According to a Global Entrepreneurship Monitor study, over 69% of existing American entrepreneurs started their professional path from home. In 1975, Bill Gates and Paul Allen created Microsoft Corporation right at home. A year later, Steve Jobs and Steve Wozniak configured the first 50 apple computers in their parents' garage. Now Apple and Microsoft are real sharks of the IT industry. The truth is that in order to make a startup you do not have to meet certain conditions. But what are the right steps for success?
Develop an Idea
Any business begins with an idea. In other words, think about what will be the foundation of your enterprise. The idea of your company should reflect the needs of the market. The sad truth is that most startups fail, and the reason lies in two main mistakes - incorrectly configured business processes and an idea that does not meet the needs of the market.
You are more likely to succeed if your business is based on what inspires you. If you have a couple of ideas that you are passionate about, it's even better. Then you will have a choice and can evaluate which will bring more profit. This does not mean that you should implement all of them, or combine them. But it will help you in the future when you conduct market research.
If you still do not know what your company will be based on, it's time for brainstorming.
Ask your friends and relatives what services are most relevant to them. This will give you an idea about what to focus on. Moreover, at an early stage, your network can become potential customers.
Think about what technologies, services, or products will become relevant in the near future. The Internet will help you in this matter. Google economical studies and forecasts for the next decade. Perhaps you will even find a niche that is still not occupied.
Try to simplify something that already exists. Perhaps something annoys you and you know how to make it better. Colin Barceloux was a college student when he faced a textbook system that ripped people off. In 2007, he founded the website BookRenter (now called Rafter, Inc.), which offered textbook rentals at great discounts. Now this site has nearly 2 million users and hundreds of employees. Moreover, Colin’s business helped students save millions of dollars.
You do not need to develop a new business idea. You can make an existing process more effective. In 2010, 4 friends from Pennsylvania organized a business for the production and online sale of glasses named Warby Parker. The advantage was that they sold glasses for $95 per pair, while their competitors charged $300 or more. Now this company is valued at more than $1.2 billion dollars.
One of the more common ideas for starting a business is to buy a franchise. In this case, you accept a successful trade that has already been proven. A franchise allows you to collaborate with professionals who already know how to build and develop a profitable business. But this option does have one big negative. Buying a franchise usually requires a lot of money.
Explore the Market
After deciding on what your enterprise will be based, you should research the market. Creating a startup without solid analysis is a recipe for failure. Identify your competitors, learn about their services and pricing, familiarize yourself with appropriate quantities/inventory, analyze the demand for what you want to do, and set your target audience and pricing policy. The actual market situation allows you to identify the advantages and disadvantages of your idea.
Let's look at tips for successfully conducting market analysis.
Do primary research
Primary research is when you independently study the market. You can order such services from specialists who will conduct an analysis of the necessary niche for you. But since most startups are limited in funds, one of the easy ways to conduct primary research is to search online on relevant sites such as Quora, Reddit, Digg, etc.
One of the most popular types of market research is SWOT analysis. It provides an extensive understanding of the situation. Making SWOT analysis you must identify the Strengths and Weaknesses of your idea, as well as Opportunities and Threats.
Conduct a survey
Another important step is making quantitative and qualitative analysis. You have a business idea. Now you should conduct a survey of potential customers about how important and useful it is. You can conduct a survey on social networks, at malls, or even with the help of cold calls. Your goal is to understand what people think about the products or services you are going to offer. You can easily conduct an online survey for free using services like Google Forms, SurveyMonkey, and Typeform.
Study secondary research
Secondary research is a method where you use already existing information. Simply put, you are studying the results of research that someone else already did. It is a great addition to your primary research, as it helps to achieve a more accurate result and understanding of the market situation.
Prepare a Business Model and Business Plan
A business model is information, calculations, and analyses that define a service or product. It shows how the company will work with customers, suppliers, employees, etc.
Most popular business models include:
Hook & Bait - This involves selling two products. You offer a basic product (hook) cheaply or even for free in order to attract attention to the complementary product (bait), which is usually sold at a high price.
Ad-Based Model - In this type of model, you develop a free product in order to receive funds from advertising placed in it. This business model is very effective, but it requires a large customer base.
On-Demand - This model instantly meets the needs of the user. Outstanding representatives of such behavior are Uber and Airbnb, where you can make an order with just one click.
Subscription-Based - This model is relevant to software companies. You do not sell a product or service. You give users full access to your platform for a monthly fee. Netflix is managed in this way.
A business plan is a document that contains information, calculations, and analyses that demonstrate the viability of a business. In other words, this is a description of how the company will be built, what steps need to be taken, ways of investing, expense items, etc.
A solid business plan should include the following sections:
Summary - This is a brief section, the purpose of which is to attract attention. It should reflect the name of the startup, the services or products offered, and the company's mission and purpose (for example, find investors).
Company Description - This section should include the structure of your business, an overview of products, services and suppliers, and a description of short-term and long-term business goals.
Products and Services - This section should clearly describe what your business will produce or offer, highlighting the benefits. It should also include the role of your product, a description of the life cycle, and research for business development.
