Key Takeaways
- Start with an idea, but that’s only the beginning — be prepared to fail and pivot quickly.
- Lay down a comprehensive blueprint and use it to measure progress against your goals.
- Get the right people with the skills and expertise you need — it’s vital.
There may be no better time than now to build a startup. The sudden and dramatic shift in social and business foundations have created terrific opportunities for technology entrepreneurs.
Companies that had been struggling were shuttered. They left a huge gap in the market and created opportunities for startups to thrive. Consumers have migrated suddenly and en masse to digital outlets so they’re easier to access, and funding has never been more available. Investors who were sitting on the sidelines are now eager to get back to business.
Although the time is right, starting a business is still hard. But with an idea, a plan, funding and a team to pull it together you can achieve your success.
With an idea, a plan, funding and a team to pull it together you can achieve your success.
The big idea
You may think you need a brilliant idea, but not really. When starting your own business, you need a solid idea that’s easy to understand and makes an everyday activity better than it was before. For example, your weather app is better than checking a newspaper or listening to the radio to see if you need a jacket or umbrella. More often than not, generating ideas for startups is looking at something people do and figuring out how to do it better.
Your initial idea, however, may be just the start. Many startups have reconsidered their business plan and scrapped their original concept in favor of a smarter one on their way to success. An idea is valuable, but what matters more are the people who have the ideas as well as their willingness to pivot and pursue a more lucrative concept.
Research the market
The key to starting a new business is simple — give customers what they want. When building a startup:
- You will make mistakes.
- Your assumptions will be wrong.
- Initial plans will go awry.
But if you can identify what customers want and adapt on the fly, you have a better chance of achieving success. This is the high-speed/high-fail model. Create a prototype as quickly as possible — as imperfect as it may be. Put it in front of people and refine it based on their reactions.
The key to starting a new business is simple — give customers what they want.
The other hurdle to clear on your way to founding a startup is a candid assessment of your competition. If your product has an easy-to-understand and easy-to-use advantage, you will quickly gain new users. If you’re a follower at the risk of being overwhelmed by a dominant competitor, you need to be prepared to address those challenges before you launch. For example, you can talk to sector experts, interview consumers and study trends to better understand your competition.
How will the business operate?
To create a tangible product or service, you will need many other entities to support your activity, including:
- A leadership team
- Manufacturers
- Suppliers
- Lawyers
- Bankers
Finding a co-founder who can complement your expertise may be your startup’s first critical opportunity. Consider an advisory board to help meet the people you need to know. Follow these five rules when hiring:
- Hire for now. Curtis Lee of Luxe says, "Everyone says you want to hire for the long term, but that's not good for hiring. You need to find someone who can fill the role now."
- Stay in touch with your superstars. Ensure valuable employees are happy.
- Make recruiting the CEO’s job. Lee continues, “There are three things a founder/CEO needs to focus on: fundraising, setting the vision and recruiting.”
- Be transparent. “In times of crisis, it's especially important to not go behind closed doors," says Floodgate’s Arjun Chopra.
- Diversify for better decisions. Hiring people with a broad range of backgrounds expands your creative thinking.
"Everyone says you want to hire for the long term, but that's not good for hiring. You need to find someone who can fill the role now."
How will you sell your product or service?
There is a myriad of marketing and sales strategies for starting a new business. How you approach your market will typically be dictated by the sector you’ll be competing in. However, depending on the nature of your product, you may choose to be disruptive and step outside conventional sales channels — providing banking services without a bank, for example, or selling automobiles direct to consumers without the burden and expense of a traditional dealership.
