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How to find the key driver for your startup business
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Use a "subtractive" process to identify what matters
Lots of things can impact how many customers you have and how much they are willing to spend with you. These can include the product or service you are offering, the design, the cost, the shipping, the location, even the weather!
So how do you decide what to focus on, and what is the process that you need to go through in order to get there? The answer is a) you need to focus on the one core problem or benefit that you are addressing for your customers, and b) you need to determine that problem or benefit through a process of simplication through elimination.
I'll start with the second one first. There is a concept in mathematics that goes something like this: the complexity of a mathematical problem increases by the square of the number of equations needed to solve it. Putting that notion into practical business terms: the more variables you try and address at once in your new startup, the difficulty you will have in arriving at a solution will increase at an increasing rate.
So what can you do? You need to simplify. You need to remove all of the ancillary and unimportant factors that cloud your business picture and focus on identifying the one thing that is most important to your customers. Illuminating that "thing" will not only flush out what makes them buy from you, but it will also expose the leverage point in your business model that will determin if you can grow, how fast you can grow, and how high you can grow.
The key thing to remember here is that finding out what you need to focus on in your startup is a "subtractive" process not an additive one. It involves stripping away the unimportant until all that is left is the important. At that point you will have a far simpler problem to solve; one with just one equation instead of hundreds.
Hey, starting and growing a business is hard enough. So why make it any harder than you need to?
For more information on key drivers, plus other tips for analyzing your business, I recommend you check out Ethan Rasiel's great book called "The McKinsey Way." In it he shares a number of insightful techniques used by the world's top consulting firm.
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