Launching a startup is exhilarating and daunting at the same time. While you may be completely sold on your brilliant idea, there is little guarantee that your business will expand as quickly as you’d like—or take off at all. The good news is that there are ways to evaluate the risks. And how profitable an idea can be before you decide to invest all of your resources into it. In this guide, we’ll cover the most important aspects to consider when launching a startup to ensure that you are setting yourself up for success.
Find a Problem–and Solve It
Every successful brand started with a problem to solve. Effective solutions to specific pain points have laid the foundations for countless products, new use cases, and customer segments.
Take Meta (previously known as Facebook), for example. Founder Mark Zuckerberg had a contract with Harvard University to make their printed student orientation handbook available online. He soon learned other universities had a similar need. There was a need for people from different universities to connect. He didn’t sit in his cubicle and ponder what software would make him a billionaire. Instead, he recognized a problem and delivered a solution.
"You could find music, you could find news, you could find information. But you couldn’t find and connect with other people, which as people is actually the most important thing. So that seemed like a pretty big hole that needed to get filled." — Mark Zuckerberg on Freakonomics podcast, 2018
Similarly, Airbnb was born when two of the founders needed to make a few extra dollars to pay their monthly rent. They bought air mattresses, offered desperate conference guests a place to sleep when all other hotels were booked out, and included breakfast.
The first step for launching a startup is? Develop a product by identifying customer pain points and dedicate yourself to perfecting the solution.
Decide on a Name
The name of a business, product, or service is its first point of reference. It is a critical branding representation of what you offer. It is the first touch point customers and competitors engage with to understand your brand.
A powerful first impact requires a catchy, yet easy-to-remember (and spell) name. It should help a customer grasp what your brand represents. Conversely, a poorly devised name also has the power to ruin that first chance at a good impression. It could also steer customers away.
When launching a startup, keep in mind that your company name reflects the ‘why’ behind your brand. It lays the foundation for brand identity and the emotional responses you hope to evoke. For example, Apple immediately brings to mind stylish, high-quality, tech-savvy design and top-of-the-range functionality. Netflix, on the other hand, perfectly embodies what the product entails—streaming flicks on the internet—in a simple, easy-to-remember name.
Your brand name holds an incredible amount of power, so give it the time and attention it deserves.
Have the Right Set of Expectations
Launching a startup and seeing it grow is an incredibly rewarding endeavor on both a personal and financial level. However, it doesn’t always go as planned. Truthfully, it rarely goes as planned. And it requires a lot of creativity and persistence to surpass the initial excitement and challenges to achieve success. The in-between phase can last years, so you need to ensure that your convictions and expectations are reasonable and measurable. The pressure to succeed and grow your business too quickly can impact your mental and physical health. Especially if you don’t set off with the right expectations.
In addition to determining the market size, marketing strategy, and funding (which we cover below) it is essential to set realistic personal expectations. Running a business is a lot more likely to take over your life than a traditional 9-5. Well, at least before it takes off. Effective time management and putting processes in place to facilitate efficiency without taking shortcuts can boost productivity and help you maintain balance.
If an expert can do something in minutes that takes you hours, consider the benefits of outsourcing. It may cost you a little more upfront. But neglecting important business areas, slowing down business growth, and making unnecessary mistakes can put a far bigger dent in your pocket. In addition, it frees you up to focus on other necessary aspects of the business. Knowing when it’s time to delegate and let go of doing things yourself is critical to entrepreneurial success.
Be prepared to face as many obstacles as you do victories. Be adaptable without losing your vision, and continually measure your activities with a flexible attitude.
Know the Industry You’ll Work On
Before launching a startup, understand the industry you’re entering, its major players, and your future competitors. Become an expert in your field by studying it as much as you can. This includes studying your competitors, their strategies, products, and even visiting their stores. No matter how unique you believe your concept is, it does not mean that other people don’t have the same or similar concept. If you can’t offer it at a better price or in a better way than your competitors, you may need to rethink your idea.
Knowing your market and what they want is essential. Make sure you will be delivering what the customer wants, as opposed to what you want. This will save a lot of wasted time (and funds) and will give you insight into their purchase decisions. Ultimately, your audience—whether that base is B2B or B2C—is the driving force behind your business’s success.
Understand who needs your product and fine-tune both it and your marketing strategy to reach your audience where they are.
In addition to who, what, and where, you need to know how many.
