Earlier in our blog, we have discussed the TOP challenges a startup is likely to face. In this article, however, we want to provide you, the founder, with a bullet-proof manual to build a successful company. We have worked with almost a hundred projects, partnered with the Founder Institute, and advised some of its participants. Now, here is a blueprint for your startup to avoid the most common mistakes.
1. Do your research
One can respond to a need or create a new one. Importantly, the need you are addressing should be worth your time. Is it a popular and/or urgent problem? Is it going to grow in the future? Is it costly or frequent or legally bound? If you reply ‘yes’ to these areas of importance, you’ve hit a jackpot.
After your initial research, validate the need with a deeper research. Use academic peer-reviewed journals and proven business articles to gather stats and theses that stress the importance of the problem and indicate no valid or cost-effective solution yet exists. If so, envision the ideal world in which your product solves the challenge. This is the ‘why’ we should ask ourselves. Follow up with a strategy to achieve this by thinking in retrospect – the ‘how.’ A business model canvas is a handy planning tool for this. It will also help you define your product, the ‘what.’ After all, it always boils down to a problem-solution fit that every successful startup founder should start with.
2. Test and iterate quickly
When you have pinpointed a clear need and analyzed the market, form a great team. The evidence shows that teams with two or more co-founders are more likely to become successful. So seek for someone who is both excited about your startup and has a set of skills different from yours. A CEO with business analysis skills and a CTO form an effective duo. Fill in other roles only if they are essential to the business and founders are unable to combine them with other tasks. Amazon’s Jeff Bezos famously said that one should be able to feed his team with two pizzas!
Once you have gathered your team, start testing your solution with real customers. Even if your product is still on paper, there are ways to validate your idea:
- launch a simple landing page
- start a discussion on forums
- conduct customer interviews
- or build an MVP
All of the above do not require lots of resources and can be done using bootstrapping. It’s one of the most underrated approaches to building and promoting your product using all the available resources out there, like open code. The final goal is to validate your problem-solution hypothesis. If it’s not correct, iterate more. By the end of this stage, you should have found your product-market fit. In case you struggle with it, request some help from our team.
3. Register your brand officially
As you are building the product MVP, prepare some design and patents. Begin with a name for your startup and proceed to logo and presentation templates. This will make you ready for a pitch before investors. Moreover, register your brand to make it legit and official. The standard practice is a domain and company registration. Incorporate your business entity in Delaware or other tax-friendly states or countries with a reputable court system.
Develop a brand for your startup. What starts with an idea you try to convey, leads to your target audience or brand persona, and other attributes of brand essence.
When you have developed your brand, it is much easier to gather a community and build a loyal user base. One says that recruiting 100 fans of the product is better than looking for several thousands of prospects. You can do this by relying on our top checklist of resources for app promotion.
4. Raise money effectively
Before deep-diving into fundraising, founders should be aware of two things. First, they need to ask themselves what they need the money for. Second, they have to remember that it is a hard, long process that requires a complete focus of at least one team member. Thus, our general recommendation is to apply for business incubators and accelerators. This way, you will clarify your value proposition and test various business models.
Having a dedicated audience unlocks the potential of crowdfunding for your business. That is, people can chip in for your development in exchange for small gifts or just a ‘thank you.’ The biggest platforms are Kickstarter (mostly tech), IndieGoGo (more for creatives), Patreon (monthly personal donations), and StartEngine (equity crowdfunding).
Also, angel investment is a valid option. AngelList could be a place to start. Below is a recent list of active angel investors from TechCrunch and their geographical and industry focus.
Next, you would want to check out the path to raise money from venture capitalists. These partners represent a VC fund that specializes in pouring money into brave new ideas (but more often ready solutions with some traction). Sometimes, entrepreneurs may opt-in for a convertible loan instead of an equity-based investment. Learn about share dilution and various rounds before leveraging this option. Keep in mind that VCs are looking for a grand market (usually above 1 billion USD) and companies that develop products users want.
Request a Free Consultation to check your product-market fit and a business model with TRIARE.
While this option is less frequently discussed, it is useful to review available bank loans and governmental programs or grants. Based on the risks associated with your venture and market, different rules will apply, but thorough research will unleash some fantastic opportunities. For example, the European Commission organized one of the biggest online hackathons to offer prizes in cash, services, and strategic partnerships. TRIARE took part in this historic event too.
To raise money effectively, choose the best fit option for your particular case, and prepare well. Make a concise business plan that covers the following:
- Startup Summary (problem, product, and market)
- Startup Description and its Team
- Startup Offerings (and how money is going to be earned)
- Operational Plan
- Marketing Plan
- Financial Plan
Here are some of the best startup pitchdecks for you to use.
5. Grow and scale consistently
As you have identified an itchy problem, came up with a solution people love and ready to pay for, and offered a comprehensive business model, it’s time to scale. There are various ways to encourage growth:
- A lot of quality marketing
- Offering a freemium model
- Buying or partnering with a competitor
However, the most important lesson should be this: always start with a mission. Show your user why the work you are doing matters. It is a long journey, and it is a safe bet to start it with the industry professionals like our partners at the Founder Institute.