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?