How to Start a Startup
The past decade has shown remarkably good news for startups, especially in the technology industry. At least, so the media would have us believe. In truth, 80 percent of startups never make it past eighteen months in business. The reasons may range from PR scandals to lack of capital investment, but by building a startup on firm ground, owners increase the likelihood of honing in on success.
With that goal in mind, here’s how to start a startup.
Step 1: Study the market
It’s not enough to come up with a brilliant idea. Entrepreneurs should also study the market to see if this brilliant idea could take root and grow. If it will not, this may not necessarily mean completely discarding the idea, but they may need to approach it differently.
For instance, a product for the winter, or based on some new pop culture craze, might produce seasonal success and great profit. However, investors must know when to draw back, count their dollars, and move on to something else. For more deep-rooted success, entrepreneurs need to look at whether or not market demand would support the product and, if so, for how long. How easy is it to market? Will many people honestly choose it over other, more established competitors?
Step 2: Plan the business
Once the market research is complete, it becomes necessary to flesh the idea out with the help of a business plan. Many businesses launch without one, but often end up in chaos and confusion as people squabble over their roles in the company and the direction it should go in.
In a business plan, the owner(s) can detail where the business is now, what it is, where it should go, and what it hopes to become. This compels owners to make key decisions early on related to the product or service, leadership and other human resources decisions, finances, and marketing strategies. Keeping this in writing prevents many disagreements that may later arise.
Step 3: Find good leadership
Not everyone with a great business idea or invention makes a good businessman. Invention and production require intelligence and technical skill, while running a business requires charm and leadership skills. The two do not always intertwine, so a smart entrepreneur knows when to delegate that role to someone else.
It’s also important to hire good leaders to handle logistics, marketing and PR, financial planning, sales, and any other relevant function in the business.
Step 4: Source capital investment
Entrepreneurs should have a number in mind as to how much capital they need to get the show on the road. This number represents a goal, or at least a minimum threshold the business needs to attract in investment funds through crowdfunding, bank loans, angel investors, family, friends, or even personal savings.
Once the capital is in hand, the entrepreneur should ensure someone is in charge of accounting for every cent that comes in, and for every cent that goes out. This helps to meet financial planning goals and to catch any shady practices other members might engage in under the table. It also provides paperwork for auditing and analyses.
After this, it’s smooth sailing into executing the business plan with the help of the chosen leaders, and using the funds available to obtain the necessary resources. From there, the company’s success depends on the leadership behind it, and the market’s reception of the product or service.