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Understanding The Difference Between Enterprise Startups And Consumer Startups

The growth of consumer startups can be exponential if successful, but they are less stable as compared to an enterprise startup.

Understanding The Difference Between Enterprise Startups And Consumer Startups - Lioness MagazineThe direction of any startup is defined by a number of decisions. One major decision being whether it is going to be an enterprise or a consumer startup organization.

Enterprise startups are talked about globally. Many companies foray into it owing to the financial attraction and tremendous opportunities of the enterprise technology market. Various companies have launched successful public offerings in the enterprise market.

In fact, enterprise software startups are growing at a tremendous rate. They are avoiding the complexity of enterprise technology by adopting the technologies and delivery system of the consumer startups, thereby transforming the enterprise software architecture. Diverse industry sectors have crept up in the enterprise software market due to this merger. For example, enterprise social networking, mobility, and casual gaming.

Enterprise technology involves developing software, hardware, or services, enabling connectivity for business organizations. The IT department’s core operations are taken care of by an outside service provider who offers the most suitable technology at the correct time and price. Building an enterprise startup is quite distinct from that of a consumer startup.

Let’s discuss the differences in detail.

Acquisition of User and Product Adoption

In consumer startups, customers are acquired through marketing strategies. An enterprise startup, which is selling a paid product, acquires business through a sales oriented team. The information about the product or service in a consumer startup spreads through viral marketing such as word of mouth and depends on social media. On the contrary, enterprise startups focus on adoption of their paid product through sales tactics. Having a strong sales strategy is essential for the success of enterprise startups.

Sales and Implementation Cycle

The consumer startups are focused with the sales process being one-to-one in nature. Enterprise startups have multiple decision makers. Products and services of enterprise start-ups have a longer gestation period due to various levels of testing phases. The consumer startups have a large target market and a single decision maker.

Security Strategy

The level and degree of security promised by enterprise startups has to be very high, as any enterprises want to feel assured that their sensitive data is safe within the application of the enterprise startup. The security features that enterprise software should offer needs to be more detailed and granular to have enhanced appeal for business consumers. Security strategy of enterprise software should include and abide various guidelines pertaining to the particular industry the product caters to. Security issues are particularly high in enterprise software dealing with highly sensitive data such as those related to credit card, bank details, medical information, etc.

Rate of Growth

Although the rate of growth of consumer focused startups are exponential if successful, as marketing happens through viral media, they are less stable as compared to an enterprise startup. The enterprise buying cycle is slow, as sales happen through building relationships with the business on a one to one manner. Numerous decision makers are involved. There is a comprehensive evaluation cycle. The enterprise startup has to work closely with its business customer to grasp his product need and do a requirement analysis before product finalization. This includes an extensive testing process, usually taking more than a year before the software is actually released to the business; hence the rate of growth for an enterprise startup is slower.

Financial Returns

The initial financial planning and return associated with enterprise start-ups is hard to predict because the sales cycle is long. This requires financial planning and carefully thought out funding options to cope with the long gestation period of revenue turn up. Getting initial customer commitment is tough, but once you do, the startup should receive results in a continuous revenue stream.

Reliability

Gaining the trust of the enterprise is an indispensable strategy to remain successful in the long run. The product should be maintained and earn the reliability and trust necessary for the business. A critical software designed for business use has greater repercussions, if it crashes, as compared to the effects of personal consumer focused software/application going awry. This does not mean that consumer users are OK with substandard quality. It just means the level of stability and continuity for business software is very high. In fact, it becomes a key business differentiator.

Cofounder or Team Member

It is quite important to have an experienced professional either act as a cofounder or team member when building an enterprise startup. This helps gain insights into the broader aspects of enterprise startup trends and requirements. A cofounder of team member can give an idea of what works and what doesn’t, thereby helping to deal with various challenges at a faster rate.

There are huge growth potentialities for startups in the enterprise technology such as hospitality, e-commerce, business intelligence, customer relationship management, data center services, cloud app deployment, cloud security, etc. There are many young companies operating in these areas and some of them will soon become the next Google or Facebook.

Supriya Lala is associated with Comnez Inc. and involved in online marketing and Content development for the company. Having strong exposure and experience in areas related to business, management and technology, she is a regular contributor in various article and blog websites.

Photo Courtesy of Heisenberg Media [FLICKR]