When developing a technology product, many tech start-up founders will always need to set up some business strategies including cost, product differentiation, focus, and more.
Strategy 1: Cost is certainly a competitive edge, even though being low cost is not for all companies or all products. There is a cost to become the leader who offers the lowest cost (of his product). It is also difficult but not impossible to offer the lowest cost. Logically, there is only one company who is able offer the lowest cost for a specific product (or sometimes a set of highly related products) within the same industry or niche. This cost advantage can usually be achieved through economies of scale, or technology. Other times it is even achieved by having access to some unique raw materials. The upside is the company can make revenue by selling with industry average prices. When competitors try lowering their prices, you still have much room to go down. The downside is when your only edge is lowering prices, at some point in the future you will have to start sacrificing product quality. Bad quality goes a long way, and will eventually put a dent on your company’s reputation and brand.
Strategy 2: Differentiation. Develop a product or offer a service that provides superior value. This strategy in the beginning probably costs a lot more that you (being the founder) and the co-founders can actually afford. Very soon into the product development project, you will need to get investment, hopefully and probably from angel investors. Completing the process of your company registry will prove vital. Having a company/entity probably and legal set up is only the first step before being eligible for investors’ funding. When your product is unique enough, it may soon help boosting the brand. When the brand grows bigger and bigger, you may be able to go for an above-average pricing strategy. Having a better brand, you are able to charge more than most of your competitors. This strategy is more preferable than the low-cost strategy, though it is much more difficult to achieve.
Strategy 3: Focus. Target a specific industry segment or even a niche (i.e. sub-category) under an industry. Do not get distracted and ignore all the rest that are not relevant. When you have chosen the right niche, it is usually the area where the competitors are the weakest or relatively weak. When you are able to focus with your development team, you are essentially saving hours and days of invaluable time of your team. This is going to eventually speed up the completion of your product.
Strategy 4: Develop your startup with the goal to one day becoming the fledgling company of another big tech company. The aim to this is to get the attention of this big tech company. Get acquired and get paid a large amount of cash or shares.