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Top 10 Considerations to Focus Your Startup : Page 2

These ten points will help you focus your team, company model, and financial situation.


6) Time Horizons

Just like with financial stop-losses, try to set concrete time-horizon goals for yourself on when you think you should quit. Calling quits on a project is very difficult and emotional, this will have to be a calculated and disciplined move. Know your limits and stick by them. Failure is not the worst that can happen. Prolonged floundering is much worse. Many projects can drag on and on, so you have to set clear rules for yourself on when to quit and under what conditions. If the company does well, it is great and you don't ever have to act on these decisions, but if the company does not, to help yourself, set firm rules for yourself on when to get out. These rules can help you avoid spending too much time in a slowly dying company that never really lived.

Be careful not to make the time horizons too short, because it might prevent you for giving it a valiant effort.

7) End Goals

Go into business knowing where you want to take it. Do you want to own it for 20 years and be your own boss, and enjoy that lifestyle? Or do you want to sell it ASAP and just cash out? In either case, answer these questions for yourself and if you have co-founders make sure their goals match yours:
    1) Will I want to do this for that number of years?
    2) What will I do if things are progressing twice slower than I initially expect?
    3) What is the required financial investment on my part is larger than I expected?

8) Getting Site Traffic and Company Model

This is one of my favorite topics because customers are the lifeline of your business. You obviously won't know exactly what your customers will think about your product, but you should definitely have some vision on where you are going and how you want to get there. So ask yourself these questions;
    1) Will the product be something people might want to show off or recommend to friends? (Potential to go viral)

    2) Do I make someone's life better (Potential getting more inbound links to your site)

    3) Is it something really cool and new? (Will help attract customers not averse to unknown products)

    4) Will it be a high-margin business (Can afford to advertise)

    5) Will it be a low-margin business (Harder to advertise)

    6) Is it entering an overcrowded market with 800-pound gorillas, or just semi-crowded market? (Overcrowded markets are death traps as cost of customer acquisition is huge and pleasing them is harder as well)

    7) Does it fit well for social media? (Social media is very much about browsing and discovering, so if you can lure people to your site, will your business be catchy enough to make them stay?)

    8) Is it going to be fun and game-like? (Ties into the previous point)

9) Will The Company Be Able to Financially Support the Founding Team?

Consider the minimal amount of money the founding team needs to consistently carry forward. People can't live of savings forever and they have to ultimately earn a living. If one way or another you do not make enough money to keep afloat, it will crumble the company.

If the founding team is one person, the company only needs to make a thousand dollars or two to stay afloat until business picks up. If the founding team is 3-4 people, the company must bring in about 10k per month just to keep the founding team fed with a roof over their heads. The vast majority of sites out there do not make even $1k per month for a long time, so before starting to pile up co-founders and embarking on a business idea, consider

Whether the company will be able to sustain itself, how long it would take to get to that point, how the team can fund itself before it gets to break-even, and most importantly be realistic and not hopeful with these considerations.

10) Market Size

Market size is a very confusing topic because with Internet scale, all markets are absolutely huge; and they are. But for every huge market there are a number of 800-pound gorillas who take up most of it, and leave the bottom-feeders to fight for the rest of it. The competition for space in a crowded market is suffocating because it is very difficult to get attention of customers, and even once it happens it is very difficult to please them because they know they have abundant options. Marketing costs skyrocket, and it becomes impossible to monetize the users enough to make up for the marketing costs on top of the already existing development costs.

If markets are small, competition may be less fierce (sometimes more fierce because there is a smaller pie to divide) and they come with their own difficulties depending on why they are small.
    * If the market is small due to being new: there is increased risk that maybe the market as a whole won't take off, which usually means death for startups.
    * If the market is new because there isn't much money in it, a 1-2 person team might be able to give it a good try because over time, they'll out-compete the bigger-spending competitors.
    * If the market is small because it is local, it might also be winnable by a 1-2 person team and do well.
It is essential to understand the market you are going after, its difficulties and soft spots, and decide whether you will be competitive in it with the resources you have.

Alex Genadinik is a Java engineer. Throughout his career he has focused on helping build and run startups. For the last two years, he has been heavily involved in the Semantic Web space. He currently runs a Semantic Web startup Semantic Valley.
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