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8 Key Factors That Discourage Investors From Putting Money Into Your Startup

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Today’s ideas are tomorrow’s winning businesses. Ideas executed brilliantly and with proper investment bring your business success. That is how the world of business got the likes of Apple, Google, McDonald’s, Amazon and so on.

But why in spite of the brilliant and promising ideas at the core of their business, many startups fail to attract investors? Why do investors hesitate to put their money into some startups? Well, investors have reasons and only by deciphering these reasons we could get hold of some deterrent factors that hold them back.

Let us explain some of the vital factors that prevent investors from putting their money in the startups below:

1. Inefficiency or Absence of Leadership Qualities

Inefficiency is the most significant deterrent factor for pulling the success of most startups. This can also be referred to as the lack of leadership qualities. Investors always want to make sure that they don’t lose their money through a company that has an extraordinary business model but no efficient and skilled business leader to make it successful. When fetching investment from investors, you need to offer a clear prospect and detailed plan of how you are going to achieve the goals.

2. Lack of Trustworthiness

An investor puts his money on a venture purely on the basis of the credibility and trustworthiness of the business. This is why besides having a sound business plan with clear objectives, you need to establish the integrity in terms of the security of the investor’s money and how the fund is going to be invested to give results as per business plan.

If an investor has a feeling that the startup may not have enough customers to fulfil its financial liabilities or if it finds that the business is hiding some information, it may further push the trust of the investors down. Total transparency and establishing the faith of the business brand are crucial for finding investors in favor.

3. Lacking Experience in Business Management

You have a great business idea backed up by a sound business plan and solid trustworthiness based on your background, but you have zero experience in managing a business. This is a serious reason for an investor to deny making any investment in your business. An investor cannot put his money just to allow you trying and learning your management skills the harder and riskier way. Uncertainty is the single biggest turn-off factor for any investor and lack of managerial experience is synonymous to that.

4. Business Model is Not Sound Enough

You have a business idea, some efficient, competent and experienced professionals as leaders, the great stamp of trust and pretty much everything that make a company look promising. But what about your business strategy and business model? Are they sound enough to take on the market competition and challenges for business growth? Well, this is what investors are most interested in.

In most cases, a business model is what makes an investor think twice and even take a backward step from investing in a startup. After all, your business model and strategy will decide how your business and products will be able to withstand competition and become victorious.

5. Taking Investors for Granted

This is a big mistake on the part of many startups. Just by becoming confident in the potential and the soundness of the business model and prospect, a business can consider getting investors on board requires just a little effort and time. But in reality, getting investors on board is the toughest thing a business can think of.

This is why without proper and meticulous preparation, it would be foolish to approach investors for your business. Most investors receive hundreds of such emails and a similar number of approaches through other means and they coldly just let them pass. This is why you need to send them very detailed proposals backed by strong recommendations and referrals.

6. Targeting the Wrong Investor

Every business has a target customer base, right? Not all customers are interested in every product in the market. Similarly, not all investors are interested in your business. Investors based on their prior experience and industry exposure, put their money in businesses that they know like their own palm of their hand.

So, targeting an investor who has no interest in your business will only drain your energy and bring you unnecessary frustration. When you are seeking investors for your software startup, don’t approach someone investing in real estate business.

7. Non-Realistic Proposal for Funds

Investors normally come with huge experience of your industry and so they have a clear idea about the fund requirements for your business startup. Moreover, they already have invested in other ventures or have gone through many proposals. Naturally, they have every bit of estimate already in their mind. So, any proposal claiming a lofty and unrealistic amount will only face rejection.

This is why it would be wise to become meticulous about your estimation of the required fund and calculation of various cost factors. Have meticulous details about every facet of investment backed up by breakup of the costs. Only when you can convince them with correct estimation, investors can take interest in discussing the matter further.

8. Make Sure Your Product Solves a Customer Problem

Will any investor put money in building a simple calendar app now? No, simply because such an app idea has no value for the end users now. Will an investor put money in a product that has already been outdated and has no use? No, no investor has to even go through such a proposal for dismissing them.

