Start-ups follow their own laws - and therefore managing such a business requires a certain set of skills. On the one hand, there is a whole range of business disciplines to be mastered: Developing and implementing strategies, designing products and services, developing business plans as well as successfully implementing them, structuring and organizing your financing, attracting and retaining employees, and many more. On the other hand, young companies often struggle with scarce resources such as insufficient capital, being understaffed and a lack of experience. Adding to this, many founders greatly underestimate the challenges they will have to face when managing a start-up. Therefore, you have to find a way to turn your business idea into a market success as efficiently and quickly as possible.
The lack of experience in how to build and manage a company paired with the small margin for error a start-up is allowed to, is a dilemma many start-ups and their founders are faced with. The reason for this low tolerance for mistakes are mainly scarce resources, particularly capital. Through a structured and focused approach, and with the help of experienced specialists, you can take determined and condensed actions in important areas such as:
Is there actually a market for your products or services? Especially for disruptive business models, this question is not always easy to answer. But even if a market exists or can be created, the introduction often takes much longer than planned or secretly hoped. Furthermore, time-to-market is always delayed and devours much more resources than planned. In recent years, this situation has even intensified. The markets have become more transparent, trade barriers have been reduced, and the increasing global networking has lead to a qiucker diminishing of competitive advantage. Also, the world has not been waiting for most of the new business ideas.
Strategy and Business Model
A clear strategy and a business model focusing on customer benefit are key - they need to be clear, simple and comprehensible. When planning to enter a market with a new product or service, there are usually not plenty of options to choose from. It is therefore necessary to extract, define and implement the best option available.
Formulating and implementing a business plan is a matter of significant importance. Too often, this instrument is only seen as a way to raise capital, which is only part of the truth. The business plan should be the red thread and a constant guidance for everything that happens on the business front. Also, it is primarily created for the company and not for others. Understandably, the plan is often drafted with the rose-colored glasses on - and with that same optimism, many expect a positive outcome in no time. But most of the time it turns out differently than expected and many are not prepared for this and are caught on the wrong foot. In this context, thinking in scenarios becomes indispensable – unfortunately, it is often neglected in practice.
Adequate financing is key. What is more important for a young company? Having the right people on board or being adequately financed? The best case would probably be to have both. The main drivers of start-ups are clearly the founders, who are pushing the project inspired by an idea or vision. But without sufficient funding, this project will always remain an idea or vision. Therefore, structuring the appropriate financing solution is a key factor in the development of a start-up company. The following are to be defined:
Human Resources and Compensation
Rather sooner than later, the founders will need personnel support, i.e. other employees and managers. Besides their technical qualifications, these new employees should also bring entrepreneurial spirit and personality. Working in a start-up is intensive and demanding, which requires a corresponding employee profile - otherwise it will not work out in the long run. Especially people who can not work with uncertainty and pressure should not be hired for such an undertaking. For those who are suitable, compensation must be adequate and attractive and these employees and managers must be allowed to share in success. To find the best solution, it is best to test different models.
Chris Stern, Dr., MBA
Director of the Center for Start-up-Management at SGMI Management Institute St. Gallen
Chris Stern is an entrepreneurial pragmatist with a highly practial approach to business adiminstration. As an expert consultant for international business strategies he advises companies in the US and Europe achieving sustainable market positions on the background of his extensive management and board experience. Chris Stern holds a Master of Business Administration of the Graduate School of Business Administration Zurich as well as a Doctorate of Business Administration (DBA) of Trinity College & University. He is a senior lecturer and project director at the SGMI Institute of Management St. Gallen and for over two decades has successfully directed a wide range of open seminars, company-specific courses, and consulting projects on:
Mr. Stern’s list of publications include two practical books: ‚Business is Simple' and ‚Total Customer Focus'. Chris Stern is a passionate aviator with an active airline transport pilot license and engaged in a number of aviation ventures.