|1||Check the Need. Is It Real?|| Check the Need. Is It Real? |
You don’t need to hire marketing specialists to conduct market research. Most answers can be found even by non-professionals.
Before building a startup, find out if your idea worth pursuing by listing problems it solves. Then try to estimate how many people have those problems and describe them in detail (age, gender, location, and income level). Now you have your specified hypothetical target audience groups.
Get ready for the next step! Imagine yourself being a representative of each of the target groups and estimate how serious listed problems are for you. Use a 10-degree scale where 10 stands for ‘a problem that reduces the quality of my life, I will pay any money to solve it’ and 1 is for ‘a problem that I easily solve myself without even noticing’.
If your idea got a high score, move to the next paragraph.
|2||Check Technologies||How to get business ideas? If you could imagine a thing, you could bring it to life, William Arthur Ward once said. However, in the mass tech startup environment, you should also count on technological progress. |
If you’ve figured out that your idea is unique and helps people, that may happen that nobody had launched a startup like that before as it would be too costly for them.
Analyze what technologies are required to implement your idea. If they do not exist yet, you need to estimate the development costs first.
Let’s take Uber as an example. In 2009, Uber was launched in the USA as a premium cars taxi service empowered by a regular good-working taxi app. We can presume, that Uber would never have become a global breakthrough taxi on-demand provider, if location tracking technology, mobile internet, smartphones, and online banking hadn’t been improved since 2009. Learn how to build an Uber-like app in our article.
Well, companies like Google can afford spending dramatic capital on technological researches and benefit global tech progress. Google search engine AI and Google Glass are good examples of such investments. But when it comes to startups, it’s always better to use existing technologies; perhaps, the latest ones.
Check whether your unique idea from the previous paragraph could be based on existing technologies. If ‘yes’, move further.
|3||Check the Market||Check the Market |
How to create an idea that will not fail? No market research is the most common mistake made by startuppers. As much as 42% of new tech enterprises failed because just a few people really needed their solutions and were ready to pay for it.
In the business world, everything is money-measurable. Before starting your startup development, get to know how many people can be attracted by your future offer and how much money you can make out of it.
To estimate the market niche volume look through successful cases in similar business fields, study demand trends, and find out niche growth rate. Mind, that there are always some competitors you need to hit. Try to understand if your niche is highly competitive by checking global usage statistics.
For example, it is a bad idea to create all-in Facebook-clone, if there is a constant demand for niche Facebook-like social networks for a particular audience such as pet lovers, religionists, and cross-stitch fans.
|4||How to Create a Startup? Creating a Business Plan Step||How to Create a Startup? Creating a Business Plan Step |
What is a tech startup business plan? The document reflects project philosophy, market research results, prior goals and project milestones, general development timelines, and detailed budget. It also describes the monetization model of an app, project team structure, and an app’s promotional plan.
A business plan is the only way to set off the startup as it is used to present your idea to potential investors and attract them.
In our another blog article, you could find step-by-step instructions on tech startup business plan writing. Here, we’d like to name and describe key startup business plan blocks briefly.
Executive summary. How to make a business on tech innovations? Start with your mission and then list your key business objectives and goals. Use this section to describe your idea and the way you see the social impact of your startup. Include target group summary and some key market observations taken from the market and customer research as the section also is an introduction one. Add brief information on existed resources, market strategy, and profits.
Company description and legal structure. Give information on the expert team, its structure and the style it is going to work on the project. Go into details about your existing resources and list extra resources you may need for business launch. List the strengths of your team and give arguments to support the statement that your company is the best one to implement the idea successfully.
Market research section. To persuade an investor that your idea is worth attention and inspire your team on building a startup, use facts on the current market situation. Show your clear industry understanding describing it briefly. Write down competitors’ names and analyze them, study market trends and measure your chances to obtain your niche. Add target groups description.
Product description. Explain how your product works and why it is so valuable for the target audience. If your product or service needs to be patented, reflect that fact within the section. Describe the lifecycle of your product and the way you are going to offer it to your future customers.
