A good product can't guarantee the success of a start-up; but it's not all about luck either. According to CreativeHQ, a group that has been guiding start-ups for over a decade, there are critical elements that can determine whether a start-up will survive and thrive. Conversely, there are also clear alarm bells for when a start-up needs to be shelved (referred to by CreativeHQ as "drowning the puppies"). Read on to find out more.
CreativeHQ is a start-up helper organisation that was founded in New Zealand 12 years ago. It runs a series of incubator and accelerator programs and has helped assisted 150 start-ups. Needless to say, CreativeHQ has a lot of insight on start-ups, having seem numerous businesses succeed and fail.
Stefan Korn is the chief executive at CreativeHQ and he's quick to dispel some of the myths surrounding how to get start-ups to thrive. Contrary to popular belief, he said, throwing start-ups into cool co-working spaces and getting all these bright minds to work together doesn't really do all that much.
While it's nice to think that start-ups is about working hard and playing hard, especially at decked out co-working spaces fun décor and leisure areas, what really helps entrepreneurs succeed with their businesses are structured programs that constantly pushes them achieve greater things and to regularly re-evaluate the value of their existence. We'll come back to that later.
Start-ups require discipline and that's where CreativeHQ comes in — to crack the whip.
"At every step of the way, we don't let them launch anything unless they're really clear about why they're doing it, how they are measuring the success and how they will know if something is working or not," Korn told Lifehacker Australia. "You need to have that set up before you do it."
Another factor for success is timing.
"In a lot of cases, start-ups either launch their products too early or too late into the market, so timing is crucial," he said.
The other thing start-ups should consider is to think globally from day one, which is not a new piece of advice but Korn does clarify that this doesn't necessarily mean you need to move your operations to the US. Silicon Valley does have the appeal of being a melting point of talent and innovation but he noted that there is currently a backlash against start-ups that operate there.
"People and investors are tired of the ego stories that come out of Silicon Valley so we tend to focus our start-ups' efforts in other markets like Asia and Europe, although the Brexit has made that latter a bit more interesting given our target market there is the UK," he said.
Korn stressed that with internet connectivity, it's not difficult to run your start-up anywhere that has a decent broadband connection so there's less incentive to shift operations overseas. Although, I suspect that may be a comment that is specific to New Zealand, given they have a decent broadband network and more Government assistance for start-ups.
But part of a start-ups journey may also involve throwing in the towel; the earlier the better, according to Korn.
"We give start-ups the opportunity to say 'Well, actually, we don't have what it takes so we better pack it up now than waste more money'. We need to be on top of them all the time about this, probably for the first 6-12 months," he said. "After that, if they're not self-sufficient, they need to be shut down."
That doesn't mean that it's the end for the entrepreneurs associated with the canned start-up; it just means they can move onto a different project that may bring them more success. But it's never easy to let go.
"It's very difficult. We call this 'drowning the puppies'," Korn said. "A lot of people, certainly in New Zealand — we have a predisposition to avoid crucial conversations anywhere but particularly with new business ideas.
"Nobody wants to do it but if we don't then it becomes a phenomenal waste of time, money and effort."
Spandas Lui travelled to New Zealand as a guest of Positively Wellington Tourism.