Running a successful start-up comes down to a simple question of economics. In fact, starting and running a business is a practice almost as old as humankind itself. But, no venture should start starting-up without an appreciation for the fundamental laws of demand and supply.
Identifying your market, classifying your customer base, quantifying your market proposition and refining your product or service niche are crucial steps before any go-to-market strategy is implemented. The basic rules of economics are simple enough to take on board and, from that core position of modelling and analysis, any start-up can begin its commercial journey towards potential profitability.
It’s a very good idea for any firm to look for mentorship opportunities. Working with mentors, who have almost certainly made all the mistakes before and who understand cyclical trends, can make a huge difference. These are people, firms, groups or bodies who know what works and what doesn’t.
In some cases, start-ups will find that established corporates and sector leaders take a somewhat benevolent view to start-ups. These firms form start-up programmes designed to encourage new entrants to the market and see the presence of new innovators as a positive thing that ultimately increases product and service diversity while also amplifying the total perception of any given industry.
In a demanding market, such as hospitality, where margins can be thin, the opportunity to work with seasoned professionals can be a huge boost. Formalised mentor networks exist and are easy to find on the web, but informal relationships are also of value.
Every start-up will need some degree of funding and there are a variety of ways to bring this initial capital investment into the business. While some will look to the “new age” route of crowdfunding (think Indiegogo, FundRazr or KickStarter), others will turn to more traditional methods such as bank loans or venture capital (VC) investment.
Bringing funding into the business is not as simple as asking for money. From crowdfunding to VC, every investor needs to be sold the idea or concept being presented. Because of this, it’s vital to lay down a strategy and identify what the unique selling point (USP) of the business is.
A differentiation and demarcation strategy is vital if a start-up wants to avoid coming across as a “me too” product or service that already exists.
Strategy and cunning plans
Talking of strategy, no business in the hospitality industry, or any vertical for that matter, can operate without strategic planning. Strategy is the methodology, the process and the means to producing tactics – and tactics lead to action. These actions ultimately lead to business processes and operations being designed to deliver profitable outcomes.
But strategy must come before tactics, that’s just the way it works. Dovetailing with any start-up’s strategy is the need for marketing. In hospitality, as in non-related fields as wide as healthcare or finance, marketing is a fundamental vehicle for taking a product or service to market and communicating with a defined target audience.
While many components make up the so-called “marketing mix”, key elements will always feature advertising, promotions and, especially today, social outreach through digital channels. As part of marketing strategies, firms will also need to think about customer segmentation and price differentiation to be relevant in a constantly changing and dynamic market.
Another important part of the way start-ups can travel towards business success is the presence of start-up accelerators. These programmes and initiatives are designed to support early-stage firms who are directly focused on the growth and development of their business operations.
Through the use of education, mentorship and the injection of a certain degree of finance, start-up accelerators usually agree to work with new firms for a fixed and agreed length of time. During the period of engagement, start-up accelerators provide a programme of often very intensive immersion into activities designed to educate, guide, instruct and plan for longer term growth, expansion and, ultimately, to take the start-up towards more guaranteed levels of profitability.
Being a start-up is tough, but in the modern connected business world the availability of resources available to support growth is expanding all the time. If you’re thinking about creating a start-up, then you’ve already started, so keep going!