Promotional and marketing plan. Give an overview of your marketing strategy. Describe the way you are going to attract and retain users, make them purchase extra product features or sale additional products. Include PR plans and projections there, list some sales strategies you are thinking about.
Funding section. Business planning for startups should be precise. Outline funding requirements and clarify how much money you need in 6 months, one year, and several years. Explain why you need that exact capital and show how you are going to spend it until you get the first revenue. Present your strategic financial plans (for 5 years or more). In the end, support the request with financial projections, a balance sheet, sales forecast, and a break-even analysis to convince the investor.
|5||Find a Partner||Find a Partner |
Most of the successful startups were developed not by one person, but by a team. And almost every well-known startup has a least two co-founders.
You can’t be an expert in every operating field of your business; startups founded by two or more different experts are more stable comparing to others.
Moreover, there are various approaches to form a foundation team. For example, you may unite with an investor, an experienced marketing specialist, an executive manager, or a niche expert.
How to create a startup? Below, you’ll find some tips on how to pick the right person or to check if the particular candidate is a good choice for you.
Soft skills are most important while managing the same project. The founders are usually people from whom the corporate communication style starts. Make sure that your partner is comfortable to work with. The best way to do this is to compare your life values and goals.
How to get business ideas? A right partner could benefit a lot. They may provide you with the necessary pieces of knowledge, experience, and expertise of your target market niche. That person also can help save money on management and marketing. Think of what business skills or knowledge you require to run a startup and find a person who has them.
Bits of knowledge and communicative skills don’t mean a thing if your partner is lacking self-control or doesn’t have any motivation to participate in the working process actively. Ask them several questions on the previous work experience and achievements and be attentive studying their reasons to quit the previous job.
It’s perfect if you’ve got a long and positive relationship history with your future partner. But don’t be upset if it’s not about you. Try to get as many references on your candidates as you can, speak with their friend circle or families, and decide if you have a chance to build a strong partnership with the person.
A business partner is the one you are going to work shoulder to shoulder. That person will have the same right to change the project just as you do.
A good piece of advice is to create a partnership contract where you can include financial rights of the founders and describe the way to solve potential crises like splitting of the company on owner’s initiative or its shutting down.
|6||Find a Startup Capital||Find a Startup Capital|
To develop, start and run a startup you need cash. Money is the way to get additional resources such as professional expertise or hard- and software, reach potential users by purchasing promotional campaign and rent an office to speed up and control startup processes.
According to the latest statistics, 29% of tech startups fail because they run out of cash. Plan your startup budget carefully in order not to become one of them.
A great piece of advice is to create a detailed financial plan and projections that will cover different periods including the next 5 and even 10 years. First, it will prove that you’ve got a serious attitude to your project for investors. And second, that will help you to avoid ‘unexpected’ outcomes soon after startup launch.
So what’s the best way to raise capital for your project? Below, find the most popular funding sources used by business owners in 2018.
Personal funds (77%)
That is natural that people who come up with the decision to launch a startup are ready for that on every level. They gain relevant knowledge, look for the perfect team, and collect money to take a risk. The last point may cause a problem in case of web site startup where it’s important to implement an idea before others have done the same.
Collecting money to start your business postpone the launch day and can kill a startup in the bud. However, personal funds give your business independence.
Bank loan (34%)
That is the fastest and the easiest way to provide yourself with the necessary capital. You don’t lose a day as loaning procedure have been long ago worked in any bank.
There are also some disadvantages to this funding strategy. First, you need to give more money back. Second, you need to present a clear business plan for bank managers. Third, you can’t use this kind of funding if your loan story is spotted.
Family and friends
borrowing money (16%) or getting donation (9%)
Yes, we used to rely on our nearest people and that is natural that most of them are ready to help us. The biggest advantage of relatives-and-friends funding is less strong terms of giving the money back. And the drawback remains a chance to spoil relations with beloved ones.
That is also possible that your friends and family members just don’t have enough money to support the startup. But usually it is unlikely. In 2019, more than half of all enterprises are started with less than $25,000.
