How to Grow Your Startup: 8 Steps to Grow Your Business

You have successfully launched your startup. This is an important and bold first step. You have a lot to handle – satisfying your customers, delivering products & services, managing your finances, statutory and legal requirements, etc. You also need to plan on how to grow your startup.

In this article, we will discuss the following topics:

• Why does a business need to grow?
• Need to build the right product/service
• How to Grow Your Startup: 8 Steps to Grow Your Business

Let us next take a quick look at why a business needs to grow.

Why Does a Business Need to Grow?

Growth is essential for any business – big or small. Growth is vital for long term survival of your business for the following reasons:

• Get to a size where the revenues can cover your costs enabling you to make profits
• Enable you to respond to market changes and demands
• Innovate products and services to better serve customers
• Handle competition and retain market share
• Increase the stability of your business

Before we dive into how to grow your startup, we will quickly discuss about a fundamental issue – do you have the right product/service?

Are You Building the Right Product/Service?

An IBM Institute study finds that 90% of Indian startups fail within the first five years of inception. How can you ensure that your business succeeds?

You can increase your probability of success by ensuring that you are building the right product or service.

How do you know that you are building the right product or service?

The right product/service:

• solves a real user problem
• is something that users want and are willing to pay for it
• solves a problem that is big and has a large market
• if competently executed, is likely to succeed in the market

If your startup has the wrong product or service, it is likely to fail irrespective of how well you execute.

In the rest of this article, we have assumed that you have the right product/service for your startup. Since you have product-market fit (we have assumed this), we will now focus on how to grow your startup.

How to Grow Your Startup: 8 Steps to Grow Your Business

In this section we will discuss the following 8 steps to grow your business:

1. Create a Great Team
2. Focus on Initial Users
3. Be Flexible
4. Get Your Positioning Right
5. Control Your Spending
6. Measure Your Progress
7. Invest in Digital Marketing
8. Get The Right Investors

1. Create a Great Team

You must focus on creating a great team. CB Insights conducted a survey in 2019 with 110 startups that failed. The survey objective was to identify the top 12 reasons for failure.  One of the reasons identified was not having the right team.

To start with, you need good Co-Founders who will complement your skill sets. There is no ideal number of Co-Founders. Some studies indicate that startups should have at least 2 Co-Founders but not more than 4.

You must also focus on hiring the right team members – who have the right experience, skills and attitude. Moreover, you need to align them with your startups goals, mission and culture.

2. Focus on Initial Users

“It’s better to have 100 people that love you than a million people that just sort of like you.”

Paul Graham

You must ensure that your initial users simply love your product/service. They need to be your greatest advocates and evangelists.

Focus on the overall service and experience that you provide to your customers. As a startup, you can be extremely agile and provide a far better customer experience than your larger competitors. This will also ensure that you are able to retain your initial customers.

3. Be Flexible

You need to keep an open mind, as a startup Founder. You must learn from the market and let the right approach evolve.

Failure is a part of startup life. You must fail fast, learn fast and move on.

You need to be flexible and adaptable and be able to change directions rapidly based on market demands and opportunities.

4. Get your Positioning Right

Positioning defines how your product/service is a leader at delivering something that a well-defined set of customers cares a lot about. Positioning is the single greatest influence on your customers buying decision.

A proper positioning exercise for your startup will help you to identify the following:

• Customers: who care a lot about the value that you are delivering
• Markets: that you can win

For a detailed analysis of how to position your brand, you can read a case study here.

5. Control Your Spending

One of the top reasons why startups fail is they run out of cash and fail to raise new capital.

You need to have a tight control over your spending – both fixed and variable costs. As a startup, you will need to learn, adapt and change your course.

Your success will depend upon the number of experiments you are able to make before you run out of money.

You can use the following approaches to control your expenses:

• Minimize your overhead expenses: For instance, you can work with a remote team instead of setting up an office space.
• Hire only when you need: You should plan your team members based entirely on your revenue and growth plans. You can initially work with freelancers on a project mode.
• Don’t invest in expensive technology: In the initial stages, focus on handling operations manually to the extent possible. Do not invest in expensive technology and automation platforms that you will need when you scale up.

6. Measure

What gets measured gets done.

You will need to monitor what is working and what is not. This will help you to focus your efforts. While revenue is a very important indicator, there are other metrics to measure growth.

We have listed below some of the key metrics to measure your startup growth:

• Revenue Run Rate: This is a measure of how much revenue your customers generate in one month.
• Burn Rate: This indicates how much money you are spending every month.
• Cash Runway: This is a measure of how long your money will last. To calculate your cash runway, divide your cash balance with your monthly burn.
• Customer Acquisition Cost (CAC): This is the cost of getting a new customer. To calculate your CAC, divide your sales and marketing expenses during a period by the number of customers acquired in the same period.
• Customer Lifetime Value: This is a measure of how much revenue you got from your existing customers during their relationship with your business.

7. Invest in Digital Marketing

Marketing is the catalyst that drives sales.

Even for businesses that rely on brick-and-mortar stores for their sales, marketing is predominantly online – digital marketing. This is because your customers are online and you simply need to be where your customers are.

Some of the most effective digital marketing techniques to grow your startup are listed below:

1. Website
2. Search Engine Marketing (SEM)/PPC (Pay Per Click) Ads/Google Ads
3. Search Engine Optimization (SEO)
4. Content Marketing
5. Email Marketing
6. Social Media Marketing

For more details, please refer to our blog post on how to increase sales through digital marketing.

8. Get the Right Investors

In an earlier point, we have discussed that one of the top reasons that startups fail is that they run out of cash. If you have the right investors for your startup, they will help you to overcome financial obstacles and also develop and grow your business.

Your investors can help you in the following ways:

• Help to raise additional financing
• Validate your business ideas
• Share business contacts & introductions from their network
• Provide expertise and guidance
• Bring credibility to your startup

We will next answer some of the frequently asked questions related to the topic of how to grow your startup.

Frequently Asked Questions (FAQ)

(a) What are the 4 growth strategies?

The 4 growth strategies are:

1. Market Penetration: increasing sales of existing products in an existing market
2. Market Development: selling existing products in new markets
3. Product Development: introducing new products in an existing market
4. Diversification: entering a new market with new products

The above model is based on the Ansoff Matrix. Read here to learn more about the Ansoff Matrix.

(b) How long does it take to grow a startup?

Although every business is different, most startups take 2-3 years to become profitable. It can take around 7-10 years for a small business to become truly successful.

(c) What are the 5 key elements of a startup?

The 5 key elements of a startup are:

1. Right Product/Service
2. Great Team
3. Adequate Funding
4. Passion & Commitment
5. Proper Execution

How Can Your Marketing List Help You?

Your Marketing List can help you with your digital marketing requirements. This is a platform started specifically to address the following challenges of businesses:

• What digital marketing services do I need?
• How can I find the right resources for this?
• How do I ensure that I get quality work in time and within my budget?

If you are interested to learn more about how we can help you, do connect with us.

To learn more about topics on business strategy and digital marketing, you can read some excellent articles in our blogs section.

Other References

If you are interested to get more tips on how to grow a startup, please refer to the following articles:

• 13 Secrets for Growing Your Business Quickly
• 5 Tips For Growing And Expanding A Startup
• How to Grow a Small Business in 10 Easy Steps