Well, to fetch investment, your product must be thoroughly customer-centric. It not only has to solve a problem but has to deliver some competitive value in comparison to similar products in the market.

Obviously, finding an investor for a new business is not an easy task, considering the huge competition that businesses need to deal with. But, if your business idea is unique and you fill all those requirements correctly as mentioned above, finding investors may not be as tough as it sounds.

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Behavioural Segmentation: Definition, Types, & Examples

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When you’re trying to resonate with hundreds of thousands of people with varying needs and preferences, marketing segmentation is a must. This allows you to deliver messages and experiences that are highly relevant to different types of customers. Yet if you’re only limiting yourself to the basics such as demographic and geographical segmentation, your efforts will also have limitations.

While it’s important to know the age, gender, and location of your customers, these alone aren’t enough. You also need to find out what they do and how they behave to paint a clearer picture. That’s where behavioural segmentation comes in, allowing you to create even more relevant customer experiences beyond demographic and geographical data.

Read on as we take a deep dive into behavioural segmentation definition, importance, and examples.

What Is Behavioural Segmentation?

As the name suggests, behavioural segmentation refers to the process of segmenting audiences based on their behaviours and habits. This isn’t just limited to their buying habits but also includes what they do online – Which social media platforms do they use? When are they most active? Which news sources/publications do they follow?

This gives you a better idea of the unique needs and preferences of different audience groups. So you can use it to form a smarter marketing strategy that isn’t just one-dimensional. Keep in mind that behavioural segmentation shouldn’t be used on its own. Rather, it should supplement and add more substance and context to other types of segmentation.

Why Do You Need Behavioural Segmentation?

When you divide your market into several smaller segments based on common behavioural characteristics, it becomes easier to create targeted campaigns that will resonate with different types of people. The top benefits of behavioural segmentation include:

  • Better Personalisation – It allows you to target different audience segments with offers that are personalised according to their purchase habits. And you can also decide on the best channels and timings to deliver those offers.
  • Effective Prioritisation – It helps you identify your most valuable prospects so you can focus your time and resources to target, nurture, and convert them.
  • Behavioural Prediction – You can also predict how certain segments might behave based on historical behavioural patterns. This helps you prepare ahead of time and look for ways to influence the outcome.

Five Powerful Behavioural Segmentation Examples

There are different types of behavioural segmentation that you could implement. Here’s a detailed look at each and some real-life examples:

1. Stage in the Buyer Journey

This involves segmenting your audience based on where they currently are in the buyer journey – awareness, consideration, decision, or retention. This will allow you to personalise your messaging, offers, and experiences to boost conversions at every stage.

For example, Grammarly sent out offers to existing free users, encouraging them to upgrade to a paid, premium plan. This email won’t be sent to existing premium users. Rather, it’s only targeted to free users who are still in the “consideration” stage for Grammarly Premium.

Audiense blog - Grammarly email targeting free users

Buyer journey stage segmentation is a little tricky as a single interaction or behaviour isn’t enough to tell you where someone currently is in the funnel. Someone who’s already far along the conversion funnel may sometimes go back to an awareness-stage blog post to get a quick refresher, for example.

So for a more accurate reading, you’ll need to combine all the behavioural data from across multiple channels and touchpoints. This will give you a more comprehensive picture of where someone might be in the buyer journey and can be particularly useful for B2B behavioural segmentation.

2. Buying Habits

Buying habit segmentation involves segmenting customers based on the different ways in which they act throughout the buying process.

You could create different segments based on the unique factors that influence their purchase decisions, such as:

  • People who look at brand name when buying products
  • People most likely to be influenced by online advertising
  • People who look at a product’s utility to make purchase decisions
  • People who look to social media for purchase inspiration
  • People who are likely to be influenced by recommendations from friends and family

Audiense Insights, for instance, comes with a “Purchase Influence Factors” feature that gives you a detailed breakdown of what influences the buying behaviour of certain audience segments.

Audiense Insights - Purchase Influence Factors

You could also use this type of behavioural segmentation to further break down your audience based on how they typically shop. How many of them are prone to make impulse purchases? Are they more likely to prefer using credit cards to shop? How many of them are likely to be influenced by targeted advertising?