Market Analysis - This section indicates your niche segment, description of industry prospects, and competitor analysis.
Strategy and Implementation - This section describes how you will implement the sales strategy and operating plan.
Organization and Management - This section must contain information about the company employees, owners, managers, and board of directors.
A business model and business plan are interconnected. So, with changes in the first tool, the second one must be changed as well. You can build a business model by studying models of profitable companies that offer the same services.
Statistics show that about half of all startups fail within 5 years. Many companies break because they ignore risk predictions. Risk assessment is to your advantage. By predicting possible negative scenarios, you can develop solutions in advance. The following are some of the main problems you may face when building a startup from scratch:
Competitive Risk - The basis of this risk is that competitors can crush you. That is why a responsible entrepreneur should study, in detail, all the advantages and disadvantages of their opponents. Analyze, in detail, the strengths and weaknesses of your business as well.
Product Risk - Before starting your project, you must make sure that the goods or services that you are going to offer correspond to the needs of customers. Any idea you want to implement must be in demand.
Financial Risk - Your goal is to predict situations and force majeure which can cause you to permanently lose finances. Occurrences of this risk are often associated with situations where you are borrowing money to launch a business.
Copycats Risk - In the IT industry, there are frequent cases when competitors copy a product or platform. One of the most important things to consider is the creation of a patent, as well as a copyright. Any website must have a copyright © and the company name in the footer of the page.
Raise Capital for Your Enterprise
This step is optional, but it can speed up the implementation of your business idea. You need money to rent an office, purchase the necessary equipment, develop a website, etc. And this is one of the main reasons why you need a business plan. This document helps determine startup costs and attract investors. Below is a list of the most affordable ways to conduct fundraising.
Grants or Loans - One of the most workable options is to take a grant or a loan for company development. There are hundreds of federal grant programs that provide money for the implementation of various business ideas.
Online Funding - Another very good alternative is to conduct online fundraising. For example, Kickstarter allows you to collect donations for various creative projects, including the creation of movies, games, and products. Pebble Technology used this platform and raised more than $20 million to create smartwatches.
Join Investment Companies - Gust helps businesses from various industries obtain investments for their development.
Connect with a Startup Incubator - There are companies that allocate money to develop ideas in exchange for a share in the business or a royalty. This is pretty convenient because you cooperate with professionals who can help you at all stages of launching a successful startup.
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Determine the Right Location
You must decide in what locations your company will operate. If its idea is based on services that can be provided online, then you can target customers around the world. The choice of location for doing business is important, as it directly affects income. For example, Booking.com was founded in the Netherlands but provides services in more than 220 countries worldwide.
No matter what market you are targeting, your company should have a headquarters. The living room can work for some time, but it is not the best place for conducting business. When choosing an office, consider important factors such as customer demographics, district infrastructure, the number of nearby competitors, pedestrian traffic, convenient parking, and of course, the cost of rent and utilities.
Develop a Website & App for Your Business
When you are considering how to start a startup, think about representing your business online. A successful company must have its own website and mobile application for a quality business. This helps customers learn more about you and your products. Moreover, digital integration is a great opportunity to build your own online brand.
The following are important components that any platform or app should include:
An appealing and user-friendly design - A lovely website template is what attracts the users' attention. But it should also be easy to understand and navigate. When it comes to an online store, it should be convenient and intuitive to make it easier for customers to go through the sales funnel.
Fast search - You will lose clients if the system takes a long time to upload. A fast search engine and related database should become your best friends.
Reliable protection methods - Hacker attacks are common. They harm websites and users who make actions on online platforms. Hackers can even steal money through online purchases. So a reliable startup should have good protection against all types of attacks.
There are many online builders that allow you to create a simple site yourself. But this is usually not the best idea. Such builders have a limited set of tools and a standard set of designs. They simply create clones of plain websites. If you want to start a business and lead it to success, the best option is to hire a professional software development company that will build your startup from scratch. Even if you are not going to start a tech business, you should still have at least a business card website to attract new customers.
Don’t Think You Can Do Everything on Your Own
Another important factor when it comes to how to do a startup successfully is a competent team. Perhaps you think you can handle everything yourself, but that’s not entirely true. For example, you are an experienced hairdresser who wants to open your own beauty studio. You got licensing, rented a space, hired another hairdresser, and even created a website to attract customers. But this is not enough to work effectively. You need an administrator who takes care of recording clients, scheduling appointments, conducts billing, and maintains the accounting books on a daily basis. The same applies to the creation of an online business. You need someone who can take care of marketing, SEO, content creation, etc. A successful company owner is a person who can delegate part of the tasks to specialists in that area.
Even if you are starting a business in a living room, hire an assistant or consultant to help you with things you don’t know. A good idea is to make a partnership with a strong analyst who can take care of market research and risk prediction.
Building a successful startup from scratch involves several important steps. The first and most critical one is the generation of a good idea on which your business will be based. Think carefully about what niche you can occupy, and then conduct market research. Analysis of competitors, demand, and price segments are aspects that will help to create a strong business plan and development strategy. Another essential step towards achieving your goal is risk assessment. It helps you to avoid collapse during the development of the company. And any effective business should have a location and its own website.