The idea of starting a new business can be very thrilling especially when you’re focused on the profits, success, endorsements, deals, recognition et al, that you’d achieve from your new business. On the flip side, startups can be daunting too. After the thrills and glimpse into the successful future of your new business, reality suddenly hits you. You have to birth your startup. Then you start wondering where to start from. What comes first? Should you focus on a business plan? Oh no, sounds like you need a co-founder to start the business with you. But then, haven’t you been told that having a co-founder in your startup is not a necessity?
Maybe you should focus on building a team. But then, you’ve barely set up your new business. Do you really need a team yet? Financing your startup could be quite confusing too. How much should you invest in your startup to be on the safer side? How do you even get funds or capital for your startups? Is the idea of having an investor invest in your startup safe at all? Does your startup even have the tendency to become a scale-up? Does your startup have the tendency to succeed? Is there any hidden thing you need to know about startups before you start yours?
Do the above questions sound like something you’d ask?
Yeah, starting a new business can leave you with twirling thoughts such as the above. It’s easy for fear of failure to creep in when it’s time to begin a new business, most especially when you feel you’re not taking the right steps.
In this article, you will learn the fundamental aspects of startups as well as set you on the right track for your new business.Startups And Its Basics: Mastering the Fundamental Aspect of Startups in 2022 Click To Tweet
What Startups Really Are.
Over time, there have been common misconceptions as to what a Startup really is. The most common misconception has to be mistaking startups as small businesses.
Now, let’s get to it. A startup is not necessarily a small business. There’s more to a startup than just its size.
Basically, a startup is a company that is in the early stage of business and not a small business as it is usually mistaken to be. Startups are just young businesses or companies. A startup runs a temporary business model that is meant to scale up to a larger business model in the long run. Startups are naturally born to be big.
A small business is the exact opposite. A small business is not expected to scale up its business model because it runs on a fixed business model. That is, the idea behind the formation of small businesses may not necessarily be to expand. As a matter of fact, while a startup is designed to scale up, a small business is not.
By default, and if run on the right business models, startups are bound to later lose their startup status after they must have scaled up. Startups and small businesses run on completely different business missions and models. Startups are focused on one major idea but small businesses are not. The big idea behind startups is bringing to the market a product or service for which it is believed that there’s high demand.
It is also believed that there are little or no products or services that match the high demand for them, hence the birth of the startup. So, the founder or group of founders of the startup are focused on bringing to prospective customers the product or service they believe they would demand. While small businesses offer what has been offered to the market before, startups bring an entirely different thing to the table.
Startups are very particular about the product or service that they are bringing to the market. They are usually focused on one main product and service to offer to their prospective customers. Usually, a startup is usually a mere idea that has the tendency to be a hit if well worked on. The founders of startups believe that their idea cannot be done without and is liable to have a lasting impact on the world.
In summary, startups are naturally inclined towards changing the world and meeting its pressing but unmet needs. As against small businesses, startups run on scalable business models, innovation, passion and drive. It is impossible to avoid difficulties and barriers to success while building a startup but then, it is the passion and drive that keeps it going.
What You Need To Considered Before Launching a Startup.
Just before you launch your startup, a number of measures have to be put into place. Extensive market research amidst many other things has to be carried out. How your startup would be funded has to be put into consideration. Your startup promotion and marketing campaign should be properly strategized.
So, first, where do you start from and what do you really need to put into consideration before you launch your startup?
- Nature of your startup
What exactly does your business offer? Are you providing services, offering products or keen on manufacturing? What does your business offer and how?
- Business Idea
Like I stated earlier, every startup begins from an idea that either hits or miss. Now, it’s not enough to have an idea, it’s important to consider whether or not that idea is feasible and would work out. First, does this business idea of yours meet any needs? Does your business idea solve a problem? For your idea to be feasible, it has to solve a problem and meet a need.
Next, does your idea stand a spot in the marketplace? Do you need to polish this idea for it to stand a better spot in the marketplace? What are the skills needed to make this idea work out? Do you have them? If you can provide positive answers that point at this business idea working out, then your business idea is good to go.
- Market and Demand Research
One of the most important researches to carry out before launching a startup is Market and Demand Research.
First, you need to be able to identify your prospective customers or target audience. Are your products or service in demand? Are there sets of people who would be needing your product or service? Who are these sets of people who’d be needing your product or service?
What are the right channels to get your product or services through to them? Do your prospective customers have a specific buying habit you could possibly leverage on?
Evaluating all these would go a long way in ensuring the success of your startup.
- Business Plan
As a startup, you need to be able to determine whether or not your business idea is feasible. Does your business plan provide enough direction on the next steps your business has to carry out?
- Legal Structure
Before launching a startup, you need to consider what legal structure is the perfect fit for your firm. If you’re deciding on being the sole founder of your startup with no co-founder involved in the founding process, this means the Sole Proprietorship structure is the best fit for your startup.
On the flip side, if you’re keen on allowing your startup to have co-founders and joint owners, Partnership is the best legal structure for your startup. Asides being having access to wide funding options; the Partnership structure is less complicated to establish. To reduce risks that might arise from Sole Proprietorship, you might want to register and structure your startup as a Limited Liability Company (LLC).