This gives you the insights you need to deliver experiences and create campaigns that will get each segment to convert. For example, email notifications about “Deals of the Day” could be enticing for impulse buyers. On the other hand, informative and educational newsletters may be a better option to target people who look at product utility before buying something.

One great example is how H&M runs ongoing Instagram ad campaigns, targeting existing customers who have often interacted with their ads in the past. Here, the segmentation is based on customers who are most likely to be influenced by Instagram advertising.

Audiense blog - H&M targeting existing customers who have often interacted with their ads

3. Service/Product Usage

Segmentation based on service/product usage is pretty much self-explanatory. It involves segmenting your audience into different groups based on how they’re using your product/service. So it looks at factors like frequency of use, duration of use, favourite features, and use stage (new users vs. seasoned users).

This is a great way to identify the reasons that might compel people to become heavy users and why some remain light users. That way, you can test different methods of marketing and nurturing to turn light users into avid users and to keep your heavy users from leaving.

For example, WordPress does a great job of welcoming new users and easing them into the experience. They send educational emails about how new users can customise their site and get more out of it. Through these emails, they also seamlessly talk about how new users should upgrade their plan to access more features.

Audiense blog - WordPress welcoming new users and easing them into the experience

4. Customer Loyalty

This involves separating your most loyal customers from habitual customers. Segmentation based on customer loyalty is crucial because it costs five times less to retain existing customers than to acquire new ones.

And it makes sense to know which of your customers contribute to the bulk of your revenue. That way, you can focus on how to keep them happy and maximise their value. And you could also narrow down on the key factors that might influence their loyalty. This will help you find more customers like them and implement smart strategies to nurture their loyalty.

Take a look at the highly personalised “Thank You” email that DAVIDsTEA sent to its VIP customers, for example. The email celebrates the company’s 10th anniversary and takes each VIP customer down memory lane. It details when and where they first bought something from the company, their favourite products, and how much tea they’ve bought.

This is an excellent example of how to segment your most loyal customers and keep delighting them so they don’t leave.

Audiense blog -  DAVIDsTEA highly personalised email

5. Benefits Sought

This involves segmenting your audience based on the unique value they look for in a product/service. You should be able to narrow down on this based on the features, benefits, and pain points that are most relevant to each segment.

For example, certain groups of customers may need skincare products to solve unique problems:

  • Sensitivity
  • Dehydration
  • Discoloration
  • Acne
  • Dullness

There may also be a group that want organic ingredients and another that looks at price. That means even if two people belong to the same demographic group, they may be looking for completely different benefits when buying a product.

When you separate your audience based on multiple benefits sought segments, you can develop messaging and offers that will be most relevant to each group. So for instance, you can display ads about vegan skincare to Instagram users who follow a lot of vegan-related accounts.

Domestika is an online learning platform that offers courses across different categories – from creative pursuits to marketing and business. But based on the courses you’ve bought in the past, they will send email updates about the latest offers you might be interested in. So if you’ve signed up for an illustration course before, you’ll get email recommendations for the best illustration courses to buy next.

Audiense blog - Domestika sends email updates about the latest offers you might be interested in

Getting Started with Behavioural Segmentation

When implemented properly, behavioural segmentation offers a multitude of benefits – from nurturing customer loyalty to personalising customer experiences. But you’ll need a strong combination of the right tools to get detailed insights into how your customers and prospects are behaving online.

For this, look no further than Audiense Insights. Using this platform, you can uncover a comprehensive breakdown of behavioural data including – buying mindset, online habits, media affinity, and more. Sign up for a free demo to get started.

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What if Elon Musk Ran Your Business? 4 Lessons From the Real Life Iron Man

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The story of Iron man and Elon Musk starts when Robert Downey Jr. visited SpaceX headquarters miles away from the setting of the first Iron Man movie back in 2007. The actor was inspired to base his character on Elon Musk’s personality. Ashlee Vance writes in Elon’s biography “both Musk and Stark were the type of men, according to Downey, who ‘had seized an idea to live by and something to dedicate themselves to’ and were not going to waste a moment.”

