Many of our clients are startup owners. So, we have analyzed there ups and downs and decided to write our article on how it is better to launch a successful starup. However, speaking about startups creation, this process is not as easy as you may think. This time we have decided to write a brief guide for those who are seriously thinking about becoming a startuper.
1. DEVELOP AN IDEA
The development of an idea and realization of a startup is a laborious task. Many things are to be taken into account to make a startup effective. The main thing is to show your vision of the startup through problems of people. Needs of people are more important than business plan. At the same time identify your motivation and purpose in life. Pay attention to your leading advantages. The main criteria for the successful idea are as follows: durability (value over time or long-term importance), trustworthiness (possibility to defend it), and sustainability (possibility to fulfill the idea over some period of time).
So, you are ready to create a startup. Here is the question, where the idea is to be taken from? We have distinguished empirically several ways that can help you find a great idea for a startup:
- Thinking over what you or people close to you are insufficient of. The great example is Glen Tullman and his company Livongo Health that uses cloud technology to help people manage chronic illnesses, starting with diabetes.
- Modernization of your hobby. Shabnam Mogharabi always wanted to tell stories that would change the world. Now he heads SoulPancake, a growing media empire in Los Angeles focused on spirituality with annual revenue equal to $3.9 million (2014) and 3-year growth of 3,044%.
- Finding market areas not yet noticed by existed companies. This is typical for established professionals who are already involved in developing an existing business of other people. Bai Brands used its imagination in combining ingredients, including organic coffee fruit and white tea extracts and earned $100 million revenue in 2015.
- Development of the area in the new thriving sphere. The reason of developing the area in the new thriving sphere is that companies are not able to manage all demands appearing there. For example, pet industry on which nearly $61 billion was spent in 2015. The Seattle-based startup (Rover.com) has been regarded as the Airbnb for dog sitting. Greg Gottesman and Philip Kimmey founded Rover.com in 2011 and raised more than $50 million.
2. EXPLORE THE MARKET
Understanding your market is a key to success. If you do not know particular features of the business sphere you have chosen, your efforts will be in vain. Stay within the area you know. Don’t start anything you are not familiar with. Remember about consumers and feel like they do, figure out their needs.
3. BE FAST
In their interview to Business Insiders the leading Internet entrepreneurs Kevin Ryan, Thomas Gensemer, Marc Andreessen, and Mark Zuckerberg are as one on the issue of speed and quickness. Reacting fast to changing market needs is crucial for a successful startup.
4. DON’T FORGET ABOUT DETERMINATION
Realization of your own project will take many efforts. In such a case, chances you will build a successful startup depends greatly on your determination, willingness to continue till your business becomes profitable, as well as ability to overcome difficulties and to cope creatively with competitor’s challenges.
5. BE CREATIVE
Unusual thinking is also essential for getting first investment and starting your business. The great example is Airbnb, whose first object of the lease was their room with air mattresses. Its founders have displaced many established companies in the hospitality industry and earned billions. So, don’t be afraid to go beyond generally accepted business schemes! It is about you and your uniqueness!
6. THINK ABOUT THE TEAM
The number of people in your team should not be too big. Still, they should have high level of inner motivation on company’s value creation. It should be right people with the same drive and much knowledge. A vision for the future is to be more important for them than high salary and bonuses. Saul Klein, founder of Kano Computing, distinguishes three types of the perfect startuper:
1. A person who understands how to build technological systems in order to solve problems.
2. A person who understands the human factors hid by the problems and who knows what it takes to solve them.
3. A person who knows how to reach people whose problems are to be solved.
7. VISUALIZE BUSINESS ORGANIZATION
The basic issues you need to pay attention to are:
1. Your business registration.
2. Legal advice and accounting support.
3. Building of effective financial model of your business.
4. Building of a formal model of your business functioning.
Moreover, a businessman should understand that at the initial stage of the startup, one of the most important recommendations is to turn particular attention to pleasure and drive of the project not money or revenue.
8. DON’T FORGET ABOUT RISKS
Risks are natural companions of any new undertakings. They should not frighten you or hamper your development. In general, a startup can face several risks.
1. Market Risk Is there a market for your product? Is it necessary to somebody? Will people pay for it? Answering these questions is one of the main tasks before releasing your product to the market. If this risk falls in your favor, your business is to succeed.
2. Product Risk Another top priority while creating a startup is to identify your product, its features, problems that are solved with its help, and its worthiness to be invested in. If you are not able to do it, obviously potential customers will not be interested in it.
3. Team Experience Risk One person cannot cope with all risks by himself or herself. That is why the issue of team is a topical one. You should build a team of such specialists who have enough experience and knowledge of the business area. Besides, the team is necessary to develop ideas concerning product’s building, its bringing to the market, etc.
4. Financial Risk Most startups require investments to get up and running. At first it can be your friends, family, angel investors and venture funds. It is necessary to identify business boundaries when you are searching for new investments. Your potential investors pay attention to your ability to articulate a business plan, to reach each new stage of development successfully.
5. Risk of Copycats There is always a risk that competitors will copy your product. It is particularly topical for IT industry. It is easy to give your idea away while searching for investors or executors. It is also possible if the development is not dynamic.
This list of risks can be continued and new ones can be added. Nevertheless, risks connected with your startup are not issues out of control. There are always ways to manage them. One of them is to build a MVP, the essence of which is to narrow down your idea into the smallest quantity of things that validates your assumptions. It is rather important for any company to create the simplest version of its product that is ready to be launched onto the market, thus helping to collect initial data about potential customers. The main benefit of it is that you will not have to spend much money until you know there is a market and a target group for your product. It illuminates risks of uncertainty surrounding a starup.
Our specialists know How to build a Minimum Viable Product and are ready to help you. Even if your first try of creating a successful startup is not so rewarding as you expected, don’t give up to the difficulties. Remember, RubyGarage team stands by you at any time!