Up-selling and cross-selling are the key here. However, it is all about choosing the right customer and providing positive emotional anchors to remain engaged. In CLV the first deal is not a margin game. At times even a new product positioning in a devout customer is below the targeted profitability. However, over a period of time margins accumulate as the relationship and confidence grow. Monitor trends in customer engagement closely. Hedge your risks by investing energies across Industry verticals and Continents.
In Public Relations Digital Marketing and Traditional Marketing, both play a key role in market diffusion and dispersion awareness. Traditional marketing mediums like newsprint, magazines, and television advertisements are expensive propositions most often beyond the budget of a start-up unless the start-up has been funded abundantly. The equation is simple more the money spent more the eye-balls and foot-falls. The digital medium remains an attractive proposition for most start-ups. Social adverts on LinkedIn, Facebook, Twitter, Instagram, Pinterest, etc. are good options however we need to be careful about where our target audiences anchor. The digital medium is excellent for B2C. However, B2B needs some planned campaigns to reach the correct decision-makers. A combination of digital vehicles will help build brand personality and affinity amongst the consumers. Identify the right social media, craft the content well, and focus on the organic growth of your social tribe. Targeted digital ads yield excellent results. Focus on blogging to establish yourself as a thought leader. People connect with thought leadership and is a key Leadership Competence of the current times. Search Engine Optimization & Search Engine Marketing is a good option to focus on by getting the right keywords in all your digital content. Website traffic and its monitoring also is a great leading indicator. Today’s world is all about digital assets and content. Build dashboards and invest in social media analytics. They are great leading indicators of customer trends.
As a start-up focus on the people you hire. A culture once set is very difficult to change. Toxicity at any stage of the growth can ruin the prospects of the start-up. Select based on the behavioral process drivers that will create success for you. Likeability is the last thing you should go for. People who work for money are the last ones to be hired. Look for passion and competence including people’s competence. Technical orientation alone will ruin the culture of your organization. All organizations that do well do so because of the top Leadership. Gender diversity brings strong revenues for the organization. Yin & Yang are the eternal truths of this Universe, and any imbalance will create noise. It is important to have Women in the Leadership positions and Board.
Technology and complimenting partnerships play a crucial role in expansion plans. Social enterprises scale-up purely through franchising and technology. However other categories enter commercial partnerships. Some of the interesting connections I have seen are Airlines and Food Industry, Hotels, and FMCG. Geographical expansion happens through dealers and owned offices. We live in a world of co-creation so retain the core and partner for non-core. Vertical or horizontal expansion must be used as a choice with discretion. Test for hypothesis before making a choice. Horizontal expansion is tricky and needs carefully ascertained strategies.
In my experience of expansion of start-ups, it is all about the state of the art product portfolios, correct stakeholders, right organization structure, and a useful technology backbone. Tech-savvy organizations scale-up faster. Capitalize on the existing value chain always. Design thinking says big thinking is difficult to implement, monetize the low hanging fruits consistently to make innovations faster. There is no point in reinventing the wheel.
The expansion phase needs perseverance, patience, and calibrated innovation. It is a phase that tests the grit of every entrepreneur and is a never-ending phase of business. Because if this phase terminates we enter stagnation. If the foundations of the organizations are in place expansion is easy. Unfortunately, when organizations enter this phase, they are seen wanting in the areas of fundamental processes that every organization needs to succeed. Only products will not get you the expansion; you need an environment and support system.
The Growth Phase is the trickiest stage and the most challenging, yet enjoyable. It makes you think and go beyond the glass ceiling. A start-up that goes for funding must be ready with the plans, processes, and structures for the growth phase so that the cash can be used instantly for scale-up.