In any event, you need to be prepared with:
- Adequate budgets
- Specialized expertise
- Efficient sales and marketing strategy
The business plan and tools
With your initial concept ready — and research, operations and sales plans complete — you can begin to assemble a business plan that formalizes your concept. All business plans generally follow a similar format:
- Executive summary — a brief and intriguing overview of your business
- Company description — your history, structure, partners and goals
- Product or service — the benefits of what you’re providing
- Market analysis — your opportunity and how you intended to succeed
- Management team — your credentials, expertise and desire
- Financial plan — how you intend to earn a profit
Your business plan guides you through your early-stage development and serves as a blueprint for how to structure, run and scale your startup. It should convince people that building a startup with you — or investing in your company — is a smart choice. It’s important to use industry accepted tools to create a plan that aligns with industry standards and to help establish your credibility.
If you have a solid product and business plan, you can raise funds.
Start your funding
If you have a solid product and business plan, you can raise funds. The idea is, as you build your startup, your venture is making money for your investors. And just as there are many ways you can raise money from investors, there are many different funding options as well. For example:
- Self-funded — Depending on your resources, this may be viable as early-stage seed capital for developing prototypes, but as you scale, you’ll need investors.
- Private loans — Family and friends can help with seed money.
- Angel investors — These individuals are investing in your idea at the early stage and are assuming risk in exchange for either equity in your company or loan terms.
- Venture capital — These investors usually come in during the startup phase in exchange for equity to support small companies with huge growth potential.
- Bank loans — These funds may be available for a startup, but banks are more comfortable loaning to established companies.
Developing your pitch
To approach angels, banks, private equity firms and venture capitalists, you will need a pitch deck that is focused, easy to scan and packed with valuable information. It begins with an elevator pitch and evolves into a presentation that includes:
- A clear explanation of the problem your product or service is solving
- The size of your market and potential competitors
- Growth models
- Evidence that your team has the ability to pull it off
Investors see hundreds of VC pitch decks for starting a new business every year and usually spend two to five minutes reading each before deciding whether to meet with the founder. So, it is critical that your pitch is a short, complete and well-positioned.
There are dozens of pitch deck templates available. Whether you choose to download an existing layout or create your own, ensure the look and feel is appropriate for your business — and your investor audience. If your business concept is lighthearted and consumer-focused, a softer approach may be appropriate to reflect your brand. If you have cutting-edge technology, a more sophisticated presentation may be appropriate. But in any case, remember that your pitch deck needs to deliver key information and branding elements should always play a secondary, supporting role.
This is a 12-page pitch deck template is a good starting point. It shows how your visual brand elements can be integrated into your pitch without overwhelming the message, Add or delete pages, as needed, Remember, the goal is a concise, precise and intriguing presentation.
When you do secure a meeting with an investor, take note of what works in your deck — and what doesn’t — so you can continually hone your pitch.
Build a team for success
First, use your advisory board, mentors, bank and network to build your team. These are people you know personally and who are very familiar with you, your culture and your goals. If these people can take a more active in your business, they’re probably a good choice. If they can’t join your company, they are best equipped to recommend people who they believe would be a good fit.
Finding the people and specialized talent you need to take your company to the next level — and how you compensate them — are some of the most crucial decisions you’ll ever make. There is a need to act quickly, of course, but you need to be careful as well. Family and friends may be good choices on a personal level, but you need to be certain they have the skills to help you scale and reach your performance goals.
The temptation initially is to under hire as your company gains traction — then to over hire to compensate for what you believe to be a need. For these reasons it is imperative to monitor your team’s progress against goals and to ensure everyone is well placed and productive. Not only will your team be more productive they’ll appreciate working within a well-organized structure, attaining realistic yet ambitious goals and achieving success.
Adapt and plan for growth
Finally, adjust as you go:
- Measure performance to goals
- Take greatest advantage of opportunities
- Build out a team that matches your expectations for growth
- Be quick to let go of solutions that miss the mark so you can keep your focus on success
If you want to pursue an entrepreneurial life in the innovation community, do it. Starting a startup isn’t magic — it’s a lot of hard work. But build something people love and keep your costs in line, you can succeed.
Running a startup is hard. Visit our Startup Insights for more on what you need to know at different stages of your startup’s early life. And, for the latest trends in the innovation economy, check out our State of the Markets report.
