Business traction refers to the progress of a start-up company and the momentum it gains, as the business grows. With traction you have a clear indicator that your product or service is viable. In addition, that you’ve found some level of product/market fit, you’re getting attention from your target audience, and you’re growing your brand. On the other hand, when traction is lacking, sales dry up and the customer base dwindles. It doesn’t matter the effort put into the enterprise. There is more than one way to measure growth, which suggests a wide variety of how traction is earned and measured. Companies usually rely on customer response and revenue as indicators of their success. This helps to determine the existence and scope of business traction. The reasoning behind developing it is to grow the business while meeting specific company goals and objectives. Nevertheless, it helps to identify where your business stands in an industry and where it would like to be.
If you’re a Saas, or social media driven startup, maintaining consistent growth in other metrics besides profit such as daily active users, monthly active users, monthly signups, or a decrease in churn rate are all indicators that your startup is gaining traction.
Just as traction is important to you, it is important to potential investors as well. It’s the most important factor which determines whether investors will invest in your idea or not. Investors want to see that your idea is not static, and that you’re working on it. You need to show them progress in every aspects of your venture. For example, product development, management teams, revenues, etc. The higher the traction, the more investors your organization will attract.
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