Profit Income of Market Strategy (PIMS) research programme analysed performance and key success factors of thousands of business including performance of tart-ups in their first 5 years of life.
What are the key learning points for profitability and growth of start-ups from this research?
Rule #1 – Profitability is not a useful success metric for start-ups, as PIMS research shows that these start-ups which made money in 1st or 2nd year of operating performed worse later
Rule #2 – The key success metric of start-up success should change as the start-up progresses. It should vary from customer value in 1stand 2nd year to market share in 3rd and 4thyear to human resources and capital productivity later on
Rule #3 – Successful start-ups are aggressive on nearly everything. In increasing market share, which is single most important metric for start-ups –aggressiveness in marketing, business development, external support or consulting is essential and pays off
Rule #4 – Successful start-ups are clever on price, and what’s proved the best is aggressively huge product or service discount that competitors cannot adverse
Rule #5 – Start-up where the environment favors you and look for segments with few competitors
Rule #6 – Rule: Use customer value as a key driver of your choices – reason for existence of start-up is to deliver superior value to customers
So are you waiting on a lightning strike?