- Business Registration
Now, this is very important. In fact, before you launch your startup, it is best advised to register your business as a means of making your business legal. This would save you from many headaches to come.
The importance of a good location for a business cannot be overemphasized. The location of a business is partly responsible for its visibility. The location of a business is also a way of promoting the business to prospective customers. This is one reason why research has to be carried out before deciding on the location of a startup.
The startup has to make a choice between conducting business online or having a physical store or office. In all, the location of a startup is highly dependent on the product or service offered. For example, if a startup major in providing UX/UI services, conducting business online is best advised.
Before launching a startup, you need to estimate the total cost needed to finance your startup. Your costs are simply your operating expenses. If you’re using a physical location, you might need to add the cost of building or land (as the case may be), furniture and equipment to the capital required to set your startup running. If you’re using an online store or conducting your business online, you need to estimate the cost of running a website, purchasing a domain, etc. Salaries, utilities and monthly expenses should also be considered.
Estimating costs is necessary to keep your new business rolling as immediate profits are not assured in the early stages of your startup.
- Funding and budget
You’d need to fund a startup to keep it going. How do you raise capital for your startup? There are a couple of ways to fund a startup. Some of which are:
(i) Bootstrapping: in this style of funding, the founders and co-founders or friends invest in the startup. They are responsible for coming together to fund the business.
(ii) Loans: A startup may choose to use business loans to fund itself. Fortunately, there are microloans with the interest of startups at heart.
(iii) Seed funding: this method of funding involves calling on high-profile individuals with considerable net worth to invest in startups.
(iv) Crowdfunding: in this method of funding a startup, funds are raised by setting up a crowdfunding page and calling on the public (more of people who believe in the vision of the startup) to donate funds.
Just the same way market research is highly important before launching a new business, so also is competition research or analysis important. You need to study your competitors, understand the target market alongside how they run in order to successfully survive as a startup.
In analyzing or researching your competitors, you need to study their marketing and promotion strategies, weaknesses and strengths, uniqueness, pricing techniques as well as how they position themselves in the market.
It is not just enough to study your competitors; you should also be able to use the competition analysis to come up with a handful of strategies with which to top your competitors and properly position yourself in the market.
This way, you’d be able to beat potential competitions as well as have a place in the market.
- People Management
As a business owner, this is one factor needed to be put into major consideration. How do you plan to manage people that are going to facilitate the smooth running of your startup? As a startup, are you hiring workers or you’re outsourcing? If you plan to outsource, how well do you trust the professionalism and expertise of the company you’re outsourcing to? On the flip side, if you’re hiring, you should make sure you have funding for salaries and can comply with the compulsory government regulations.
- Marketing and Promotion Strategies
For your startup to successfully scale up, you need to have a feasible strategy. How do you plan to promote your business to your prospective customers? What marketing platforms have you put in place for promotions of your startup?
Remember, without a good marketing plan, your startup has the tendency not to scale up.
- Financial Analysis
For every business, you have to have to properly account for your business. You need to be able to balance your financial accounts at intervals. Nothing comes close to having an accountable financial system in a business.
Co-founders or Team Members; which do Your Startup need the most?
It’s no news that a founder is a necessary factor in creating a startup. I mean, at least there has to be someone who’d bring the idea and work on it. There might later be co-founders or team members in the picture but there has to be a founder first. After a startup has been launched by the originator of the idea, what comes next in terms of human resources? Co-founders or team members?
While both groups (I mean, the Co-founder and the Team members) vary in terms of equity and all, both fall under the umbrella of a team. Both team members and co-founders are generally addressed as team members (And that’s whether or not you’d like to admit it).
Now, both co-founders and team members have similar things to bring to the table – ideas, innovations and passion that would move the startup forward. It doesn’t matter what title either of the aforementioned groups fall in, they both need to bring forth ideas that would push the business forward. Both Co-founders and team members are equally needed by startups.
As the founder of a startup, you should look out for people who can contribute positively to the growth of your new business. If you ask me, (Which is the reason you’re reading up to here, lol) you shouldn’t be necessarily concerned about the title, you should be more concerned about what each group is bringing to the table.
Co-founders or not, your startup needs a formidable team that has the best interest of your business at heart. What do your co-founders have to offer to the business in form of innovative ideas that lead to growth? How are the team members working hand in hand with the founder to help the startup scale up?
Everyone involved in the growth process of the startup, (Co-founder or not) makes up a team and are an important asset to the business.
Therefore, as a startup, you should focus on attracting and building human resources that have the best interests of the startups at heart.
Why Startups Fail?
You know what statistics are saying. 90% of startups failed, leaving the lucky 10% to success. 20% of startups collapse within the first two years of existence and a good half of businesses do not survive up till their fifth year.
If these statistics are not somewhat disappointing, then I don’t know what it is.
Now, the big question is, what is responsible for the failure of the huge 90% of startups? Why do startups fail?