What blew Robert Downey Jr.’s mind about Elon Musk are the characteristics that make him an extraordinary business man. Follow along if you’re interested to know these characteristics and how they would affect your business.

Here are four things Musk would probably do if he were to run your business:

1. He would be more approachable

No matter how important and larger-than-life he gets, Elon Musk would still be approachable as a friend you’ve known for ages. For one thing, when one of his Twitter followers asked him whether he is bipolar, he responded “yeah” and then explained “Maybe not medically tho”, a level of humbleness you wouldn’t expect from the CEO of two million-dollar companies.  

His openness with the painful reality of his success is also what makes him a regular Joe who is there to “just take the pain” and make sure he really cares about what he’s doing. He is a man of unlimited success who reaches down to elevate his fellow human beings by sharing his uncertainties. You just have the feeling that his success is even accessible to you.

“Failure is an option here. If things are not failing, you are not innovating enough.” – Elon Musk

2. He would be more authentic

Musk’s approachability is more authentic than you might think. Even in his public speeches he rarely gets the know-it-all presumptuous perspective. He gets nervous, makes some awkward moves and jokes, gets lost in details, and frequently interrupts himself, yet as Justin Bario writes for Inc. magazine, these only show his authentic passion about his vision.

“When you truly believe in an idea, and you focus on sharing that passion with others, you tend to forget about the mechanics of speaking and presenting. Instead of focusing on being nervous, you become focused on your belief. This leads you to speak more naturally, and makes it difficult for listeners to turn away.”

Also his authentic visions for social betterment beat the self-serving goals of many other billionaires. Whereas most entrepreneurs tend to see their work as revolutionary and disruptive, Elon actually moves away from such bold claims and replaces them with the question “How can we make things better?”

In an interview with the Telegraph, he explains that “a lot of my motivation comes from me personally looking at things that don’t work well and feeling a bit sad about how it would manifest in the future. And if that would result in an unhappy future, then it makes me unhappy. And so I want to fix it. That really is the motivation for me. I certainly don’t believe in disrupting things for the sake of it.”

3. He would be a tougher business rival

The fact that 8 out of 10 businesses fail might be a good reason to believe that the remaining 2 should really be tough.  Elon’s businesses were never exceptional. Although he had netted $180 million from selling his online payments start up (later PayPal) to Ebay, he invested much of that money in Tesla and SpaceX, and he was constantly faced with financial issues to keep his companies up and running. In one case, when the news leaked that Tesla was left with its last $9 million, Musk promised to personally refund Tesla’s customers if the company couldn’t deliver the promised cars.

Even in SpaceX, things were not in full control. In August 2008, the third launch of SpaceX’s rocket, Falcon 1, failed and along with it three government satellites and the ashes of 208 people it carried were destroyed. This was already super costly for a privately held company.

Yet, such failure could never stop Musk from pursuing his dreams. In an interview with Wired just after the failed launch, Musk declared that he planned to do more launches: “We must get to orbit eventually, and we will. It might take us one, two or three more tries, but we will. We will make it work.”

Nearly a month later, Falcon 1 was successfully launched into space, and on December 23, SpaceX could seal a $1.2 billion contract with NASA to deliver its cargo to the space station in 12 rocket flights.

“Persistence is very important. You should not give up unless you are forced to give up.” – Elon Musk

4. He would spend more on innovation

The $30 billion market cap in 2016 could be the jackpot for many business owners. Although Musk could have enjoyed a bit of risk-free stability, in the same year he made another decision that left the business world in a shock.

In late 2016 he acquired SolarCity for $2.6 billion. This of course puts Musk in a better position to implement his master plan to “move from a mine-and-burn hydrocarbon economy towards a solar electric economy”, as he had declared in 2006.  But just when Tesla was beginning to gain some serious traction among people and when many CEOs would have decided to focus on their current products, Elon Musk decided to move forward and offer a big upgrade to his products.

