There is nothing easy about creating and sustaining any new business, let alone one that’s offering something genuinely new. That is why 90% of startups fail and more than 20% end up folding within the first year. 

But from Airbnb to Uber, the most successful startups always share some common characteristics. Chief among them is a disruptive idea that can achieve huge scale in a short period of time.

Of course, this is often much easier said than done, and developing a fully formed business model from nothing is nigh on impossible. Instead, you need to work through a process and tick off business fundamentals as you go. So with this in mind here are my thoughts on the seven key ingredients to building a successful startup.

UNIQUE 

The uniqueness of your idea is fundamental to its success. Otherwise, launching a business into a sea of established competitors offering exactly the same product as you will make it even harder to succeed.  

There will no doubt always be competitors within your overall market, for example airbnb are competing against hotels and Uber against yellow cabs, but it’s direct competitors that you want to focus on.

Here’s an exercise that can help you test your idea for uniqueness: write down your startup idea without using any adjectives or adverbs. Now ask yourself, “Is it true that my startup will be the only business that can make this claim?” 

DEFENSIBLE

If your idea is original, can you keep it that way? If not, you may quickly find that your high growth is curtailed by competitors that swoop in to exploit the opportunity you spotted and developed.

Okay, the fact is, even with copyright laws, most ideas can be imitated to some extent. There is nothing stopping somebody launching a search engine to compete against Google or a short stay rental platform to compete against airbnb.

So how can you create a strong preference among your customers that will keep them using your product once competitors move in on your patch? Much of this comes down to your product being superior to competitors. And if you’re going to be a platform provider, then the ability for your idea to gain critical mass is crucial. Users stay with airbnb because alternative options have nowhere near the amount of listings that airbnb offers.  

AN EXCITED CUSTOMER BASE

It’s hard to grow a new business, so you want to be certain that your startup idea is very appealing to at least one type of customer. These will be people that place a very high value on the aspect of your offering that is uniquely yours.  

First, you need to figure out what type of demographic is most excited about your offering and why. You don’t need every customer to care about your offering, but you need at least one type of customer that will praise your product and organically bring those around them into the fold.  

It’s not enough that a lot of customers agree that your offering is better than the alternatives.  You need a subset of customers that are truly fans. These are the folks that will drive your repeat sales, will fight to keep you in business, will send their friends and relatives to you and will write testimonials. If there is not at least one type of customer that is super excited about your offering, it’s time to find a better idea.

A TACTIC TO SCALE  

Now you have a marketing dilemma. You have a unique offering that some customers care deeply about and that isn't readily available from any competitor. 

However, you need some means of putting your offer in front of all of those customers. You don’t have to reach them all at once, of course, but you do need to reach them in a way that can scale up so your business can grow.

Be confident in the fact that you are giving real value to these customers and you will eventually find a cost effective way to acquire them. The important thing is that, at this step, you know exactly what it is that you are trying to do and you know why it should work. 

ECONOMICS THAT MAKE MONEY

All along you have probably been thinking about what it will cost you to provide your offering to customers. You have also been thinking about what it will cost you to acquire said customers.  

Now you need to think about the price at which you can cover all of your costs and still make a profit. Then you can test various price points and various means of offering your service.  

This step is where you confirm that you can sell your product at a price where you can make a profit while remaining competitive. If you think about this from all sides and cannot find a way to sell at a price that both brings you a lot of customers and makes you money, you will need to go back to the drawing board.

ACQUIRE ALL NECESSARY RESOURCES  

Two of the most vital steps between a great idea and a successful business is the money to get it off the ground and the human capital required to run it. 

When it comes to funding, you first need to calculate a budget. This will come down to your business plan and how much human capital and equipment you will need at each stage of growth. It may be the case that you can cover initial seed funding to get off the ground, but taking the next step and scaling will require outside investment. In which case, have a plan as to how you’ll acquire this funding.

When it comes to human capital, again your business plan will be the basis of what positions you need to hire and when. And this is intrinsically linked to budget. If you need top engineering talent to create a product that will leave competitors in your dust, you’ll need to factor in the cost of this.

COMMITTED LEADERSHIP  

I once told my co-founder in a venture-backed startup that if we worked very hard and didn’t make any serious mistakes we would be an “overnight success” in about 10 years. There are certainly exceptions to this timeframe, but expect to spend seven years working very hard while not entirely sure when your idea will lead to loads of profits. Some people build and sell an app in 18 months for lots of money. But most startups are a multi-year emotional rollercoaster ride before success becomes certain. 

Don’t work on an idea that you cannot commit to for quite awhile. You may have to believe in your idea for years before others come to believe in it too. Some people fail, but a greater number simply quit. If your startup idea checks the preceding six boxes and delivers a product or service you feel good about delivering, don’t quit.

CONCLUSION

There are many ways to get a business off the ground, but they’ll almost always involve some combination of these seven key ingredients. In a day and age where the market is oversaturated with new businesses offering slight variations of the same service, it pays to be bold. However, your bold idea needs to be solidified with resources and a consistent demand.

Failure is always going to be a possibility for any business, but you can get a bit closer to starting a successful startup by following these tips

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