Lack of extensive market and demand research
The easiest way to fail as an entrepreneur is to venture into a market you know little or nothing about. As stated earlier, before launching your startup, you should acquaint yourself with how the market works, who your target audience is and how to reach out to them. Is there even a need for your product or service? Does it stand a chance in the marketplace?
Lack of extensive market and demand research is one of the fastest ways to fail as a startup. If you fail to identify where you stand in the marketplace and who your prospective customers are, how do you offer your product or service and to whom do you offer it?
Lack of feasible business ideas and plans
Your business idea and plan is the determinant of the success of your startup. You’d need to weigh your business ideas to determine how feasible it is. More often than not, a good number of startups fail to weigh the feasibility of their business idea and plans before they launch and unfortunately, they come crashing as soon as they began.
If your startup has a physical store, office, etc, the location of the business goes a long way in determining the visibility of the business. As a startup, if your prospects and target audiences are unable to locate you where they feel you’re supposed to be, it reduces the visibility of your business. Reduced visibility would hinder your prospective customers from getting to know about your product and service and this could lead to the crash of the startup.
This is why it is always advised to make extensive research of your consumer demographics and location before you launch.
Inability to take risks
Some risks have the tendency to turn your business around positively or not. This is why it is termed a risk. Dangerous as risks might present themselves to be, some of them are actually worth the stress.
As a business owner, you should be able to take risks as some of these hold good things in store for your business.
But how do I know the risks that might actually be of help to my business?
Well, risks do not come out plain to tell you, “Oh, hello dear business owner, take me because I hold good things in store for your business.”
To be on the safer side of risk-taking, be sure to weigh the options before taking risks. And don’t be afraid to take one.
Inadequate marketing and promotion strategies
it’s the dream of every startup to scale up but then, scaling up isn’t even a walk in the park. What are the marketing strategies put in place to help your startup grow? How do you plan to promote your business to prospective customers?
The inability of startups to see to these is a leading reason why they crash.
Not having the right people on a team
The kind of team members you have would either contribute to the growth or the death of your startup. As founders of a business, you should do well to ensure that the passion of your team members for the growth of your business should match yours (even if it doesn’t equal it).
Do your evaluations properly and ensure your team members have the interest of your business at heart.
Inability to study competition
Whether you like to admit it or not, your business has competitors. And it is your duty to study them, their strategies, positioning, pricing techniques, etc, so as to have a spot in the marketplace. If you’re not studying your competitors, you’re only deliberately allowing them to have an edge over you.
Poor funding and budgeting
Funding and budgeting is an issue in new businesses. To be on the safer side and avoid crashing, it is advised to have an external means of funding the business as profits may not be made as quickly as you think.
Having a means of funding the business without necessarily having to depend on the profits to be made from the new business ensures continuity, growth and success of the new business.
Shying away from customers’ needs and complaints
This is one thing every business should try as much as possible to avoid. Your business exists as a result of the needs and wants and customers. Now, not focusing on satisfying the needs of the customers would lead to the failure of the business.
If you cannot solve problems and satisfy needs, what then is the use of your product or service? Always put customers’ feedback and complaints into consideration. This would enable you to know areas of your business you need to work on in a bid to scale up and ensure growth.
For the sake of visibility and sales, some startups go as far as offering their product or service for a price that’s less than the worth of whatever is being offered (Now, lol)
This is one of the easiest ways to run down your business. You shouldn’t for any reason whatsoever, offer your products for less than their worth. This would not only cause the business to run at a loss, but it can also hinder growth.
Poor Product or Service
Now, it’s one thing to offer a product to a target market and it’s another to offer quality products and services. The main aim of your business should be to keep your customers satisfied. And the only way to do that is to offer quality products and services that leave them satisfied and even turn them into recurring and loyal customers.
Inability to Leverage Technology in Business
The world is not going backwards. Technology always wins, and the world is constantly innovating without waiting for you to catch up. A business without basic technology such as a business website in the 21st century is on the verge of failure. A website is the anchor of any small business. It’s where you communicate your services, your goals, everything about your business. Writing articles and whitepapers about your business on the blog will still stand your business out among its equals.
Your small business website can be one of your most valuable tools in customer acquisition and retention. A business without a website will collapse and because the competitors will take all the customers at the end of the day.
Final Thoughts on Mastering the Fundamental Aspect of Startups
The thrill that comes from wanting to launch your startup is understandable but you should also make sure you’re taking your time to plan and strategize. Planning and strategizing is key to the success of every business.
In choosing team members, ensure that those you’re building a team with are those who are keen on making sure that the startup scales up.
Be open to feedback and suggestions and do well to make sure you’re offering a product that has market demand. Do well to ensure that your business is duly registered and has a legal structure. Ensure your physical location is one that is easily accessible to your target customers.
Never stop carrying out researches and never stop improving on your business ideas.
While this is not an exhaustive list of everything you need to know, I want to believe you’ve been provided with the necessary information needed to launch your startup and ensure growth.
So, how about you launch your startup now? Let me hear your startup story in the comments section below. Hearty cheers to your growth and success!