Online lenders (4%)
An online lender is a hybrid of a bank investor and a private one. The person that gives your money doesn’t know you personally and probably would never hear about you if the bank didn’t connect you.
Online lenders provide you with a sort of bank loan using their capital, but it is their banks that support the investing process, take care of the contracts and other documents, and extort compensation from the borrower if he or she doesn’t comply with the terms of the contract.
Angel investors (3%)
It is no coincidence that this term includes the sacred word. Angel investors are the most desirable form of startup financing for its owner. The trick is that such an investor is very difficult to find.
Angel investor is a guardian angel in the business world. The person assumes the costs of starting a startup and its ongoing support, supervises your project and keeps you from mistakes. Typically, an investor of this type is very interested in the topic of a startup and has a sympathy for team members.
Some other less popular funding methods are venture capital and crowdfunding which got 3% and 2%. However, they remain a great source of capital for website startups nowadays, as venture capital and crowdfunding platforms are normally specialized in innovative regional projects.
|7||Find a Mentor||Regardless of the field, the startup process is taking place in, having a mentor is a good way to improve your competencies and strive for business excellence. In general, a business mentorship is close to sports coaching. The skills that turn any specialist to a coach are attention to detail and ability to explain complex things with simple examples. |
A business mentor should also be communicative and open-minded, but that is more important for them to speak the same language as you.
In terms of startup mentorship, a mentor’s tasks are the following:
To supervise startup planning and ongoing management.
To provide advice for startup funding, team hiring, communication, and general work organization.
To help with business connections.
To fill your tech startup knowledge and skillset gaps.
It’s essential to understand that a business mentor is neither a partner nor a teacher. Some business leaders in the tech startup field consider that mentors shouldn’t be top professionals from the area you are working in (however, that is an advantage), but have a definite propensity to observe and manage quality.
Don’t take a mentor’s advice as a direct order. A mentor mission is to provide you with an alternative point of view at your work and fill gaps in your skillset.
Who could be your startup mentor? In fact, anyone. Sometimes, you have mentors even without knowing about it. Friends, relatives, neighbors, and even barmen usually play a mentor’s role in our life: they observe our activities, listen to our daily stories, and give us a piece of advice. The question is who is the best tech startup mentor. Here you’ll find some tips on how to identify this person:
A mentor shouldn’t be your clone! Look for somebody with another background, set of skills and knowledge.
Pay attention to the mentor’s networking quality. If the person maintains a connection with professionals, powerful people, or leaders of your area, he or she will bring you extra benefit in the future.
You should understand each other. No toxic or unconstructive mentorship! At the same time, support diversity as it is a source of useful observations for you.
Establish a relationship framework. Decide if your mentor will receive a salary or get the percentage of profit; include those points in your business planning for startups documents.
Find somebody who can conduct mentorship sessions regularly.
The procedure for finding a mentor has no rules. Decide on what mentor you need and go look for him. Of course, your chances of meeting an expert in your industry are higher if you attend professional conferences and seminars. At the same time, sometimes it’s enough just to write to the person you follow on the Internet and invite him or her to supervise your activities.
|FAQ||What is a Startup?|
A startup can be defined as an emerging company, normally with a core technological component and high growth potential. Generally, these companies champion an innovative idea that stands out in the general line of the market.
How long is a startup considered a startup?
Too often the allocation of this concept to business who have been on the market for less than 3 years, however, this is not true. That is, one company you can have 7 years and is still a startup.
How do i get startup ideas?
If you’re looking for a startup idea, don’t look outside for people to tell you what they want. Pick a personal problem, validate it, and if you see people actually are willing to use or pay for such a solution, then and only then start a company around it.
What should a startup focus on?
It seems to go without saying that you can’t have much of a business if customers won’t pay you. As a leader, you must spend time meeting with those customers and find a need that competitors aren’t meeting.
How does a startup start?
Startups typically begin by a founder (solo-founder) or co-founders who have a way to solve a problem. The founder of a startup will begin market validation by problem interview, solution interview, and building a minimum viable product (MVP), i.e. a prototype, to develop and validate their business models.
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