If there’s one thing that we can learn from studying successful startups and corporations, it’s that there’s no singular path to entrepreneurial success. But at the same time, it’s clear that most high-growth startups do things a bit differently.
The Differentiating Factors of High-Growth Startups
Most startups start with a burst of momentum from the founder, slowly add some customers, and stagnate, before ultimately fizzling out. High-growth startups, on the other hand, take a much more proactive approach. Here are some of the things they do differently:
1. They Raise More Money
Inexperienced founders pick a conservative funding target and tend to raise just enough money to reach that goal. The problem is that conservative numbers rarely work for startups.
High-growth startups understand that something always goes wrong, projects always cost more than originally anticipated, and that cash has a way of evaporating in a hurry. So they raise more money than they think they’ll need. (This is typically done via a smaller number of bigger rounds.)
2. They Hire Great People
High-growth startups understand that it’s people who make a business successful – not products, buildings, or even ideas. So rather than skimp and hire the least expensive people, they pay a premium to bring in good people who will propel the company forward.
According to entrepreneur Feliks Eyser, “First-time founders hire one employee out of five applicants after just one or two job interviews. Second-time founders know that recruiting is their number one priority in growth mode.”
Second-time founders, who Eyser argues are much more likely to launch high-growth startups, work very hard to avoid bad hires. They make it their first priority to hire an outstanding recruiter. From there, they generally hire one exceptional employee out of 50-plus applicants.
3. They Know When to Outsource
It’s always nice to be able to hire someone and bring them onto the team in a full-time capacity, but high-growth startups also understand there’s a case to be made for outsourcing particular areas of the business.
“Companies in an accelerated growth mode must expand their marketing capabilities, but can’t add marketing talent at the same pace,” EAG Advertising & Marketing mentions. “Outsourcing enables companies to add incremental support in small, manageable doses so that marketing expenses rise along with sales.”
Knowing when to outsource versus when to hire makes a huge difference in the success of a young startup – particularly on the balance sheet.
4. They Iterate to Great
Slow-moving startups take weeks, months, or even years to plan. And once they do launch, they’re extra cautious. They want everything to be perfect before they take action. And while there’s nothing wrong with a desire for perfection, it has a way of paralyzing companies.
High-growth startups want perfection, too. However, they understand that it’s unrealistic. So rather than wait for something that will likely never come, they do it. Then they learn from their mistakes, continue with what’s successful, and iterate to great.
5. The Innovate in the Small Areas
No aspect of a startup is too small for innovation. From obtaining faster internet connection speeds of remote workers to streamlining how an individual part of a larger product is manufactured, innovation goes a long way towards growth and success.
6. They Focus on the Client
It’s impossible to build a successful startup – let alone a high-growth startup – if the primary focus isn’t on the customer. The formula for success is simple in theory, but requires careful, deliberate execution. It looks like this:
- Identify the target audience (including specific customer profiles within this audience).
- Ask your audience what they want and listen to the results.
- Build a brand that identifies with your audience and focus on high satisfaction.
- Develop habit formation among your target customers.
- Emphasize retention through continued value.
Too many startups position the brand as the hero, when the reality is that the customer is the hero of their own story. Instead, make the point to position your brand as the “guide” – shining a light or offering a specific tool so that the customer can solve their problems.
How Can You Set Your Biz Apart?
There are a million and one ways to set your business apart. But when you study the fastest high-growth startups, it becomes evident that they follow a rather simple formula. It involves listening more than talking, proactivity over reactivity, and a commitment to people over products. By reframing your startup in this lens, you can experience rapid growth, too.