A Startup is a young company created by one or more entrepreneurs to create a unique and irreplaceable product/service. Their aim is to innovate quickly and generate ideas. In a modern society where everyone strives to innovate, good ideas alone cannot create a startup.
Understanding how startups work and what it takes to be a successful startup can be very helpful. Take a look at these steps.
Determine if you have what it takes to build a startup.
Starting and growing any business takes dedication, time, and several activities including networking, planning (financing, registrations, a startup, setting up several systems, marketing, etc). If this sounds like too much, it’s because it is. Starting your startup will require a lot of training but don’t worry, there are a lot of resources available to help you on your entrepreneurial journey.
A keen understanding of industry issues and challenges gained through industry experience can give you and your startup a competitive advantage. However, not all startup founders have the technical background or experience needed. Many successful entrepreneurs simply have the vision and basic skills to run their company and so need to hire qualified employees to fill the skills gap.
The question is: Are you ready to create a startup? Take this quiz to find out!
Choosing, developing, and refining your startup idea
If you’re looking for a startup idea, one way to start is to look at what you already know. This includes your abilities, skills, interests, and hobbies. The most common sources of business ideas are your work experience, education and knowledge, personal interests, and technical knowledge and skills. However, keep in mind that you are not limited by your current skill set.
Consider how close your starting idea is to your interests. Think of it as a place where your abilities and skills, and interests align with attractive opportunities. Whether you’re brainstorming or looking for startup ideas, look for ideas in this area.
Business opportunities created should be desirable, feasible, sustainable, and timely. Feasibility means having or being able to acquire the skills and resources required for the project. Desirability means you want to do it and so the risk/reward is worth it. Sustainability means it will be durable, economically viable, socially responsible, and environmentally friendly. Timeliness means now is the right time for the market, for the idea, and for you.
Learn how to analyze potential industry environments to develop ideas for startups.
Create a “Getting Started” Roadmap
This is about creating your business model and pitch.
First, turn your ideas into actionable items. This is a business planning process and one of the first steps is to write it down. Whether you start with an informal or formal business plan, the process of writing a business plan requires thinking about all the key elements of your business. It allows you to take a closer look at the industry market and competitive position so that you can set goals, identify the keys to success, and plan your strategy.
There are different types of business plans, depending on the stage of the venture and the purpose of the business plan. In the early stage of your business idea, you may want to start with an informal business plan such as the business model canvas. Whenever you are ready to begin seeking investments, you will most likely be required to provide a formal business plan to lenders and potential investors.
Your Pitch Deck
Before you secure funding as an early-stage startup, there are a few things you need to put in place to increase the likelihood that your pitch is successful, whether you`re reaching out to angel investors or attempting to acquire a small business loan. Crafting a compelling story is essential not only to the success of your startup but also to creating an impactful pitch deck.
Build Your Founding Team and Entrepreneurial Network
Startups with two founders are 19% less likely to scale prematurely than startups with a solo founder. Research shows that aspiring entrepreneurs launching a startup without a cofounder takes 3.6 times longer to see significant growth — enough to outgrow the startup stage.
Despite these statistics, not all startup owners need a cofounder to be successful in their startup journey. Bringing on cofounders is all about filling important gaps to ensure all of the company`s needs such as leadership experience, industry Knowledge experts, startup experience, fundraising experience, and personality gaps are met.
You could also find advisors and hire a lawyer if needed but to develop the most impact, having a networking strategy will help you connect with a wide range of people, such as Fellow entrepreneurs or founders, mentors, potential customers, industry leaders, investors, and members of your local startup community.
Establish your Startup
First, choose the best name for your startup based on your business type, industry, and target audience. Ensure that this name is not already in use and a potential domain name is available. You can do this by searching the internet for trademark records (eg, IPO Nigeria).
MSME Hubs’ 5 steps for choosing your company name can help you choose your startup name, register the name, and generate a TIN.
Business Name Generator by Industry provides names for different industries so you can find accessible startup names that fit your business goals.
The next step in turning your startup into a real business is choosing a business structure. There are four main types of legal structures for startups:
- Sole proprietorship
- Partnership
- Limited Liability Company (LLC)
- Corporation
Structure choice depends primarily on (1) whether you are starting a startup alone or with a co-founder. (2) Stages and plans of enterprise development.
The most preferred structure for a startup dreaming of rapid growth is the C corporation. This is because it is investor-friendly tax rules, simple ownership transfers, and natural exit strategies, and many angel investors and venture capitalists do not invest in businesses that are not incorporated.
Next, It’s time to choose a location and draw up the Founder Employment Agreement and Vesting Agreement. A founder employment agreement is a legal contract between the founder and the company while a vesting agreement is an agreement between the company and a shareholder (eg, employee) that provides restrictions for the shareholder’s ownership of the company.
The next step is to establish corporate governance. Corporate governance is essentially the rules, regulations, and guidelines that govern a company. Corporate governance not only provides the structure a startup needs to achieve its goals and objectives, but it also balances the needs of all members of the company. From shareholders to employees and society, corporate governance ensures that all needs are balanced and met.
Finally, register your business with CAC and FIRS, get the necessary licenses and permits required for businesses like yours, and get insurance.
Get Funding
Startups need funding for a number of reasons. Startups often need capital to cover up-front costs until they become profitable, and then again to survive expansion, growth, stock accumulation, and even quiet periods. When planning your business, you need to determine the type and timing of business financing your company will need.
Before looking for outside funding, you should be fully aware of your starting costs and your financial plans. Knowing exactly what funds you need and when you need it is the best way to choose the right type of financing.
Set Up Accounting for your Startup
Accounting is an important aspect of how startups work. It tells you how you are doing financially, tracks your benchmarks and goals, and tells you how much your startup is worth. You also need an accounting system in place to accept payments, pay your employees, and manage your startup`s finances.
There are a number of options for handling your business accounting, including hiring an in-house accountant, hiring a bookkeeper, using a payroll service, or using small business accounting software.
Read also: 4 ways tech is powering growth in the business industry
Build Your Brand and Business Presence
Just because you’ve created a great product, service, or experience doesn’t mean your customers will show up at your doorstep. Chances are you’ll have to find them first and talk about your startup and what you’ve built. Successful startups need to build a brand and to do this you will need:
- Logo Design
- Creating a Business Website
- Building Awareness on Social Networks
- Distributing Press Releases
Learn how to write a press release.
Hire your Team
The company is as strong as the team. Building a passionate, skilled, and trustworthy team is essential to the success of a startup, but before hiring you must validate your startup mission statement to accurately describe your company’s purpose and values. This will help you find the right candidates for your team.
Note: You will need to draw up employee contracts and register for employment tax.
Finally, start up and scale your startup.
It doesn’t end when the job starts or after the first sale. You need to focus on implementing your plans and growing your business. This requires determination, patience, and a willingness to seize opportunities for growth. Developing a strategy to motivate growth is the first step.
