Creating a startup is all the craze these days. It’s a spectacle that could be compared to the risks and rewards of the California gold rush between 1848 to 1855. But while it's an exciting proposition to create your own startup and call the shots, the realistic side of starting and building a business is not all fun and excitement. In fact, developing a marketable product and pitching to VCs and angel investors is quite difficult. The pressures and stress can quickly overwhelm an inexperienced startup founder. By studying the habits and patterns that serial entrepreneurs are able to repeat with success, we have extracted seven tips that can help you create yours:
1. Validate Your Idea
While you might have had positive feedback from your family members and close friends when you told them about your new idea for a self-cooking hotdog, is there real potential for the product? Go out there and see if you have an actual target market for your startup idea. Successful startups have a large enough market from which to consistently extract sales and profits from. Validate your idea by talking to people about it, taking polls on social media, and scraping data on websites to determine the most searched for products or services.
2. Write Your Business Plan
A business plan should detail short-term and long-term goals, tools and technologies to use. It also needs to include expected income and expenses as well as customer acquisition and sales strategies. Customer acquisition is of particular interest to venture capitalists and angel investors when you apply for seed funding. You will want to have that nailed down to a tee before you start meeting with potential backers. Expect your business plan to change over time as it factors in new events, circumstances and the inevitable curveballs.
3. Keep Costs Low
Perhaps the most common problem that startups run into is cash flow imbalance wherein costs exceed the business' operational budget. When starting out, limit your costs to essentials, such as business permits and licenses, patents, equipment and inventory. Hiring full-time workers, bringing in a co-founder, or leasing a serviced office at a prestigious location are luxuries that you should only be thinking about once your business is making money. Until then, all costs must be scrutinized and justified.
4. Find the Right People
The role of a startup founder doesn't have to be solitary. Isolating yourself limits you as an entrepreneur. Working with other like-minded, equally passionate people not only accelerates your learning, but also keeps you motivated when times are tough. Nowadays, it's much easier to connect with people who can potentially bring something of value to your company. Add and follow people on social networking sites, like Twitter or LinkedIn. If you're interested in the skill set and experience of someone in your industry, check if they have a portfolio website and look through the contact page to see their email address so you can message them directly. Sites like Reddit are also becoming a popular place to network with professionals in other industries. Make a list of people you are considering as your co-founder or first set of employees, and then do some cold calling.
5. Start Building Your Brand
Success in the startup world is led by the founder's passion, drive, and hard work, but luck plays an equally important role. In order to maximize your luck, you have to be at the right place at the right time. You need to hang out with the right crowd, whether it's board members, advisors, investors, bloggers, journalists, etc. Surround yourself with the right group so that you have varied skills and experiences to tap into as needed. You don't need to have capital to start the branding process. All you need is to be outside, talking about your brand.
6. Don't Spread Yourself Too Thin
Scaling too quickly can create more problems than opportunities for your business. When starting out, focus on your core offering. Avoid new locations and product lines until you have the business finances to push through the expansion successfully. It's better to aim for a gradual yet sustainable growth rate instead of an explosive but volatile one.
7. Perfect Your Sales Model
The success of a startup is primarily dependent on how well it can sell to its target audience. If your startup sells its products and service subscriptions left and right through organic marketing channels, like word of mouth, you'll make more money and thus be able to scale faster than the competition. If there is one thing you should try to do for your business every day, it's figuring out how to better sell to your customers. The thing is, one marketing channel that could work wonders for a certain startup won't necessarily be a good fit for another startup.