Tech startups have a lot of resources and money at their disposal. This makes it easier for them to get to the top of their industry. As a small business owner, you are probably not as well-funded as these raging hot VC-backed startups, which adopt the “growth at all costs” mentality. However, if you want small business success, you can learn from the mistakes that many successful tech companies made to survive and thrive.
You can always stand on the shoulders of giants, period.
Tech startups burn millions of dollars every year to perfect their business process. And this presents you with the leverage to duplicate their perfected techniques instead of starting from scratch.
Owning Their Core Offering, And Outsourcing The Rest
You may think that your small business success has little in common with the mistakes that tech startups make. After all, you are not trying to grow a company the size of Amazon or Facebook. Plus, you don’t have to worry about revenue growth or market share battles like with Google and Apple.
But you can make the same business mistakes regardless of the revenue-dream size.
One thing that tech startups have learned is that they don’t need to own every aspect of their business. They can outsource the parts of their business that aren’t core to their DNA and focus on the ones that are.
For example, a SaaS company might outsource its customer support to a call center instead of dedicating some serious dollars to build an in-house team for the same.
While trying to do everything yourself may seem like a good idea at first glance, this approach can quickly lead to a chaotic business, which ultimately lands you in a pool of failure.
So, quit being a gym or salon owner who tries to do everything in their business themselves, even if it is less efficient.
Because either your revenue will stagnate or you’ll serve your customers so poorly that you start losing them.
Obsession With User Experience
A top-notch user experience is one of the best ways to attract new customers and retain existing ones.
While this may seem obvious, many local businesses don’t take the time for user research and to think about how their website looks and feels. It’s not just about your logo or color scheme but also how users navigate your site and what they see when they land on it.
For example, if you have a text-heavy site with lots of links and images that are difficult to read, users will bounce off your website very quickly.
This is why local companies must continue to invest in improving their user experience to attract more customers.
You don’t need to look much further than the tech startup founded in your own city and its obsession with user experience — this includes support resolution time, obsession with customer engagement, etc.
Local businesses lose out on many potential clients because they didn’t pick up the phone when someone called or their website was down for days.
Balance Between Revenue And Profitability
Small businesses can learn from the balance between revenue and profitability that tech startups try to keep.
Tech startups go through phases where their focus is on growth, and the rest is on profitability — bootstrapped businesses like gyms and salons do not have the means to grow without profitability.
So, the objective should be primarily on increasing revenue alongside profitability.
You can do this by expanding your service offering — going upstream and downstream from what you do.
For example, selling white-labeled products in-house, offering home-based services, etc.
Another way to increase revenue is by diversifying your business’s customer base.
For example, if you are a gym that offers personal training services, then you should consider offering group fitness classes so that more people can use your services at the same time and make more money from them.
To achieve this balance:
- Have a clear understanding of your target market’s needs, wants, and desires
- Research them
- Design the product or service based on them
- Test it out with real customers
- Adjust based on customer feedback received during testing
- Continue iterating until you find a sweet spot where both revenue and profitability are growing simultaneously
In addition, work out your billing and invoicing schedules so that there is always enough cash runway to run your daily operations.
Have A North Star Metric
Your small business is a startup, and for success, you should treat it like one. Just like tech startups, you must have a North Star metric.
A North Star metric is a key performance indicator (KPI) that you obsessively go after, and it’s the same thing with your business: find out what is your North Star and do everything to hit those metrics.
The North Star metric for your company should be something that will help you grow and improve faster than your competitors. It’s not just about making money; it’s about becoming the best at what you do.
For example, if you own a salon business, then the North Star would be something like increasing the number of premium payers (hair spa customers) or reducing customer churn rate (customer attrition).
Another great way is to have clear and realistic projections.
For example, if you’re trying to grow your business and make more profits, it’s important to know where exactly you want to be in one year or five years. Then, work backwards from there and find out where you need to get your business by the end of each quarter or each year for it to hit its target profit goal for that period.
The ‘Never Down’ Mentality And Execution
There are many things that a small business can learn from the ‘Never down’ mentality and execution of tech startups.
When successful websites or apps go down, they make news. In other words, they are almost always available to customers. Try to do that for your business.
This not only means keeping your online assets available 24×7 and avoiding cyber threats such as a DDOS attack. But also means you never keep customers guessing about your open and close hours. If you do not open at the promised time when the customer is here, you lose them forever.
The best way to do this is to keep your open hours posted on the web and in person. Don’t let any opportunity of creating a deep customer connection slip by your palms.
Tech startups (mostly) refuse to give up. Your small business success model should have a similar attitude towards problems and challenges it faces in its day-to-day operations.
In other words, if a problem arises, don’t let it get you down. A startup’s mentality is that it will come back up again after being down for a while because its body of customers is still alive and kicking.
Accept, And Pivot Quickly
Small businesses can learn from tech startups’ ability to pivot quickly and seize opportunities as they present themselves.
Tech startups are constantly changing their strategies based on what works best in the market at any given time — whether it’s an app launch, a new blog, a new customer acquisition strategy or product features (or all of them).
They’re always looking for ways to improve products or services for their customers, gain more users, scale up operations, keep costs low, or whatever else it takes — but most importantly — to make money.
Remember, pivoting doesn’t mean you failed. Still, you realized that your existing business model or offering isn’t working as expected, so it’s wiser to conduct proper user research and behavioral analysis and switch to something with a good product market fit.
The ‘Right’ Culture
The first thing to learn is that there are no shortcuts to success. To be successful, you need the right mix of talent and execution. You cannot hire the best people and then expect those people to execute well. You have to create a culture that supports excellence.
This is why it’s so important to have an executive team who can drive execution without micromanaging every step of the way.
A great way to tell whether you have the right culture is by looking at how long it takes for things to get done in your small business.
How long does it take for an idea or suggestion from someone at a lower level within the company to get passed up through a chain of command until it reaches its final destination? If it takes more than two weeks for this process to occur, then some work is left undone somewhere along the line, which needs to be corrected quickly.
Learning from the experience of a startup isn’t easy. Most startups fail, and those that are successful aren’t willing to admit it if they’re using a tried-and-true method.
And yet, there are ways for small businesses to emulate the rapid growth success of a startup without burning millions of dollars (which they don’t have in the first place) each year in the process.
By experimenting with new tactics, talking with other entrepreneurs, and adopting the mindset of a tech startup, your small business can grow exponentially—even if you don’t have millions to dump into marketing or research and development.
Ultimately, it all comes down to focusing on your customer and making them happy while using technology to improve that focus. It really doesn’t matter how small your company is or whether or not you’re working out of a garage; almost anyone can use these business tips.
Guest Author Bio: Anand Srinivasan
Anand Srinivasan is the founder of Hubbion, a suite of business tools and resources for small business owners.