The startup landscape has changed significantly over the last couple of decades. Connected technology has been a key factor in this; it has helped make resources, knowledge, and global customers more accessible to business owners. One of the most significant changes it has brought, however, is the rise and continued power of digital entrepreneurship.
The more our society uses and demands the tools of our technological age, the more relevant and essential diverse digital startups become. This is why it can be such an attractive and viable option for both first-time entrepreneurs and business leaders with years of experience alike. However, that’s not to say that it is always a clear-cut choice. As with any enterprise, there are advantages and disadvantages that must be taken into account before diving in.
Let’s take a moment to review some of the primary considerations when launching a digital startup.
There are always risks in business. That’s no reason to completely avoid engaging in a digital startup. Bear in mind that 90% of all startups fail, 10% of those in the first year — but this can serve as a valuable experience. The important thing is to be aware of what the risks are so that you can make more informed decisions.
In general, the digital economy — which refers to how the public and businesses interact with each other in online spaces — is a positive and exciting addition to the commercial landscape. It has made transactions and communications easier, and in most cases, improved efficiency across the board. However, there are some drawbacks, including the fact that when you launch a digital startup there is increased pressure to ensure that your business continues to innovate.
This comes both in the form of your products and services and ensuring that you are always on top of using the new tools that are constantly developing. While this kind of pressure can stimulate creativity in entrepreneurs, it can also represent a source of stress as you try to keep up with competitors who may have been in the industry longer and have better access to resources.
This brings us to another of the prevalent risks in digital commerce — the sheer volume of competition. The fact that online startups are so accessible also means that there are likely to be a lot of people offering similar products and services to you. Not to mention that more brick-and-mortar stores are also starting to shift to digital methods, particularly since COVID-19. As a result, you need to be sure that what you are providing is either innovative or that you take a more engaging approach to your industry than your competitors. Do your research on the market, and learn where you can make a difference.
As the online marketplace continues to develop, so too do business models emerge to meet the needs of an increasingly demanding consumer base. As such, it’s important to gain an understanding of which approach best suits the services that you want to bring to the industry.
Some of the most prevalent digital startup approaches today include:
Selling physical products in online spaces is one of the most popular forms of digital startup today. Part of this is due to the ease of setup. There are multiple e-commerce platforms that provide packages that include inventory management, search engine optimization (SEO), and check-out services. There is also a high rate of personalization that allows for distinct branding. Efficiency also tends to be boosted here, as you can integrate your enterprise resource planning (ERP) software to handle order processing and inventory management. The margins in e-commerce tend to be low, but then so are the overheads.
Entrepreneurs have found that digital subscription services attract consumers primarily due to convenience. As such, there is a chance to apply the model in various forms. There is the product sales area where businesses automatically replenish perishable items. Curated subscription packages, that provide monthly selections of niche products to members, also continue to be popular. However, software as a service (SaaS) is among the most profitable forms of subscription. This sees software developers providing access to their cloud-based applications for a monthly or yearly membership fee. This is good for consumers as they always have access to updates and support, and entrepreneurs have a more predictable revenue stream.
As we exist in an increasingly competitive digital commercial landscape, part of the consideration for your startup should be how you plan to punch through the noise and connect to your audience. The marketplace has opened up digital marketing approaches that can make a significant impact, and your choices here will often depend on what you’re trying to achieve and who your demographic is.
Among younger consumers — especially Millennials and Gen Z who are digital natives — video marketing is swiftly becoming the primary form of making impactful connections, much of it being hosted on platforms like Youtube. However, you can’t just take an amateur approach to this, as these audiences respond best to quality content. When designing a strategy around video you need to factor in time and investment to make storyboards and shot lists, and consider appropriate lighting and efficient coverage approaches, especially when targeting Youtube as a video host, specifically. You can’t skimp on editing, either. It is no longer acceptable to think that just because a video is hosted on YouTube that it can be less than top quality; your digitally savvy audience deserves better, and they know it.
If your startup is geared toward a mixture of demographics, you can factor in alternative types of digital content. Generation X and Millennials are both responsive to longer-form blog posts. All generations — from Baby Boomers to Gen Z — seem to connect with short messaging service (SMS) marketing. The key is to review your product, your budget, and your demographic to understand how to get the most impactful reach.
Launching a digital startup can be an intelligent choice for entrepreneurs today. However, it can help your chances of succeeding if you take time to understand where the risks lie in the sector and review what digital business models are most appropriate. Don’t skimp on understanding how to reach your audience either, as this can mean the difference between falling at the first hurdle, or flying.