27/09/2017 9:23 AM IST | Updated 28/09/2017 9:42 AM IST

Tricky Trade-Offs That Entrepreneurs Make In The Early Years (Part 3)

Speed, sophistication, perseverance and the art of listening to customers are the secrets to success.

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Innovating, and quickly manoeuvring a new organisation and team needs effort and many trade-offs. Twitter co-founder Biz Stone sums it up aptly: "Timing, perseverance, and ten years of trying will eventually make you look like an overnight success."

Here are some key trade-offs that must be made in the early years:

Speed vs. perfection

New companies want to create the 'perfect' product before sharing it with prospective customers. Teams worry that showing a prototype may make them appear underprepared, and drive customers away. Consequently, they wait for too long to launch the final product.

There are multiple issues with this approach. First: a delay in showing the product to the customer is expensive. Second: the team misses out on early customer feedback. This feedback is easy to incorporate in the product's initial life-cycle but is expensive and time-consuming later.

Since customer expectations tend to change quickly, it is easy to get blindsided by your own idea of the 'perfect' product.

My experience in the technology space has taught me that the only real measure of a successful product is when you get positive customer feedback. Since customer expectations tend to change quickly, it is easy to get blindsided by your own idea of the 'perfect' product. It almost always makes sense to present the product to the customer early on, to get real feedback that can help you make incremental enhancements.

Third: prospective customers who have given feedback and influenced the product, are more likely to buy it. Sometimes they may even agree to pay a little money in advance, making a huge difference to the venture's credibility and credibility.

I have often made final presentations and started pitching to customers, while the products were still in the early development stages. This exercise was helpful in building an active pipeline, while the solution was under development.

Product sophistication vs. team sophistication

While engaging with prospective customers, it is important to remember that the team must come across as being sophisticated and professional. Every small detail counts, including meeting preparations, presentations, product demonstrations, feedback collection, and customer engagement. This enables teams to demonstrate their calibre and leave a positive impression—in the early years this is often more important than the product itself.

India lags in product design, marketing skills and packaging, and this tends to drag new ideas down. Trying to enhance product design and product marketing can be a challenge, as new teams may often not have the necessary skills. Nevertheless, I have found that putting the product, packaging and marketing content next to comparable international products is a simple way to make a big impact and bridge the important gaps.

Customer vs. prospect focus

As the business starts to grow and acquires new customers, there is often a trade-off between spending time, effort and money on existing customers versus acquiring new customers. While word-of-mouth has always been important for success, it is of paramount importance now in a world that's connected online. Customers share feedback, and ratings online, and this has a strong bearing on future sales.

It has been proved, across industries, that selling to existing customers is three to five times cheaper than acquiring new ones.

New entrepreneurs often put a lot of effort towards chasing new prospects and building a market presence. While this is extremely important to the company's growth story, businesses must not lose sight of the enormous potential of existing customers. A business can only scale if existing customers become repeat customers. It has been proved, across industries, that selling to existing customers is three to five times cheaper than acquiring new ones.

Perseverance vs. fail fast

While every new business idea needs time to mature and scale, unfortunately some may not find adequate traction in the market. It is a difficult challenge for new entrepreneurs to determine how much to persevere and when to give up and start afresh on a variant or a new idea. I have found that stopping an initiative has an organisational impact for team members driving them.

There are no easy guidelines or metrics to make this trade-off—the team must make its own judgement call. It helps to define and track a set of metrics, such as sales, revenues, pipeline value each month. This helps teams make better and collective decisions. Managing this decision making well can be the most important factor for the survival of the team in the early years!

The opinions expressed in this post are the personal views of the author. They do not necessarily reflect the views of HuffPost India. Any omissions or errors are the author's and HuffPost India does not assume any liability or responsibility for them.

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