In today's fast-paced, ever-evolving world, there's been a surge of startups, and you may have come across the term 'unicorn.' What exactly is a Unicorn, you wonder? In its simple terms, a unicorn, coined by venture capitalist Aileen Lee in 2013, is a privately-owned startup that has not been registered as a listed company, and is valued at over $1 Billion.
This being the highest peak when the business is still categorised as a startup, many entrepreneurs aspire to reach this level of success. While this success is rare, where only 0.00006% of all startups globally reaching this level, the question on how can someone turn a simple idea into a billion-dollar business arises. What does a startup have to do different in order to become a Unicorn?
Scalability becomes the key element that drives a startup towards becoming a Unicorn. Here are few key steps you need to have covered in order to achieve that status:
1. Begin with a Robust Idea and a Defined Problem-Solution Alignment
Every successful business starts with a simple yet great idea. But just having an idea isn't enough. To make sure your startup is scalable, your idea must solve a real problem that people or businesses are willing to pay for. This is known as *problem-solution alignment*.
This problem might be something that you yourself have faced or have noticed someone else having. Begin your efforts by pinpointing a particular problem or gap in the market. Confirm the issue is real and learn what your target audience is looking for specifically, by conducting thorough market research. Your solution should not only address the problem but also provide something different and unique compared to your competitors.
Followed by identifying the problem and its solution, you should concentrate on creating a minimum viable product (MVP), which is a simplified version of your product that has all the essential features plugged in to address the issue. This is your guinea pig. The MVP helps you test your concept, collect feedback, and make necessary improvements based on real user interactions.
2. Devise a Scalable Business Model
Any strong business idea should be backed by a scalable business model. What does scalable mean? This means your business can grow quickly without a similar rise in costs. This requires a model that has three key elements; easy to replicate, efficient, and adaptable.
For example, many successful companies like Airbnb and Uber use what is being widely adopted in the present day, the platform business model, where the company plays the role of connecting buyers and sellers. These platforms grow fast because they don’t own the assets themselves.
3. Establish a Robust Team and Organizational Culture
At the core of every successful unicorn, startup or mega corporation is a robust, diverse, and skilled team. As a founder, in addition to sourcing funds appropriately, one of the other primary duties is to assemble a group that aligns with your vision and possesses the capability to implement the business strategy effectively. Hence, it is crucial to recruit the right individuals – who possess high expertise in areas which may not be your strongest suit which can be any integral part of your business such as product development, sales, and or marketing.
Another vital part of the process that’s equally important is the development of a culture that promotes innovation, teamwork, and resilience. Having a flexible and purpose-driven team can be that unique element that helps navigate the startup through turbulent times and towards becoming a unicorn. Notable unicorn founders like Elon Musk of Tesla and Brian Chesky of Airbnb themselves have highlighted the importance of fostering an organizational culture that not only attracts exceptional talent, but also propels long-term success.
4. Integrating Technology and Automation
Without any doubt, efficiency plays an important role as your startups begin to grow indicating the need for increase in productivity and output, lowering costs and minimising unforeseen costs. The ability to scale in response to this increased demand heavily relies on the implementation of technology and automation. Implementing the right technology helps startups to address all of the above-mentioned requirements and eliminates any potential threats or lack of resources that may arise in the future.
For instance, investing in tools and or software that facilitate efficient scaling such as Cloud computing services; AWS or Google Cloud, automation solutions for marketing; META tools, Hootsuite, or sales; salesforce, Pipedrive can save your team’s time, allowing them to focus on strategic initiatives and growth.
5. Prioritizing Customer Acquisition and Retention
Yes, attracting new customers is important for a startup, but customer retention is the key for continued success since a loyal customer base acts as the guarantee to a consistent revenue stream, reducing churn. Work on creating that positive customer experience in order to create a loyal customer base which will transform early adopters to advocates in the long run. This would eventually help the startup grow in terms of revenue and support long-term brand building.
6. Obtaining Funds at the Right Time
As your startup develops, you will eventually need outside funding to scale. This could come from many sources such as venture capital (VC), angel investors, or crowdfunding. Getting the right investment at the right time is essential for your growth.
There will come a point at which you will eventually require outside funding to scale, as your startup develops. These funds could be obtained from multiple source such as venture capital (VC), angel investors, or crowdfunding. Keep in mind that getting the right investment at the right time is key. Hence, before seeking investors, concentrate on gaining traction with your MVP and demonstrating your growth potential since investors are only intrigued by and invested in startups with a strong foundation and a well-defined growth strategy.
Although there may be a number of sources, it’s imperative to be selective in choosing where your funds come from. By making sure your funding rounds are aligned with your business goals, and raising only the required amount of funds, you can ensure your ownership stake is maintained.
Creating a successful startup is not a walk in the park as it requires a strong vision, strategic planning, and continuous hard-work. By following all the explored steps above, you can build a scalable business that would transform itself into a unicorn.