Everyone has or once had an idea.
An idea which he/she thought to be worthy of calling “revolutionary” in the business world. While some ideas indeed are revolutionary, some just aren’t that good. And some despite being amazing ideas, couldn’t turn into successful startups. The first step towards building a successful startup is to understand what being an entrepreneur is.
Getting your startup running successfully isn’t an easy task. But we bring to you, your personal guide to walk you through each and every step that you need to take, to startup. And just to understand the entire concept better, we will consider the example of OYO, while understanding the concepts.
A startup or business can only be successful if it is solving a widespread problem. The first step you will need to take is to find a problem that a large sum of people encounters. You might already have an idea that solves a problem for the mass. If not, talk to people or find out by observing. A good way to find a problem that needs to be solved is by looking for them in yours and your friends/ family’s life.
If we take the example of OYO Rooms, one of the major problems they found was travellers not being able to pre-book good quality rooms at a reasonable price. Another problem it solves is finding new customers for hotels throughout the year.
2. Ideation & Solution/Validation
Once you have found a problem, it is time to come up with an idea that actually solves the problem. After you have brainstormed the initial idea, research to see if the solution actually solves the problem. You can even look for existing businesses based around your idea and innovate their idea a little.
If we take a look at OYO Rooms on a more foundational level, they solve the problem of not finding quality room stays at a reasonable price by partnering up with hotels around India. The visitors would be able to see the list of OYO rooms in different places on the website and book their stay as per their needs.
3. Build your team
If you are starting out in college, then there is no better place to look for people to work with than your college. You will find some incredibly talented people at your campus. You just need to determine if or how they can be helpful to you and your business.
Start by making a list of all the required positions, write the responsibilities associated with each position, and hire people that are a good fit.
OYO Rooms was founded by Ritesh Agrawal but as it grew in size, he started building his team. Similarly, you could venture into a solo-business journey and find people as you learn and expand, the emphasis being on finding people.
4. Customer Persona
This is probably where most startups fail. Research plays a huge role in understanding whether your business is going to be a profitable one or if it’s going to keep costing you money.
A big part of the research phase is understanding your ideal customer. Customer or buyer persona refers to a semi-fictional character that will be your ideal buyer.
You create buyers persona by getting in your customer’s shoes, representing the key traits of a large segment of your audience, and using the data collected from user research and analytics.
A buyer persona helps you understand the needs of your customers, their behaviours, and their concerns. They help you understand your ideal client and help you target them better.
Take these simple steps to create your own buyer’s persona:
- Research your target audience : To get started, look at your current customer base and/or take surveys of people in your college or around you.
- Narrow down the common details : Once you’re done with your research, start highlighting the similarities amongst them. Then sort out the ones that are important for your business like age, gender, occupation, skill sets, interests, hobbies, behaviours, etc.
- Start separating : You need to start organising your buyer personas. Start separating them into groups based on their mutual interests, challenges, and goals. You might also need to go back to step 1 and conduct some more research.
- Give your personas a name : Assigning a name might seem unnecessary but doing so will help remind you that you are speaking to an actual person while pitching or writing e-mails.
5. Customer Validation
This is the phase in your startup where you start handing out your product on trial-basis to the public. You start conducting interviews and surveys to validate your customer’s needs and understand their perception of your product and experience while using it.
Customer validation also helps you understand your product’s quality, capabilities, and room for improvements. This phase holds its importance as it helps you establish and maintain good customer relations, make sure your research is correct, and develop a business model that reflects that information.
One of the ways OYO Rooms perform customer validation is by asking about the stay experience to their customers.
Here are a few tips for better customer validation:
- Set up a customer validation process in the early stages of your business
- Focus on learning what your customer personas want
- Make your interviews long enough to ask all the questions and make it count
- Conduct many interviews to get a sense of your potential market
- Arrange face-to-face interviews as often as possible. It helps you note their expressions, body language, and understand them better.
- Let them talk more, you simply ask questions.
- Don’t get too eager to present your product or solution. Listen first and then show what you have.
- Document your interviews or surveys and reflect upon them to find similarities
6. Marketing Plan
A good product isn’t the only thing needed for the success of a business. Without proper marketing, the market wouldn’t know about your product and not enough people would convert into customers for you to make a profit or even sustain your business.
A good marketing strategy help discover the areas affected by organisational growth which results in creating an organisational plan to cater to the customer needs.
