A startup manager is accompanied every day by dozens of questions that require prompt solutions, but some require attention even before the project is launched. I’m Dustin Bratten, argumentative essay writer, and today we’re going to break down six main questions.
Question 1. What if the product “doesn’t work”?
This is, without a doubt, a risk. To reduce it, cast-devs are performed before development to gauge the product’s demand. A series of user interviews help determine how relevant the product’s problem is, how it is currently being handled, how many people care about it, and how much they are willing to pay for the product.
The more hypotheses a business tests, the better the chance of finding the one and creating a product that is in demand. To choose which product changes are worth trying, there are several methodologies. The most popular are HADI-cycles, RICE framework, and Lean Prioritization. A striking example of a radical change in the direction of a startup is the corporate messenger Slack. Initially, the team created a game, but it failed to gain popularity, but the chat for communicating with players turned out very well.
Although the principle of testing as many ideas as feasible appears straightforward, it is backed up by massive resources. In addition to the team’s vitality, you’ll need an appropriate IT infrastructure, with the keyword being “suitable.” It’s a horrible idea to buy your equipment and store it in the next room. It’s expensive and difficult to maintain, and its dependability and efficiency are dubious.
An alternative for business can be cloud servers, which can be purchased virtually on a subscription basis. Their capacity can easily be adjusted for current loads – you will only have to pay for the consumed resources rather than the actual hardware.
Question 2. What if a competitor enters the market before us?
The presence of a competitor is not necessarily bad news. It can mean confirmation of the hypothesis that there is a problem of the target audience, which can and should be solved with new products. Also, if the market is in the blue ocean stage, competing for an existing audience doesn’t yet make sense. In this case, competitors help develop the market and increase demand – this is the current situation with the need for fast home delivery. In addition, partnerships are possible with them, including purchasing one company by another.
Sooner or later, you will have to compete, and it is worth being prepared for a confrontation. One way to beat your competitors is to introduce new solutions faster than they do. Before launching a product, a company must buy hardware, find administrators, and go through several approvals. If you spend a lot of time on that, the new product may not be relevant after the release.
Cloud services help speed up the product’s launch on the market (or Time-to-Market). The fact is that a more agile business, whose hands are not tied by self-purchased equipment, is much more active and faster in rolling out new products and improving existing products. Its advantage is the ability to rent a server in a few minutes to test any idea and just as quickly shut it down without having to pay for extra resources.
Question 3. What if I run out of money?
Money will run out in any case, and the question is at what point. To be ready for that, the startup must have a financial plan, go through all the stages of growth and survive the valley of death. Depending on the phase, there are different ways to find funding.
Business incubators can help a young project. The most famous is Y Combinator in the United States.
Promising projects can come to gas pedals to accelerate growth. Additional financing, mentoring, expert support, and new connections await them there. If a funder no longer needs any of this, he can find a venture investor who will invest so-called smart money. In this case, the project will get investment and a partner with experience and understanding of the market. When the startup has grown stronger and is ready to turn into a full-fledged company, it goes through A-D investment rounds and prepares for an IPO.
A company’s expenses can generally be divided into capital expenditures (CAPEX) and operating expenditures (OPEX). The former is spent purchasing product licenses and patents, registering the trademark, repairing equipment and buying new ones, building additional facilities, and investing in software. Operating costs include employees’ salaries, money spent on outsourcing specific tasks, and the purchase of consumables. In short: CAPEX is a significant and very large investment here and now. OPEX is relatively small regular payments. For a startup with constant uncertainty, the second option allows it to develop quickly. In addition, serious capital expenditures can be unaffordable at this stage of development.
Not all CAPEX-type costs can be waived, but this list can and should be reduced. Sometimes it is much more convenient, cheaper, and faster to outsource a task than to invest a lot of money in its solution, search for the right specialists, and subsequent constant adjustments. The most obvious example of such a task for many people is buying and maintaining IT infrastructure. There is a widespread belief that it is better to spend a lot of money immediately, buy everything you need and never think about it again, at least for the next couple of years. Unfortunately, you will have to think about it, and a lot.
Difficulties begin at the stage of choice of equipment: the last two years it has been more expensive than usual, and delivery times range from one to several months. Moreover, the staff will need a specialist to pick up the assembly for the existing tasks and then set it up and maintain it. The salaries of such employees in an overheated IT market can reach several hundred thousand rubles a month.
Buying equipment on their own, the company ties its own hands – they have to squeeze the maximum out of it to make it pay back the investment made (and this, according to experts, takes two to three years). And when the project grows up, you will have to go through all these processes again. IT infrastructure outsourcing helps reduce capital expenditures and dramatically increases its flexibility. You can save money, rent something simple, and increase capacity as the project grows in the first stages.
Question 4. What if we lack competencies?
When a company grows, it constantly needs new employees. When hiring them, it is crucial not to lose quality and not put yourself in a situation where the bloated staff will not have enough tasks. You can initially outsource part of the tasks without reducing personnel and not paying them bonuses.
It is common practice in startups (and in larger companies) to entrust outside companies with accounting, legal support, recruitment of new staff, selection and scaling of infrastructure, and control over it. This can be done without detriment to the business and with a huge advantage, freeing up resources for priority tasks.
Question 5. What if we stop keeping up with constantly evolving technology?
The world, especially the technological world, is constantly changing, which is difficult for large companies to keep up with. Today the latest technology is an essential competitive advantage tomorrow, and it will become obsolete and require upgrades. Yes, businesses need to plan IT infrastructure in advance and prepare it for the potential increase of loads, but it is impossible to predict everything.
Flexibility is a crucial requirement of today’s world, and cloud services give businesses the technological variability they need. One of the pluses of IT outsourcing is choosing the best individual solution relevant to the current development moment. Plus, the providers are the first to access the hardware from the leading vendors. They test it and immediately offer it to their clients. Thus, customers get access to the most modern equipment and technological innovations.
Question 6. What if our project is not ready to succeed?
The classic story of a successful startup is long preparation and rapid growth. But you have to be prepared for success, too. A surge in traffic due to a news release, an online sale on Black Friday, or an ad from a famous blogger that caught the audience’s attention is an important test for the company and its infrastructure. If a growing business can’t handle the influx of visitors and the service is unavailable for a while — customers won’t come back, and bad reviews will close the door to new ones.
Stress testing shows how ready a company is for an increased workload. In this case, its infrastructure is intentionally subjected to a high load to determine how many simultaneous requests it can handle. In addition to such tests, it is necessary to monitor the loads and stable operation of the infrastructure constantly. Migration to the cloud allows you to delegate some important tasks to the provider:
- Professionals maintain the infrastructure.
- It can be quickly scaled up as the project grows.
- At any time, it can be expanded with the necessary services.