Starting a business is easier today than ever before with all of the free information and helpful apps out there. The hardest part is standing out with all the fragmentation in the different tech markets. You need to make sure that you have taken all the appropriate steps towards building your business to make sure that you succeed in today’s economy.
1. Do your market research to know if the idea is worth pursuing
Google is your best friend. Know your industry, your competition, and where you fit in the market. If you do not have competition, it is not necessarily a good thing. This could mean that your idea is too ‘new’ and might require educating your market, or you might have to wait for the technology of the market to catch up to your idea. Do your market analysis, and most importantly, make sure there is a need for what you are building! Do this by surveying your potential customers by talking to them. Make sure that you are solving an actual problem they have, and they are willing to pay for your solution.
2. Do your due diligence
Build a Business Plan, Pitch Deck, and create mock Financial Statements. Doing this will help create a lot of clarity and will give some perspective on how much work goes into building a business and a brand. Be sure to know that on average businesses take several years to become profitable even if there is a dire need for them. Together, these will become the road-map for your business and will continuously evolve and grow as you do.
3. Get a mentor and build a team
Networking is a great way to meet people in your field, and to find successful people who believe in you and want to help you succeed. They can help give you the knowledge to avoid potential pitfalls that they have seen on their journey to success. Understand that no matter how smart you are, you can’t run a whole business efficiently by yourself. Look for people who believe in your idea as much as you do, whose skills are complementary to yours. If you are looking to bring a friend into the company as a co-worker or co-founder, understand that there is a chance you might not be able to maintain a friendship. I have worked with friends in business, and it either really works out, or it doesn’t. Unless you have an accountant on your team, a great way to reduce personal liability is by hiring a third party accounting company, as accounting laws change daily. Lastly there are a few apps that can help you with the various management needs of a startup. Some popular and free apps that I like to use are called Slack for messaging, and Trello for operations management.
Figure out what legal structure is right for you and your idea. There are many different ways to incorporate a business today, so knowing whether you should create a non-profit, LLC, or a for profit with the correct legal structure can help save you a lot of time, money, and headache in the future. Some startups require large amounts of capital investments, and unless you are a C corp out of select states (like Delaware, or New York) that are more investor friendly, it can become another hurdle to receiving that much needed cash infusion. Today there are also many options for how you incorporate, and how much it will cost you. You can get a lawyer, but this can be expensive. You can file yourself and save a lot of money, but this is very tedious, requires much legal research, and your applications can get rejected. Lastly there are companies like Legalzoom that will allow you to incorporate for a fraction of the price using legal templates, but they do not give legal advice. If you go this route, I would suggest getting legal consultation or doing your research before using their, or similar services.
5. Build a brand
Create on online presence by building a logo and website, and figure out if marketing your brand on social media is right for you. Creating business cards is an essential tool for looking professional and for networking efficiently. Lastly, creating an explainer video for your idea can be a great way to receive feedback, and gain potential sales leads. You want people to know exactly what you are doing, and get excited about it.
Now that you have spent time understanding your market and building a brand, it’s time to figure out how much money you need to get to the next level. Decide what you need to do to make money, and put your money, time, and effort into that. For most businesses today, this is building a software. Bootstrapping means that you, your co-founders, and your have friends and family invest your own money so you can further your business and achieve the goals needed to get you off the ground. Some other alternatives for early stage money are incubator or accelerator programs, pitch competitions, and potentially grants (if you are a non-profit). Generally your goal is to build an MVP (minimum viable product) with this funding. Once you have built a product and have several letters of intent, it will be easier to seek angel investment.
7. Build MVP and prove the concept
Assuming you are not a developer, now it’s time to figure out how to build your product. You have successfully raised some money? Great! Depending on how much, you need to either go to a development shop in the US (or overseas to make it more affordable, however there can be other difficulties associated with this). Having a difficult time raising the money? Not a problem! Spend your time networking with developers and try to find a CTO (Chief Technology Officer) who loves your idea, and is willing to work for equity. You have been fortunate enough to get over the hurdle of building your own product, congratulations! Now it’s time to prove your concept with your market. Testing is key to make sure that you are able to continue to build your user centric product that your market will love. Get your KPI’s (key performance indicators) from your pilot tests, which will help you get sales, and achieve investment.
8. If you need, raise money to hockey stick your business
Be sure to network with investors, and continuously hone your pitch so that when you are ready for money, it will be easier to win them over. To do this you should: know your problem, your solution, your market, your business plan, business model (how you monetize), your competitors, how much money you need / why, and why you and your team’s skills are complementary for your endeavor. Have all these things, KPI’s, and some letters of intent or paying customers? You should not have a hard time receiving your Seed round angel investment. Receiving investment will help propel your business by giving you runway (time for the company to continue to thrive and take off). It will allow you to salary yourself, pay for the various business expenses, market and sell your product, and pay for the various technical expenses associated with scaling your product.
Bottom Line: There is really no secret or shortcut for the amount of time and hard work that goes into building a business. There is also no right or wrong time to start your business, but you should also understand the risks involved depending on where you are in life. Hopefully following these steps will help you as they have helped me create a successful brand.
By Maxwell Witt