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Launching a startup is always exciting. This is your opportunity to accumulate wealth, make a name for yourself, innovate in some unique way, and possibly leave behind a legacy. But too many entrepreneurs end up failing because they were inadequately prepared.
Before you even consider launching a startup, there are many preparatory steps you’ll need to take.
Set the Right Expectations
Before you do anything, you need to set the right expectations. A combination of media attention and survivorship bias has led people to believe that launching a startup is a surefire path to success – and maybe even a path to becoming a billionaire.
Being overoptimistic can cause you to overlook important weaknesses and threats and be disappointed and frustrated when things don’t go your way.
- While it’s easier to start a business today than it was, say, 30 years ago, there are still prohibitive costs to keep in mind. Depending on the nature of your startup, you may be responsible for paying for licensing, an office, employees, technological infrastructure, marketing, and more. If you’re not prepared, these costs could completely overwhelm your budget and make it nearly impossible to recover.
- Failure rates. Some businesses explode in growth, becoming tech unicorns worth more than a billion dollars. Others make a fair amount on an ongoing basis, becoming a reliable source of income for their founders and employees. But half of all businesses fail within five years of launching. You need to be prepared for that reality.
- Media stories often make it seem like tech startups skyrocket to success overnight. But the reality is, most successful businesses are the result of many years of hard work – including an entrepreneur’s previous failed attempts that serve as lessons for future development. You’ll need to prepare for a long, complex journey to be successful.
- Hard work. Being an entrepreneur may seem like a lot of fun – especially when you get to choose your own employees and set your own work schedule. However, no matter what, you’re going to face significant hard work. You’ll be working long hours, often into the evenings and weekends, and facing stress from a combination of many factors.
- Just because market conditions look a certain way at the beginning of your journey doesn’t mean they’re going to stay that way forever. Many tech startups fold because they can’t keep up with a changing market, new competitors, or other unpredicted factors.
Do Your Research
You should already know the importance of doing your research before starting a business, but many entrepreneurs skip or gloss over this vital step. You’ll need to dig deep into many areas of business development; for example, you should learn about your target demographics, the current competition, future prospects, financial models, and other factors critical to your success.
Objective data isn’t going to instantly make your business more viable, but it will give you something good to start with.
Write a Business Plan
You can’t launch an effective business without having a business plan in place first. Your idea may be brilliant, and it may solve a problem effectively, but does it have a reliable way to make money? Your business plan will force you to think through your entire business concept, modeling financials for years in the future and outlining the biggest strengths, weaknesses, opportunities, and threats before you.
This document will serve as a blueprint you can reference as you invest time and money in your business and begin to grow. It’s also going to serve as a persuasion tool, potentially attracting new investors or partners to your startup.
Build Your Network
Not even the most seasoned, inventive entrepreneurs can build a successful business by themselves. Most businesses strongly benefit from the help of a robust professional network. Through networking, you’ll meet potential investors, partners, employees, vendors, and even peers who can give you advice. Throughout the course of your startup’s development, these people will be indispensable in helping your business grow.
It pays to get an early start here. It’s much more beneficial to have a strong network and start a business than start a business and then build a network.
Find What Makes You Unique
Your business is going to face competition, no matter how original your idea is. There may be competitors already on the market, or they may begin to arise only after establishing yourself as a major player. Either way, you’ll need to find something that differentiates you from the competition. What’s something you can offer that other businesses like yours can’t? What’s your unique value proposition?
Don’t start a business without an answer in mind, or else you’ll face significant competitive issues.
Hopefully, you’ll have a network in place by the time you’re ready to launch your startup. Otherwise, you’ll need to start reaching out as your startup begins to develop.
Pay critical attention to:
- You may like the idea of starting a business by yourself, but even a single partner can reduce your fiscal obligations and make your life easier.
- Investors can make sure your startup has the capital it needs to grow and become successful; they’re also great sources of advice and direction.
- Your employees are the people responsible for turning your vision into a reality. Don’t skimp on the hiring process.
- When your startup begins to mature, you’ll want a few eager clients in the wings to step up and provide you with income.
Foster New Skills
Being an entrepreneur means wearing many hats. In the span of a day, you’ll take on responsibilities like accounting, hiring people, making critical business decisions, marketing, making sales, negotiating, making purchases, and more. You’ll also need soft skills like communication and emotional intelligence.
In the months and years leading up to your foray into entrepreneurship, it’s a good idea to develop some of these skills. See if you can land yourself in a leadership position, whether it’s in your job or a volunteering opportunity. Take courses to develop yourself in areas of weakness, and talk to people who may know more than you on these subjects.
Get a Marketing Strategy Together
There are tons of marketing options these days, even if you have a small budget as an emerging startup. But one thing is certain; it’s almost impossible to build an effective brand presence without marketing. Even if you’re relying on positive word of mouth and referrals, you’ll need some initial marketing to attract your first customers.
Some of the best options here include search engine optimization (SEO) and social media marketing, since they’re both relatively inexpensive, accessible to all businesses, and ideal for long-term growth. However, there are plenty of other options to choose from.
Come Up With Contingency Plans
Don’t forget the failure rate of startups. Even with the best-laid plans, there’s a chance your business will fail. You’ll need to be prepared for that reality with contingency plans – long before you start the business properly.
- Personal financing. Your income may be unstable as your business begins to develop. Can your personal finances take the hit? Do you have another source of income you can rely on?
- If your business isn’t growing the way you expected or wanted, is there a different business model you could pivot to? What outlets for growth and development are there for your business?
- Alternate career paths. Finally, are there alternative career paths that could sustain you? For example, is there a different type of business you could start, or could you join an established company in this industry to gain more experience?
No matter how good your startup idea is or how original it is, these steps will be vital to maximize your chances of success. Entrepreneurship is often fun, and always stimulating, but it’s not going to end in success unless you’re adequately prepared.
Originally appeared in ReadWrite