Let’s be honest: A tech startup’s success hinges on a lot of different variables clicking at the right time. The most important thing for startup founders is to focus on the factors they can control rather than the ones that are out of their hands.
I’ve been in the trenches for more than a decade, both as a tech entrepreneur and as someone who works with and nurtures startups. Through that time, my colleagues and I have done a lot of qualitative and quantitative analysis with a goal in mind: to identify the common traits of successful startups, validate them, and use them to increase other entrepreneurs’ chances of success.
What came from that research was something simultaneously fascinating and frustrating — fascinating because there are, in fact, commonalities among all these companies shared, and frustrating because they seemed too damn simple to have not been tried before.
Keys to a Top-Notch Startup
ShortPar4.com is the product of passionate founders wanting to create the golf apparel equivalent of Trunk Club. In its first year, however, the company had a little more than 100 members and was using a business model that wasn’t catching on with the masses.
Skip ahead a year, and it’s the fastest-growing golf brand in the country at 20,000 members and counting. How’d the company get there? By applying our research and keying on these five common denominators our research uncovered that exist among all successful startups:
- Passionate Interest Group
The sole purpose of a service or product is to fulfill the need of a target audience. The most successful startups don’t just pinpoint that key demographic; they gauge its market viability and identify what that audience’s biggest passion is. With ShortPar4, it was crystal clear from the start that golfers were a passionate interest group that it could target and identify in all its marketing efforts.
- Scale Potential
If the interest group is too narrow, shallow, or niche to reach critical mass, the chances of hitting your goal greatly decrease. Everyone thinks he has a great idea, but if the scope of your audience isn’t substantial enough, you’re already behind no matter what your business model is.
For ShortPar4, the golf industry is massive, with the ability to target millions of potential customers on Facebook at the click of a button and an industry booming in growth.
- Unique Product Offering
You have to find a way to grab your audience’s attention and stand out from competing brands. Building those hooks into your value proposition can be the difference between a made sale and a missed one.
The traditional way of shopping for golf apparel was at a big box retailer — which all men hate — or at the club pro shop, which breaks the bank. The convenience of delivering great brand-name products directly to a golfer’s doorstep was so unique that customers took notice.
- Compelling Unit Economics
The numbers have to line up. When a customer gets hooked on your offering, the price and unit economics need to make sense for them to want to buy in. As the service provide, those same unit economics must be such that the company can still promote, infiltrate multiple platforms, and maintain the best possible profit margin.
ShortPar4 originally offered members five pieces of branded golf apparel a month. Customers could try them all on, be charged for what they liked, and send the rest back. We helped pivot those unit economics into a service that sends a few pieces of branded apparel — all valued at more than $100 — to the customer’s front door for a flat rate of $45 per month, or 65 percent off retail price.
A lack of profit margin means you’ll be fighting an uphill battle from day one. With consumer products, aim for at least 50 percent — and possibly 75 percent or more.
- Market Pain Solution
As simple as this sounds, if you’re not providing a market solution, you’re adding to the market problem, so ensure your product is a “must-have” rather than a “nice-to-have.” If it doesn’t soothe a real pain point — and not just one you’ve made up — people are less likely to become regular customers.
It’s shocking the number of entrepreneurs who miss this step or incorrectly think they’ve taken it. Companies that fall into that second category can even generate some sales, which is even worse because it further leans into the false positive. But if customers aren’t banging down your door every chance they get, then the problem you’re solving isn’t that big.
These five criteria can help give you a significant entrepreneurial edge and help you achieve your dreams only if you are brutally honest with yourself and your business. Take some time, run through it, and make the necessary adjustments where you find the gaps. Don’t drink your own Kool-Aid — chances are it’s too sweet.
Image Credit: CC by Brisbane City Council