The merger of the two companies is “logical” and “quite obvious” from Musk’s point of view. Tesla should be able to offer an autonomous sustainable-energy solution: electric cars, solar roofs that produce electric energy, and Powerwalls that store the electric energy produced in the day to be used at nights. It seems that for Musk, the need for more innovation is on the forefront of his business goals.

There is never a better way to learn effective leadership than by looking at the successful examples. Elon Musk is such an example. His approachability, authenticity, toughness and geekiness make him an iconic figure in the business world.

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18 Must Read Business Books for Emerging Entrepreneurs and Startups

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Reading is both relaxation and training for the mind. Who reads, dives into another world. Learning, entertaining and breaking out of everyday life for a short moment. One could go even so far as to say reading is the second most beautiful thing in the world! Whether it is non-fiction or a novel of all the world’s man has created, the book is the most powerful tool. That is also, why we wanted to find out which business book you should undertake in the new year.

Here are 18 business books you might not have heard of but you need to read:

1. Prediction Machines by Ajay Agrawal, Joshua Gans, Avi Goldfarb

The book “Prediction Machines” helps to classify the development of artificial intelligence and deal constructively with uncertainty about changes. The book first appeared in October and highlights the changes that AI inevitably brings with it. The three renowned economists give an overview of the possibilities of AI and deal with economic issues related to this technology. This book offers some illustrative examples of use.

2. Growth Hacking with Strategy by Hendrik Lennarz

The book by Hendrik Lennarz provides numerous tips and practical examples for the successful introduction of a growth hacking strategy for companies. The spectrum ranges from organization through product development to marketing and customer loyalty. The growth-hacking-readiness checklist is particularly useful here. In my view, the book is a must for anyone looking to maximize user growth.

3. 7 Ways to Effectiveness by Stephen R. Covey

A classic among the business advisers, which appeared in 1989, but has since lost none of its topicality. Covey describes the habits of successful individuals and derives universal principles from them. They help me both in my professional and personal life and are reflected in the successful development of extremely strong teams. The book is one of the most influential business books of the last 100 years, according to Time Magazine.

4. Digital Offroad by Ulf Bosch, Stefan Hentschel, Steffen Kramer

“Digital Offroad” shows that digitization should not be considered one-dimensional. It touches just every area of a company and must, therefore, be understood as a holistic challenge and an opportunity. The authors argue that digitization has an impact on a variety of factors, including corporate culture. Provocative thesis that reveal important questions, as well as best practices, make “Digital Offroad” an absolute must-read for me.

5. The Startup Code by Johannes Ellenberg

In seven chapters, the book sums up clearly and pragmatically what middle-sized companies can and must learn from startups. It clearly represents startups and why they are better prepared for the future. Johannes Ellenberg, who helped set up the startup scene in Stuttgart, explains how companies have to change their course and adapt to changing market conditions in order to remain sustainable. A new mindset is postulated: cooperation instead of competition!

“Reading is a way for me to expand my mind, open my eyes and fill up my heart.” – Oprah Winfrey

6. From Zero to One by Peter Thiel

“From Zero to One” is full of unconventional perspectives on starting a business. The basic idea of the Silicon Valley veteran Peter Thiel is to build something fundamentally new — a monopoly. He explains what has to happen to ensure long-term success and how to protect this monopoly from imitators. From the book, I was able to draw many valuable ideas for our own startup — a real must-read for anyone who wants to start their own business!

7. The Platform Revolution by Geoffrey Parker, Marshall van Alstyne, Sangeet Choudary

Although the book was published in 2016, the content is more relevant than ever. The authors clarify all important questions about the development of a successful platform business model and the concepts can be applied to both B2B and B2C. The examples are very practice-oriented and the analysis of how established companies can adapt to new requirements in the market is sound. Whether founder of a startup or established player in a changing market, this book is a must for everyone!

8. Artificial Intelligence by Peter Buxmann, Holger Schmidt

Holger Schmidt is an economist and journalist on platform economics and has even developed a stock index exclusively for listed companies with platform business models. In his new title, he and some colleagues are scientifically dedicated to artificial intelligence and its impact on the economy and society. The book deals with many myths and provides exciting facts and case studies. The book is very inspiring for me.

