How to Build a Lucrative Startup

February 17, 2013

12:00 pm

Vision and strategy are both essential in creating an effective startup. However, you can’t have one without the other. Here’s why: A vision points you to where you want to be. A strategy, on the other hand, outlines how you are going to get there. Most startups have enticing ideas, yet creators many times lack a plan to reach specific goals.

Wondering how to ensure both and build a lucrative business?

1.  Take charge.

You, as the founder, are the pilot, not the engine of the company. Remember that. Focus on creating scalable processes that are independent of the core founders and first few employees you bring into the fold. Eventually, you’ll want to focus your time on complicated questions that may lead you to building viable strategies, rather than the minutiae of daily operations.

 2.  Limit your goals.

While it is easy to say “yes” to every opportunity that arises, you should be disciplined in your focus. Your time and resources are limited. Whether it’s providing superior customer service or leveraging technology to drive down costs, outline the areas where you want to win, and think about how you’re going to accomplish this.

3.  Embrace change.

Be bold and implement modifications that are the best fit for your brand. Early on in my company, for instance, we employed a number of private tutoring directors who were not interested in significantly growing the company. More importantly, these employees had difficulty embracing significant changes to our website, our processes, etc. We eventually chose to part ways with those initial few hires. As a result, we were able to recruit new employees who were much better fits for our long-term vision.

4.  Consider strategy before growth.

Before focusing on growth opportunities, build a feasible business model. It is precarious to generate a client base and then determine how you will bring in meaningful revenue. For instance, many tech-based companies tend to establish a large number of followers and then later scramble to figure out how to convert those followers into paying customers. Instead, put an effective strategy in place from the start. If your product or service truly adds value to people’s lives, then they will be willing to pay for it.

5.  Surprise your customer

How can you meet customer needs in unexpected ways? This is a key question to ask. Problem identification is just as important as problem solving. Think about little setbacks or annoyances that people tend to view as “part of life.” Being conscientious in this manner may lead you to opportunities for a new business.

One example of this ingenuity is Netflix. Rather than following the business model of seasoned companies like Blockbuster, Netflix saw a need for flexible, easy movie rentals. Rocket Lawyer, which provides basic legal services for a flat monthly fee, is another example of turning a long-standing business model on its head.

Everyone has ideas. If you want to provide a great service and make real money doing it, consider your strategy. A great strategy can allow you to make an impact with your ideas — and fulfill your vision.

Guest writer Chuck Cohn is the founder and CEO of Varsity Tutors, a tutoring service in New York, NY and 15 other metro areas.

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