Ráchel Hagarová
2 RESEARCH AND RESULTS
2.4 Conclusion and Discussion
Typical Slovak startup, based on our research, has young founder with higher education and some practical experiences. Typical startup team has 5 to 6 members. Average duration of startup is almost 2 years.
A topic of cost items and structure is not easy to research. Startups have difficulties to separate products/services costs from operation costs. This problem often appeared in first stages of development startup, when team is focused only on product/services.
Cost Structure is only part of Business Model Canvas, on which research is build on. In order to understand importance and level of development of Cost Structure, we need to know these aspects about all nine blocks.
We found out that block Value Proposition it the most developed block. Founders start their activities with product or service, on which they later eventually build a company. Value Proposition is most important for founders and they often focus all activities and recourses into development of value proposition. On the other hand it can be very dangerous, and there are some examples when it was deadly for startup. Startups should not forget about other parts of business models too.
Cost Structure is the second most developed among all nine building blocks. It means that startups can tell their costs with some certitude, maybe based on their Value Proposition. We can assume that these two blocks are linked. On the other hand respondents identify product costs with overall costs. It means, we
134
cannot take this level of development as absolutely right. Because, product costs are not the same as organizational costs. Awareness and knowledge about operation cost is crucial especially in later stages of startups, in time when product/service is developed and ready to launch. Awareness of costs rises together with development of Business idea. It is only logical, because the more realistic the idea is, the more realistic necessary costs are. Time factor plays the role also. Exactness of defining Cost Structure rises with duration of startup. In general we can say that concreteness or accuracy rises along with tangibility of startup.
In overall percentage share of cost items we can see that the biggest share have costs related to Payroll (45%). Services and Others have radically smaller share, 14% and 13%. All kind of materials are at the third place with 11%. This is also headed to problem with product/service costs. If startup is hardware oriented material is one of the greater parts of all costs. Payroll has such a big share because people are important in every kind of startup. Payroll is the most important and has the biggest share in all stages of Business model development. The importance of the Payroll we can link with strong feelings about importance of startup team. Founders said that team is very important for success and they always try to get best team members. Such a big share of Payroll is also linked with software focusing. In these cases, startup does not need specific material or devices. They need great people, as factor of their success.
Along with higher Business model Development, share of Others cost degreases. We can assume that some activities are not necessary anymore and some are included into internal team. Also Share of item Material degreases with rising of Business model Development. As respondents said, they still need Material, but the already have more effective processes. So they can work better with stocks and they build better position towards suppliers.
Awareness of costs rises together with development of Business idea. It is only logical, because the more realistic the idea is, the more realistic necessary costs are. Time factor plays the role too. Exactness of defining Cost Structure rises with duration of startup. In general we can say that concreteness or accuracy in costs rises along with tangibility of startup.
References
Afuah, A. (2014). Business Model Innovation. New York: Taylor and Francis.
Blank, S. (May 2013). Harvard Business Review. Cit. 7. December 2015. Dostupné na Internete: Why Lean startup changes everything?: https://hbr.org/2013/05/why-the-lean-start-up-changes-everything Blank, S. (2012). Startup Owners Manual. Pescadero: KS Ranch, Inc.
Ghezzi, A., Cortimiglia, M., Frank, A., 2015. Strategy and business model design in dynamic telecommunications industries: A study on Italian mobile network operators. Technological Forecasting & Social Change 90, 346-354. https://doi.org/10.1016/j.techfore.2014.09.006
Kesting, P., Günzel-Jensen, F., 2015. SMEs and new ventures need business model sophistication. Business Horizon 58, 285-293. https://doi.org/10.1016/j.bushor.2015.01.002
Maurya, A. (2012). Running Lean (Second Edition. vyd.). Sebastopol: O´Reilly Media, Inc.
Magretta, J., 2002. Why Business Models Matter. Harvard Business Review 80, 86-92.
Osterwalder, A. ,. (2009). Business Model Generation. Self Published.
Pozin, I. (29. August 2016). This is the real cost of building a startup. Cit. 10. January 2017. Dostupné na Internete: Inc.com: http://www.inc.com/ilya-pozin/this-is-the-real-cost-of-building-a-startup.html Ries, E. (2010). startuplessonlearned.com. Cit. 4. December 2016. Dostupné na Internete: What is startup?:
http://www.startuplessonslearned.com/2010/06/what-is-startup.html
Ries, E. (2011). The lean startup : how today entrepreneurs use continuous innovation to create radically successful business. New York.
135
Thanedar, N. (2012). Are You Building A Small Business or Startup? Cit. 5. November 2016. Dostupné na Internete: Forbes: http://www.forbes.com/sites/theyec/2012/08/15/are-you-building-a-small-business-or-a-startup
Teece, D.,2010. Business Models, Business Strategy and Innovation. Long Range Planning 43, 172-194.Pereira, B., Caetano, M., 2015. A conceptual business model framework applied to air transport. Journal of Air Transport Management 44-45, 70-76.
Contact information Ing. Ráchel Hagarová
University of Economics in Bratislava, Faculty of Business Management Dolnozemská cesta 1, 852 35 Bratislava
+421 2 6729 5111
rachel.matuskova@gmail.com
DOI ID: https://www.doi.org/10.7441/dokbat.2017.13