OYO Rooms strategies are based around attracting customers with a lower-priced room from the base hotel room. They promote mainly on digital advertising platforms such as Google, Facebook, Instagram, etc.
Here are five important steps anyone trying to create a marketing plan should take
- Define your business goals : A sound marketing strategy must always be aligned with your business goals. With your goals and objectives set, knowing what you need to build a marketing strategy, developing an action plan, and measuring results become simpler.
- Set goals and budgets : These are your marketing goals which are realistic such as grow leads by 10 percent this month or gain 10,000 social media followers. Once your goals are set, you need to devote a budget to achieve those goals. A general rule of thumb is to use 6-12% of gross revenue into marketing. You will need to use the higher end in the foundational phase of your business.
- Use your target personas : You will need to customise your marketing approach for each group of individuals. This is where the previously collected target personas will come in handy. Use them to perform precise-targeting.
- Create a plan : It is time to use all the gathered information to create a plan and execute it. The most effective way is by creating marketing campaigns. Think of campaigns as a list of activities focused on a common theme or goal. Campaigns can be used to promote anything from a new product launch to a new blog aimed to increase website traffic.
- Organise and measure : Finally, you will need to organise your marketing efforts and place a system to measure its results. This is important to help improve results from your marketing efforts and ensure that you are operating within your budget.
7. Business Model
The most important step in building a successful startup is developing a business model. Simply put, a business model is a plan for the successful operation of a business. It is made by identifying the sources of revenue, the ideal customer base, products, and financing details.
A proper business model will help you answer questions like
- What will help you create customer value?
- How your business will stay competitive?
- What will be the expected revenue and cost?
- How will the customer find out about your product/service?
OYO Rooms began by partnering up with hotels, leasing some rooms, and selling them under their brand. In other words, their business model used to be of a hotel aggregator. Now they’ve moved more towards the franchise business model.
While coming up with a business model for your business, keep these elements in mind:
- Establish your business process : Understand the activities that are required to run your business model. Then go ahead and develop a process and work-flow with regards to the priority of the task
- Register key business resources : This is where you answer questions like what would your company need to carry out its daily processes, finding new customers, and reaching business goals.
- Develop a strong value proposition : Come up with a strong Unique selling proposition (USP) for your business. It will help your customers determine what exactly your business offers and how it stands out against your competitors.
- Identify major business partners : While developing a business model, select key partners, like suppliers, strategic alliances or advertising partners. No business has been able to convert into a successful one without partners.
- Create a demand generation strategy : You will need a strategy that generates interest in your business, attracts leads, and closes sales. Create a blueprint of a customer’s journey and register their key motivators for taking an action
- Keep some space for innovation : As a beginner, your plans and strategies are going to be based on many assumptions. So leave some space for improvements, experiments, and innovations.
8. Revenue Model
A revenue model is a framework that states and explains the strategy of earning revenue of a business. It is a key component of any business model as it identifies the value of a product or service, the revenue sources, and the techniques used in generating revenue.
OYO Rooms book hotels in advance and get a high discount for the same. Then it sells the rooms to pocket-in the commission. For example: If a hotel room is worth Rs. 2000/- originally, Oyo gets it for the discounted price of Rs. 1000/- and sells it for the price of Rs.1300/-
One of the reasons OYO Rooms is such a success, it is because its revenue model benefits all three parties. Hotels get a large number of their rooms leased, customers get a good discount, and the company benefits from the commission.
There are very few businesses that turned profitable without any fundings. Fundings are the fuel on which startups run. Your business concept, business model, and revenue model play a huge role in getting funded.
Getting funded also depends upon your entrepreneurial skills heavily. Investors don’t want to risk their money on someone who isn’t an entrepreneur from the core and doesn’t understand what being an entrepreneur means.
When he founded Oravel Stays, which later turned into OYO Rooms, Ritesh Agrawal flew down to Mumbai and got a seed funding of around INR 30 Lakhs, which he then used to partner up with hotels.
But funding also shouldn’t be the reason for you to stop your entrepreneurial journey.
Depending on various factors, you can choose to get started with no money or with the money that you have. The important thing is to start and as you get your business up and running profitably, investors might start contacting you to invest in your company.
Do you want to get mentored by Entrepreneurs and take the first step in your entrepreneurial journey? Then, sign up for the MyCaptain Entrepreneurship Workshop.