9. Fast thinking, slow thinking by Daniel Kahneman

This excellent book opens your eyes to the countless limitations and influences of your own thinking. It helps to reflect on how decisions and assessments – which you as a founder and entrepreneur must constantly make — actually come about and this often does not go as rationally as you would wish. Admittedly, it takes some time to read — definitely not easy reading — but it is worth it.

10. Founder to CEO by Matt Mochary

I can recommend this book to anyone because it covers the most important start-up and growth topics: competencies and motivation in the team, knowledge transfer and productivity, cash flow, finances and scaling — all in all, the perfect sweeping blow. Founders who are CEOs for the first time will find guidelines and answers for challenges. Long-time CEOs can use the guide to reassess their own and the company’s performance.

11. Rethinking Agility by Klaus Leopold

The book “Agile Rethinking” by Klaus Leopold is my book highlight for 2019. Just 136 pages of concentrated knowledge with precise illustrations of why agile teams alone are not enough if you want to re-think the entire company and be agile. A case study, which shows all the problems and the appropriate solutions in the practical example. My clear recommendation for every leadership team at C-level — from 50 employees to a global corporation.

12. The Startup Way by Eric Ries

Eric Ries is a Silicon Valley entrepreneur who helps large and small organizations with transformation processes. He helps them to focus on their customers and their requirements with little capital and lean processes in order to bring the right products to the market. Based on his experience of the past twenty years, Ries has developed a system of corporate governance that leads to stable growth and sustainable effect.

13. Homo Deus by Yuval Noah Harari

Yuval Noah Harari describes in his bestseller how people have striven to challenge the status quo from the very beginning. At the same time, he explores the question of what a world in which man has become “homo deus” through technological progress looks like. A must-read for the entire tech industry, which deals with future topics and looks for the appropriate modus operandi. Harari points out the potential of innovation and warns to think about developments from the potential end.

14. The Design Thinking Playbook by Michael Lewrick, Patrick Link, Larry Leifer

Design thinking is a great approach that defines customer needs and practical use cases for these needs for constant innovation. Too many companies are still pursuing an “inside out” approach, focusing on internal skills and innovation plans in the development of new services and products. The book provides a playful approach to the methods and tools used. It also provides sufficiently detailed and clear explanations for those who want to get directly involved in the practical application of design thinking.

Reading is to the mind what exercise is to the body.” – Joseph Addison

15. Smart Business – Alibaba’s Strategy Secret by Ming Zeng

Alibaba looks at some digital transformations we are about to face and which an almost unbelievable success is the group’s platforms attract more users than the US, and earn higher margins than Amazon. Alibaba’s chief strategy officer Ming Zeng, who is also a former professor, discusses the guidelines for the world of artificial intelligence. Spoiler: human creativity and innovative ability are essential.

16. Hard Things about Hard Things by Ben Horowitz

The book gives an open and realistic view of entrepreneurship, with all difficulties. Through the own experiences of the author and Silicon Valley investor Ben Horowitz, the tips and advice are very practical and have a real added value for the reader. After reading, you are prepared for the next lows as an entrepreneur. Many books and guides ignore the negative aspects of founding. That is not the case here. A real recommendation for every entrepreneur!

17. Digital Vortex by Michael Wade, James Macauly, Jeff Loucks

A vortex described in fluid mechanics is a mathematically not precisely formable circular flow, which sucks things with increasing speed into their center. Metaphorically transferred to organizations, they whirl chaotically along the flow, collide, merge or dissolve completely. They head for the center of the movement — a digital revolution. For entrepreneurs, the question of what role they play with their company in the wake of digitization is decisive. Therefore, the question of what incumbents should know as they move in the digital vortex is at the heart of the book.

18. Measure What Matters by John Doerr

My must-read for 2019: “Measure What Matters” by John Doerr. He describes how goals and responsibilities can be defined and controlled by means of objectives and key results. In particular, the case studies and knowledge resources in the book help to understand the approach and to find starting points for the implementation in their own environment. In summary, a very practice-oriented book that shows possibilities for direct involvement.

Image courtesy of Twenty20.com

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