Traction Is Like Fuel for Your BusinessRachel Matson
Funding is critical for scaling and growing almost all startups. If investors are ignoring to fund your startup business, one of the main reasons is “You don’t have any traction!” It is nothing personal. Investors are in the business of “making money.” They are searching for investable businesses with the potential for an exit within 3-5 years with the least risk and 10-20x return on investment (ROI). They might even imagine/dream about a unicorn too!
Traction for startups is essentially proof that it will develop and grow into a successful and sustainable business. Businesses measure traction with metrics such as revenue, projected profit, lifetime value (LTV), customer acquisition cost (CAC), current users or customers, funding, and industry partners.
Investors look for company growth to help determine potential and provide reassurance that the people behind it are trustworthy, coachable, and have more than just a good idea. Remember, 9 out of 10 startups fail within the first 5 years; 50% of them do not survive beyond the first 12 months. The startup is a risky business.
Business success is dictated by the team- its attitude, mindset, resiliency, unified vision, and goals. One of the main reasons for startups failure is co-founders’ chemistry and whether they are team players and coachable.
Business success is also dictated by customers, competition, market trends, and the ever-evolving ecosystem. Product/Market Fit and Tractions are the foundations for every business: large, small, or startup.
Get-Keep-Grow is one of the simplest strategies to achieve business traction and ultimately your business success. It takes a holistic analysis of your product/market fit, customer relations, and customer channels. It involves customer acquisition, converting them into loyal customers through a wow experience, and who then become your sales/brand ambassadors/evangelists. You strive to grow the business through referral/word-of-mouth marketing and achieving a viral loop. Your marketing expenses can go straight to your bottom line!
The secret formula for success is to be obsessed with the customer experience. Address their pain, worries, and wishes. Make customers “can’t live without your product/service.” It is not rocket science. It is a very simple approach. All very successful businesses have very simple Business Models. Some examples are: Apple, Google, Microsoft, Netflix, Costco, LinkedIn, HubSpot, Wawa, Whole Foods, Lego, Ikea, to name a few.
Simplicity is your best competitive edge.
Here is a great success story. Worth watching this 10-minute Shark Tank video. We can all learn some important business as well as pitching skills from this 15-year-old high school freshman, Carson Grill.
Shan Shanbhag, Ph.D.
Mentor and Business Development Advisory
Principal, Shanbhag Enterprises