Startup Essential Workshop #4 – Business Development at Heart
Welcome back! Today we are heading into the fourth round of the Startup Essentials Workshop: Business Development at Heart with Stefan Steiner & Melanie Aregger.
Stefan highlights the importance of talking to your customers as early as possible. “Many startups fail because they produce something nobody needs,” explains Stefan. In other words, if your product does not solve a problem, then there is no need and thus no market for it.
Knowing your customer is tremendously important. Be as precise as possible: what is their age, location, background, income, and motivation to use your product? Then, break down your customer profile and customize your products based on those needs.
There are also different markets to enter: (i) existing markets, (ii), re-segmented markets, and (iii) new markets. Existing markets are difficult to penetrate in the beginning. Startups should look for niche markets first, test their product, and then grow their business from there.
Many startups struggle with losing track and working on too many ideas at the same time. Stefan refers to the book "Made to Stick: Why Some Ideas Survive and Others Die". The take-home message is this: just focus on one idea at a time!
Several acquisition strategies and tools exist – for instance, the AIDA sales model. Start with raising awareness, make the audience interested, create desire, and then it’s time for action: sell your product.
During early stages, the CEO is the only sales person you have. There is no money to hire sales representatives, and actually, you don’t want to – do it by yourself and get to know your customers intimately. This will help you continue to tailor your product and grow business. However, at a certain level of growth, you will need to establish a sales team. Weekly sales meetings are a great way to keep everyone updated about strategy, contacts, and possible clients.
Melanie Aregger gives an overview about InSphero – a biotech startup – and how they handle customer acquisition. “Sometimes it takes up to 2 years until you get the first payment on your bank account; you need to be persistent, don’t give up, someday the cash will flow.”
She outlines the importance of getting strategic partners in the beginning. “You cannot do everything by yourself,” Melanie advises. You need to have players around to help. Later on, you should carefully evaluate when it’s better to outsource or do tasks and projects in house.
Keeping a precise strategy and evaluating it occasionally is often forgotten in the day-to-day business. Many useful tools exist for defining strategy and business development, including Value Chain Analysis, SWOT, and Business Canvas. Instructions and guides for these can be easily found online.
Melanie finishes the workshop with the statement: “Cash is king! Revenue is great, but you need to have money on your bank account to survive. Make sure to plan in advance.”
– Christian Koch, ETH Entrepreneur Club