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The Importance of Traction in Startups

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Business traction is the initial progress and momentum a startup builds as it grows. Traction indicates that the products and services your business is offering is viable. It also shows that what you’re providing has achieved market fit, and the brand is growing, for you are attracting attention from the right audience.

Traction is measured in different ways, and profitability is not the only sign of traction. For instance, an online business can measure traction using metrics such as daily active users, monthly signups, and active users in addition to decreased churn rate.

Potential investors are interested in your early traction, and greater evidence of this attracts more investors and bigger networks, which are necessary for your growth. 

Metrics for Measuring Traction        

The following are the factors that are used to measure traction.

Revenues: Refers to company turnover. Potential investors and founders are greatly concerned about this figure.

Profitability: It’s a sign that your business is performing well financially.

Active Users: You should be able to track all users of your mobile application. The statistics are an indication that the target audience is interested in your service. The number of registered users helps you to evaluate how far your product and services have reached and how you can increase awareness.

Clients and Partnerships: The number of partnerships and clients’ base can be used to measure how good you’re with clients and establishing relationships. Attracting customers in your business needs product development and careful planning. Thus having a reasonable list demonstrates that you’re on the right track.

Stakeholders’ Engagement: The metric helps you to understand the number of people using or interacting with your product.

Importance of Traction

Traction is important to all the company’s stakeholders, such as the founders and employees. It’s particularly important to investors since they want to put their money and expertise in a company with growth potential. They don’t want to lose their investment.

For that reason, investors are interested in companies with higher traction. They will be willing to put more money to help your business grow and succeed. On the other hand, investors are interested in making profits; thus, their demands for returns and profitability can hamper your startup’s ability to put their investment into meaningful use to build your business.

Therefore, avoid the trap of investors that want immediate profits and that frown at short-term losses. Opt for those investors that are patient to wait for the longer-term payoff.

Growth

Traction stage is used to measure where the business is headed. Thus entrepreneurs that do what is right in this stage are likely to experience a significant upward movement. They are able to measure their market share in the industry and how the target audience feels about the company’s products. On the other hand, businesses that can’t observe these signs should focus on gaining traction before scaling up their efforts.

Further, the traction stage allows all forms of experiment on different offerings. On the other hand, the growth phase allows you to capitalize on what makes you unique and valuable. Thus, you should hire experts at this stage to do what you’re good at in a better and efficient way. The experts can craft better user experience and products.

More so, it’s at the growth phase that you work on your business instead of work in your business. It’s at this level where the team that you have been nurturing begins to take most of your responsibilities and propels you to leadership. The change gives you an opportunity to standardize processes, craft strategic vision, and guide the team to achieve the company’s objectives.

Transitioning from Traction to Growth

Startups have poor statistics since 9 out of 10 businesses fail due to various reasons, such as having few customers that can’t sustain the business. The following techniques are useful when transitioning from the traction stage to the growth phase. 

Networking: The activity is effective in driving engagement at the start of the entrepreneurial journey. You can market your business to your personal connections by word of mouth.

Look for mentors that can link you with important people in the world of business. Personal networks can help you get angel investors, top talent, customers, equipment, or partners. Mentors can provide answers or solutions to business challenges that you will encounter along the journey.

Organize meetings with potential clients to discuss how your business can add value to their lives. You can attend conferences to see what other industry players are up to. Therefore, you need to be the voice of your company.

Social Media Marketing: It’s one of the costless and easy methods of marketing the startup.  Many people are using social media to communicate or interact with family and friends. Thus these platforms expose your business to many potential customers.

However, it’s very easy to fail on Facebook, LinkedIn, Twitter, and Instagram if you don’t have a marketing strategy. Therefore, ensure that you have enough high-value content to keep your audience informed about your business and products before signing up.

Website: create a site for your business and generate relevant content to what people are searching for in your target market. Ensure that the content is optimized so that the search engine can serve it to users seeking information or product you’re offering. Let your content be useful so that potential customers can follow the link back to the company website, as well as share with others.

Further, make your website and content user-friendly and accessible via mobile gadgets. It should be fast loading, and the domain should get backlinks from other high authority sources.

Email Campaigns: The use of emails in marketing is also effective. Actually, social media platforms came in recently, but emails have always been around. The platform can help you generate traffic since you communicate with customers directly.

Use the platform to update your customers on how the business is doing and ask them to provide feedback about your customer service and products. You can also ask them what you can do better to make them happy.

Bottom Line

It’s not easy to generate traction in a startup life; however, it’s an important phase that is considered by investors, founders, and other stakeholders. On the other hand, the stage leads to the growth of your business, which is an excellent indicator of your company’s value. Therefore, use methods such as networking, social media, website, and emails to market your startup. These avenues will help you to turn the startup into an iconic brand. 

I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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