Determine a realistic market size that you can reach rather than overestimating your potential customers. You need to differentiate between the total available market (TAM) and the serviceable available market (SAM). The latter is the segment that your product can capture. Take competition and other market factors into account. Lastly, be honest about the SOM (serviceable obtainable market) that your SAM segment can realistically inspire.
To help you identify your target demographic accurately and nail where and how to effectively convert them from the very beginning, you can use primary and/or secondary market research. Primary research is information sourced directly from your target audience. It includes polls, surveys, and focus groups. Secondary research is research that was previously conducted by other organizations and is generally available as a paid report or for free.
When strategizing your marketing, keep your unique selling point at the forefront. When you recognize and clearly define your product, service, company strengths, differences, and mission, you can make informed and harmonious decisions to effectively build your brand.
Think Funding–You’ll Need Lots of It
Funding your new venture can be tricky. Some people ask family and friends to invest in their business while others take a business loan from a financial institution. To get investors to back you, you need to know exactly what they are looking for in a startup. You also need to be willing to open yourself up to increased scrutiny and forego a percentage of your company. Considering what you may have to give up, it is always beneficial to first weigh whether a professional investor is the only way your business can level up.
A cash flow forecast is an important part of determining the initial capital required. It's easy to forecast large numbers, but you need to be realistic about unexpected expenses and late-paying customers that are the reality of running a business.
As a business owner, you should always include a 12-month cash flow forecast in your business plan. Monitoring this regularly and staying on top of daily, weekly, monthly, and quarterly income and expenses will help you identify cash flow gaps and take action before things get out of hand. It is also essential to understand your tax responsibilities. Understand when, how, and to whom you need to pay taxes and fees. This is especially true because filing late could result in severe consequences for you and your business.
Develop a Sound Marketing Strategy
In launching a startup, you need to be strategic about how much you can invest in marketing and the return this is likely to generate. Understanding your target audience is vital to deciding which marketing channels you are going to use. Once you’ve decided on the most effective channels, start with small tests. This way, you can measure results and set realistic expectations before allocating more money.
Cost per acquisition (CPA) is an important measure to consider during the test phase. It measures the total cost to gain one paying customer from a marketing campaign, giving you an indication of profitability. If, for example, you invest $50 on an Instagram campaign and generate five sales, your CPA is $10. Having this information will help you determine whether the chosen channel is the best option or if there are perhaps more effective or cheaper alternatives that you have not yet considered.
Results need to be measured constantly since the same channel may stop working as intended, or may not be as effective for one product as it is for another.
Of Course, Write Your Business Plan
A business plan should include every detail about your concept from what it is and who your customers are to your marketing strategy, competitors, and how you plan to grow the business.
Since your business plan should essentially form a roadmap to help you achieve your goals, it will ideally entail financial forecasts, sales goals, expense budgets, and cash flow predictions.
Additionally, it can serve as a management tool to analyze results and make strategic decisions. When pitching to investors or lenders, a written business plan of how the business will operate, generate revenue, and grow is essential.
Outsource What You Can
Every business requires reliable manpower to operate. Operations, bookkeeping, marketing, and human resources all involve a lot of paperwork and administration. These tasks take up a lot of time without actually generating income within themselves. Having only a handful of employees to try and manage all these tasks rather than focusing on other important business can lead to poor performance, rushed work, and a lack of attention to detail. This can result in negative customer experiences—which you particularly can’t afford so early on.
Outsourcing can be a great relief to you and your staff and is often the most strategic way to grow your business. Using a third-party service that specializes in certain business functions means these tasks get done with more efficiency and professionalism, all while freeing up your staff to focus on core operations and business growth.
Ease Burdens Off Your Shoulders With Outsourcing
There is no doubt that you’ll have your hands full when launching a startup. From training, marketing, recruitment, order processing, and customer support to onboarding, data entry, and operations, there is a multitude of tasks that demand equal attention.
Being able to scale without sacrificing quality is possible with a partner like Helpware. Helpware offers a full suite of front and back-office solutions that are customized to your business growth goals. Helpware offers expertise in the desired areas, as well as a complementing staff fully dedicated to your business goals.
Hepware’s People as a Service model enables the right people equipped with the right technology can breathe life into your business.
Enjoy the growth stage of your business by partnering with someone who is as dedicated to making your startup a success—as you are. Contact Helpware today to take the burden of back-office tasks off your hands while knowing that every aspect is being expertly attended to.