Heavy industry and innovation – are you familiar with the combination? Probably not. Industrialists are increasingly drawn to startups but are afraid to take risks. Here we will detail several tips for industrial startup development.
Start With a Problem
Brilliant ideas are born to solve a problem. Not vice versa. This may be obvious, but it is not easy. If you have an idea that can help people, you are on the right track. This is key in startup development or when starting a new company.
For example, Force Motion has made caring for loved ones easier. Foodger has figured out how to simplify grocery shopping and food preparation. Many people try to think about an idea to make money. However you should first have an idea and worry about cashing in later.
Note about creating the next big thing – be bold with your ideas! All startups were crazy ideas at once. But then they turned out to be an example of success.
Choose the Right Sales Channel
Choosing a sales channel is a process that any company faces throughout its life cycle. This is especially important in conditions of limited resources, at the initial stages of company development. The selection process is the constant construction and testing of hypotheses within individual HADI cycles, which are important to break down into small steps leading to a large goal.
During the testing process, companies receive useful insights for building correct communication with customers (taking into account all stages of the sale and all the features). In the process of this “building”, they begin to understand “who to go to”, making their sales system extremely effective.
Mico-Tech (wear-resistant mineral coatings) is an example in this area. For acceleration, the project team chose several sales channels, determining goals for each for the duration of the program, as well as criteria by which the effectiveness of each channel was assessed. Sending letters in conjunction with cold calling, attendance at industry-specific workshops, and participation in exhibitions were chosen. The client’s profile was also clearly defined. As a result of the program, seven pilots and 10 sales were made. In addition, Micotech managed to create a pipeline of clients.
Analysis and Identification of Bottlenecks
A significant number of problems, errors, and bottlenecks in projects at the early stages of development are quite similar. These can include the wrong choice of the target audience, sales channels, and monetization model. Thanks to competent analysis, a significant number of issues can be found (and then corrected) through comparison with similar stories and the exchange of experience with colleagues in the shop.
A good example in the current acceleration program is, for example, VR Concept’s transition to a subscription model. Before adopting this structure, the company planned on the sales of perpetual licenses. This switch allowed it to significantly simplify and speed up the process of selling its solution.
Simplify Instead of Complicating
A product that solves one problem well is better than one that somehow solves several problems at once – albeit not well. When launching a startup, focus on one feature and implement it well. After your product becomes popular, you can think about expanding the functionality. Otherwise, the device or service may turn out to be too complex. If this is the case, the value of which will be difficult to convey to the target audience.
The Importance of Piloting
For an industrial startup, any serious customer interaction starts with a pilot. This is where a potential customer can watch a proposed solution in action and see the real effect of what the company is doing.
At the same time, sometimes the positive results of piloting development in a large enterprise can provide a foundation for developing relationships with smaller customers and speed up communication with them. For smaller customers, approval from large enterprises can mean a kind of “quality mark” and additional confidence that it works and it works well.
Things to Consider When Starting a Project
There are many things to considering during startup development. Planning, diligence, and more diligence. In any startup, one of the most important qualities of a team is the ability to “drag” it in the early stages of development and have time to do everything. These tasks include the need to communicate with investors, work with clients, and monitor product development.
Therefore, in the early stages, it is important not to stop doing daily monitoring of tasks. You and the team must focus on the essentials and allocate resources in such a way as to support the growth of the project most efficiently.
Industrial Startup Perspectives
To assess the perspectives of industrial startups, compare them with startups in other industries. For example, the volume of investments in IT startups at the first stages is on average $500,000. For projects in the field of industry, $1,500,000 – $2,000,000 may be necessary. When asking how to finance a new business, the answer will be different depending on what industry the business will operate in. In addition, the first sales in the IT sector can go as early as six months, and in the industrial industry, the period of “buildup” is usually several years.
Another advantage of IT startups is that the specialists in this area are interchangeable and you can easily rotate teams if necessary. In industrials, this is more difficult. This is due to the fact that these types of companies need narrowly focused specialists. Another issue is that it can be difficult to replace them. However, there are international engineering marketplaces where you can find true specialists. How to hire world-class engineers? Just go to Engre.co where you can find any kind of services including mechanical design, software engineering, machine development, etc.
If we talk about the advantages of startups in the industrial sector, then, first of all, we note the high liquidity in case of force majeure. Typically, industrial projects offer unique products that have no competitors.
In the IT sphere, on the contrary, there is a very high level of competition. When it comes to revenue, we can say that the situation here is roughly even. The difference is that the industrial sector is more capital-intensive and has a higher turnover. Despite all the advantages, investors are not very willing to take part in industrial projects.
Industrial Startup Development – Summary
When thinking about startup development, industrial startups may not come to mind. When developing an industrial startup, there are several steps that are necessary that other startups don’t need to consider. This can be attributed to the fact industrial startups may need larger cash injections to get projects off the ground.
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