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You’ve got an exciting business idea, you've great expectations on the possible outcomes if only you’d manage to build a startup around it, but you find yourself at an impasse: how do you start a startup? Building a startup may seem easy. In movies, tv series and on social media, we’re submerged with fascinating narratives of people who succeeded. But starting up your own business it’s not something that you can improvise. You have to study, to gather information and take all the right steps in order to have a possibility of succeeding. Let’s see how to build a startup without making bad mistakes.
First of all: clarify your idea
When your idea first springs up, it can be easy to get caught up in the dream of it. It may seem like the most original idea in the world, a million dollar idea waiting to be realised. But if you want to make a successful business out of it, you have to sit down and scientifically dissect it. Find if there are any potential blockers, any immediately evident shortcomings, any flaws that meet the eye. Then you have to do some research and determine whether it’s a truly original idea or if there is already something similar out there. If you do find competitors, find out how they are performing and if there is still enough space in the market for another similar business.
Of course you should do some market research, identify your target with the utmost accuracy and determine if what you have in mind can truly represent something valuable for them. Does your product or service solve a problem that they have and more importantly, will they pay for this problem to be solved?
You should then start working on a business plan. This will be a fundamental tool to guide your steps but also a powerful way of refining your idea and how you will make it profitable.
Do not underestimate the risks and the fatigue
When you think of launching your own startup, you can be easily distracted by the romantic aspects of the whole thing (IPOs, flashy office spaces etc.) and tend to forget the negative aspects. Over 1 million startups are launched each year but a whooping 90% of them fail. Research shows that 21.5% of startups fail in the first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year. According to business owners, reasons for failure include bad management, money running out, being in the wrong market, a lack of research, bad partnerships, ineffective marketing, and not being an expert in the industry. With such a high failure rate, it is important to be aware of what you are getting into.
First of all, expect to be overwhelmed by work, by great and small details you have to think of, by decisions to make, by worries, first of all about your finances. Because at first, the money you need for your startup will typically come from your savings or from friends and relatives, not from investors. And before things start working, a considerable amount of time will have passed, during which you will not earn money but you will have to cover expenses.
You will also have to make sacrifices: working long nights, giving up parties and going out with friends because you have things to do or networking events to attend. You have to be prepared. Remind yourself that only half of the startups survive past a five years lapse, double your efforts and work even harder. In the process, you will learn to manage your time well, dedicating it to the right priorities and creating the most value.
Find funding...at the right moment
Are you going to need more money than what you can provide with your savings or with the help of friends or relatives? Of course, yes. But should you start looking for funding (be it angel funding or venture capital) first thing after you founded your startup? Maybe not. This is where the term Bootstrapping comes in.
Bootstrapping is building a company from the ground up with nothing but personal savings, with luck, and the cash coming in from the first sales. The goal is to keep it as lean as possible with little or no outside cash or other support launches.
At first you should give priority to other things, like developing and marketing your product or business idea, finding customers, preparing a brilliant business pitch, finding the right people to get on board, clarifying responsibilities with your business partners etc. Only afterwards, if and when your business starts growing, you should look at the issue of finding more funding. For the same reason, never quit your job before your new company has a solid footing, because you’re going to need what you earn to fund your new venture.
Don’t take forever to launch
Last but not least, it’s ok to chisel your idea and the company you’ll build around it while you are moving forward. Let it develop while you work. It doesn't have to be perfect. Not having everything figured out shouldn’t force you to postpone the launch. Because, especially in the startup ecosystem, timing and momentum are crucial.
Article updated on: 09 August 2023
Written by
Talent Garden, Digital Skills Academy
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