The company has developed the first version of the product and you are more or less ready for launch on the market. Some employees experience having their role description changed, and may now be responsible for sales and marketing, in addition to other tasks.

Many businesses are rightly impatient to get the product onto the market and the questions can be many:

• What do we do if the product does not work as expected?
• How do the customers perceive our product, do the marketing channels we have used work, does the product have the functionality the customers want?
• How do we differentiate ourselves from the competition, what price point should we choose?
• Do we have sufficient funding, do we have the right composition of employees, and how should we handle customer support?

 

Commercialization – complicated and time-consuming

For many, the biggest challenge during market launch is shifting focus. The company moves from a development-oriented approach to a market-oriented one. In the development phase, the organisation is built around strong technical expertise. The market phase requires both commercial and technical competence. In most cases, this phase requires recruitment. The company grows in number of employees. As a result, the composition of competence becomes increasingly important.

As the company grows, the general manager will not be able to sit with the operational responsibility for the entire company alone. The need for decentralization of responsibility and establishment of an organizational structure becomes more important in this phase. Often this places demands on the organization that the founding team is not prepared for. Some have not established clear areas of responsibility and decision-making structures, and until now "everyone" has been involved in everything. But now the company is becoming of such a nature that responsibility and decision-making authority must be delegated. In many cases, this delegation of responsibility takes place without associated structures for follow-up. This complicates accountability and can lead to a lack of control and poor results. 

Market adaptation can be slow

Many will find that market adaptation is slower than expected. Although the product development has been market-oriented, the real test comes now. This is when you truly measure the customers’ willingness to buy. Analysing customer purchase preferences requires systems for collecting market feedback. Entering the market often demands major adjustments to product functionality. It is important to establish structures for market feedback at an early stage, so that the necessary adjustments and adaptations can be made. Integrating this data into the company’s management and reporting system will save time for the general manager.
At the same time, it ensures focus on key value drivers during this phase.

Delivery model, strategies and commercial agreements

It will be necessary to establish a clear delivery model. The company must also make several key strategic decisions. These decisions include product strategy, market strategy, and pricing strategy.
Customer segmentation will also be an important part of this process. This takes place in parallel with the company entering into commercial agreements. These agreements involve both customers and suppliers. They are designed to ensure scalability and prevent restrictive future commitments.
They also contribute to long-term profitability. It is now that the negative consequences of a lack of preparation and internal structures can come to light.

Tightened requirements from the employees

Market entry requires high commercial competence, and it will be necessary to establish a function for handling customer enquiries. In many cases, this leads to employment. More employees tighten the requirements for the company as an employer. The employees expect the company to operate as a professional employer on the same level as any other company. As the company grows, the general manager will not be able to be responsible for all employees alone. The need for the support system and structures for follow-up of the employees is becoming more and more important. The appointments often take place reactively and during a period of rapid development. This tightens the requirements for the right appointments - incorrect appointments can lead to delays and a lack of focus on the core activities. At the same time, the composition of expertise in the team is becoming increasingly important. It is essential to carry out a conscious competence mapping.
This mapping must be measured against the requirements under which the businesses operate.
Doing so is crucial to ensuring the right team is in place. The team is needed to guide the company through this phase. Competence, culture, and personality are all important factors to consider when hiring.
In practice, only competence is often assessed. This typically happens in phases where it is critical to bring in resources quickly.

Once the team is in place, active management of the employees is essential for success. Employees are one of the most important resources in a company, and perhaps especially in start-up companies. This applies to board members as well as employees. Losing key resources can lead to delays in company development, and even affect company value. Managing employees can be time-consuming. However, establishing routines and support systems early makes a big difference. This creates a scalable platform for handling the company’s most important resource — its people.

New requirements from investors and other funding sources

Despite the company receiving its first revenues, many are still dependent on external financing to cover operating losses and investments. The supply of investor capital changes, and the company can in many cases qualify for some of the bank's loan schemes. Investors and financial institutions conduct risk assessments before providing capital. Their investment decisions are based on several factors. These include confidence in the company’s business plans and liquidity forecasts. It is important that the company can show traction in the market. This is one of the most important value drivers in the phase.

In addition, investors often look at issue history, and there are now more challenges with a high valuation early on. It is important for the company to develop a conscious approach to capital and ownership strategy from an early stage. The investor must also be a good match for the company. It is not only the company that must suit the investor. In some cases, setting a lower price is better in the long term. This can help attract “active” or “smart” capital. It may be wiser than aiming for a high valuation. A passive investor might not understand the company’s goals or risk profile. Unfortunately, we often see that high valuation and access to capital come first.

As the cost structure increases in complexity, information from the accounts becomes increasingly valuable:

• What does the company spend money on?
• What margins does the company have on the various market segments and products?
• What do different marketing initiatives cost and what are the effects?
• What is the company's net and gross burn rate?
• How long does the company have capital and how sensitive are the company's forecasts?
• What does market adaptation look like?