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Why slow down is good for startups in validating Business Models
Startups are not just about raising funds or burning discounts to have more customers and build traction these are the things that happen when things are good and investors are pumping in funds.
The problem starts when there is slow down in economy and sentiments of people suddenly change from buying the extra to just what is required or even postponing the buying which brings in sudden change to every company in the business.
The bigger companies have enough cash to survive the slowdown and also have the ability to act fast and tough in cutting down cost factors to ensure that slowdown does not affect them.
Startups find it difficult to raise funds when there is slow down in the economy but at the same time it is good for startups to validate the best of models to understand the best of revenue practices and focus more rather than trying to figure out various at the cost of cash flow.
Startups get most of the benefit in validating their business model when it is slowdown in economy. It give clarity to startup in strategizing which model is good and also helps in understanding the loyalty of their customers.
During burning of discounts the loyalty cannot be tested but when its slowdown and still you are doing sales mean that there are loyal customers to you as it clearly indicates that your business model is need of the hour and during slow down also you are alive.
Every plant blossoms during rainy season but plants, which still grow in drought, are the ones who enjoy the next rainy season and become mightier and stronger. This applies to startups.
Also one more advantage is you don’t have to burn too much to acquire customers, as every customer will be yours when things are fine. So startups can also try various models without much burn of cash as during drought people buy what is essential for survival.