Money. Every startup needs it, and it’s usually at the most vulnerable, early-stage, high risk point when it needs the most. Tech startups, for instance, are notorious for seeking out a number of different ways of receiving funding including: venture capital, angel investing, and other seed funding opportunities. This is because, typically, these types of startups are too small to raise capital in the public market, so they go to venture capital firms or independent venture capitalists and ask for funds in exchange for equity in their company.
But because venture capital has been less available in recent times, startups have to find the best ways to turn a profit and satisfy stakeholders, and even more more critical, they must be particularly creative and sharp before spending any money at all. Here are 3 things to consider before spending your company’s hard-earned cash.
Understand the needs of your consumers
Before presenting your company’s basic principals and projections to any venture capital entity, one must consider exactly what portion of their company they’ll be expanding, launching, or improving. Venture capitalists want to know that you understand your market, which means you have a greater understanding of market opportunities. This shows that you have a strong handle on your marketing strategies and can dissect consumer potential, as well as thrive in profitability and value by keeping costs low and returns high.
So how do you identify the needs of your consumer? Well, you start by understanding your company’s value and how that value can be applied to a problem in your market. Your brand must become synonymous with solution. This is the perfect opportunity to implement workshops, surveys, consumer insight panels, and other bilateral forms of communication with your customers. User experience analytics (also referred to in certain business circles as ‘personas‘) is key in collecting data and drawing conclusions on the needs of your current and future clients. Once you identify your startup’s value, you can then begin to uncover revenue drivers and customer satisfaction vehicles. Be cautious, though, this form of exploration tends to expose your weak spots (i.e. complaints) — but don’t be afraid, any good entrepreneur isn’t reluctant to tackle these head-on.
Identify trends that are on the rise and how they can help you
At Third Wave Fashion, we are constantly speaking to fashion tech startups that are trying to answer the questions today’s shopper is asking. There is an industry-wide move to improve consumption — people want better quality and brand names faster than ever before, and they also want to be able to show the world exactly how much more fabulous that purchase has made them. It’s about improving quality of life. But how does your startup accomplish that while strengthening conversion rates?
Well, understanding — and maybe even forecasting — growing trends is key. In fashion tech, we have a tendency to forget that each word in this compound description (‘fashion’ and ‘tech’) is a disruptive, yet symbiotic, business endeavor. Yes, we love beautiful fashions, but we cannot forget tech. As an entrepreneur in this space surrounding yourself with people that understand technological evolution will play a key role in determining which trends effect your business, and which ones won’t. For instance, let’s consider for a moment that mobile retail is on the rise. So then ask yourself: Does site conversion via tablet change the way your consumer’s going to shop? Are you prepared to support sharing/social media? Is your website seamlessly translated on a smartphone? Is your website PC-based? These are all questions you need to be able to answer, and then determine how this growing trend (in this case mobile) is hurting or helping your business.
Never hesitate to spend money on just the right fringe benefits
What information does your consumer need to know? Will they get a shipping notification? Can they track their package? Will you tell them when their ‘liked’ product has gone on sale? Can they make a profile you can cater to? Are there products to offer within other, overarching selling methods? The idiosyncrasies of any consumer experience are more important today than ever before. Consumers understand that they want more, but don’t always now what that ‘more’ is. This is where your company’s features comes in.
Having just the right fringe benefit available to the consumer as he/she navigates through your site (regardless of the device) is, in business, virtually priceless. This is to say that investing in high-quality features/add-ons such as easy payment options, video tutorials, alerts/push notifications, and customer ratings options will absolutely help your business thrive. These features are subtle indicators of what people want and expect out of your brand. Making an experience more convenient than expected is likely the most valuable strategy for your startup.//
Interested in learning more about finance and pitching to investors? Join us and Women Innovate Mobile on April 22nd at Behind The Pitch to get all your questions answered. Want to know more about the burgeoning fashion tech industry? Then come to The State of Fashion Tech event, April 9th where we’ll be hearing from TWF Founder, Liza Kindred, about the current state of the industry, the 600+ companies in our database, and much more. See you there!
Leticia Domenech is the Writing and Copyediting Intern at TWF. Third Wave Fashion has been your fashion tech think tank since 2011. We publish the first ever printed fashion tech magazine, Third Wave. Follow us on Twitter or subscribe to our newsletter to stay on top of the latest in fashion tech + wearables.
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