A startup is a company that is just in the beginning phase of development and is designed to scale up fast enough. The basic characteristic of a startup is its ability to grow. Following characteristic differentiates a Startup from small business.
- It is initially financed
- It is operated by a handful of founders or one individual
- It offers a product or service presently not offered elsewhere in the market
- Requires financing
- Has revenues lesser than $20 million
- Has less than 80 employees
Once, the startup cross the revenue, number of employee and shares limits, it moves away from startup-hood and is recognized as a startup graduate.
Secrets to Build and Grow your Startup
Very few startups turn into big businesses and as very few among them have innovative ideas. Growth of a startup depends upon the technology choice for building the business. Companies are not really built on ideas, but on visions. Implementation on vision requires building of a team that is efficient and cohesive. It must have a basic understanding of markets and customer expectations. Also a deep understanding of how technology can help fast-growing and early-stage companies is required. One needs to know the product & market development, team management, and growth strategies and tactics.
Writing a business plan
One of the first steps towards startup is writing a solid business plan before launching the business. It serves as a guide to decision making and a means of communicating with potential partners, allies, vendors etc. Planning includes both the conceptual and financial part. The revenue and expenses should be estimated realistically. Marketing strategy should be planned including ones approaches to sales, promotions, advertising PR, networking, community building, customer service and other marketing channels and tools.
Choosing the Target Customer
One must not assume what his customers want, but he should use his competitors as a research tool. One must open the doors of his business. A note of what the competitors are selling and how they are marketing and selling their products and services, would prove to be helpful in targeting the customers. The most important thing is to figure out the kind of customers that would help to achieve the goal. For that purpose, many traits should be identified so that business could be organized to keep the customers coming back. Different market segments growing in one’s area should be identified. Internet could prove to be a very helpful in identifying those segments. Service should be focused as it is the best way of marketing.
A new business requires help of an attorney and an accountant. Choice of attorney is very important when one plans to seek venture capital. Venture capitalists generally judge the company by the lawyer picked by the company. Similarly, finance professional must also be hired carefully. One must know, at the time of hiring that the industry preference of the professional. Professional must be hired that has one’s industry experience and interest.
Money is very important for any business. However, it shouldn’t be made an insurmountable barrier for the startups. Financing can be taken from different sources. Following are some ways of generating funds:
- Self-financing is the first thing to try. It could be personal savings, rolling credit card etc.
- Another way is through the stakeholders; the customers make the payment in advance for something that has to be delivered in future and the funds are used as seed capital.
- Friends and family could prove as a great help. The interest rates and terms would be much lower/better in case of friends and family.
- Once the business has sales, accounts receivable and short-term financing needs; one can start with the banks for revolving line of credit, pay it back and earn the banker’s trust. Later on, one can qualify for longer-term loans with better terms.
Right Place to Set up Your Startup
Deciding the right location is very important. One must consider the environment required for the specific business. Data regarding the trends and potential customers can be helpful in deciding the city or state to start the businesses. Additionally, it is better to become part of a cluster that attracts a much larger market. Getting information from the small stores about their business would also be a great help.
Using The Right Technological Tools
Equipping the new business with right technology is very important in keeping the business run smoothly. Following are some important technology tools:
- A client/server-based network operating system which has file and printer services configured to back all that up.
- A dedicated internet access with enough broadband bandwidth to handle up to 100 users.
- An anti-virus package that resides on the server.
- Viable backups that can be restored.
- Printers that meet one’s needs
Insurance is designed to help businesses minimize certain risks and a good advisor would prove to be really helpful in understanding the risks and selecting the insurance. The things that are not covered by insurance would need additional coverage.
Once the company starts growing, hiring employees becomes necessary. One must define the job, the skills needed and how much he could afford to pay for the best person. One can choose from local schools and college job centers, recent immigrants etc. They should be interviewed professionally and communicated well regarding training, job expectations, company goals, scheduling and pay from the start.
What to Avoid
Here are a few things that should be avoided by a startup owner.
- Assuming privacy or security is just for the geeks
- Ignoring relevant rules and laws
- Not making adequate use of technology
- Thinking that one is flying under the radar
- Lacking a social media presence
- Ignoring the benefits from policies
- Not taking proper advices
- Believing that one is not responsible for sensitive information
- Assuming that more is better
- Making representations that one does not understand
Concluding this, every startup has the potential to become a big business. That could be achieved only through proper planning, advices, strategies and technologies.