Building an Empire: 10 Steps to Launching a Successful Startup
Launching a startup can be a daunting task. According to the Bureau of Labor Statistics, many businesses fail to sustain themselves during their first ten years. Approximately 20% of new businesses fail during the first two years. That number escalated to 45% during the fifth year of operation. Entrepreneurs might find these statistics frightening, but it’s no reason to quit; you just need to launch your startup the right way. You’ll want to keep a close eye on all stages of your startup business and get access to the best resources you can find.
Why should you start a business?
Before we proceed with our guide on launching a startup, we need to discuss why you should bother starting and running a business in the first place.
Starting a business has a lot of benefits, like financial freedom, creative expression, practicing entrepreneurship, personal and professional growth, and, of course, the undeniable satisfaction of building something with your own hands. Remember that almost all recent and popular companies today, like Meta and SpaceX, started from one person’s vision. Not all startups thrive and grow to those levels, but you’ll never know until you try.
Now let’s cover how to start a startup with a step-by-step guide to ensure you’re starting in the best possible way.
1. Come up with a startup idea
Every startup begins with a business idea that addresses a specific issue or ongoing problem. For example, Grammarly was developed to assist individuals and businesses in improving their writing. Ripple Labs, a fintech startup, devised a way to circumvent heavy transaction fees for international transfers and trades while significantly enhancing transaction speed.
But it doesn’t have to be a big, overarching idea initially. You can use the lean startup method, wherein the business will focus on being as efficient as possible while using the least resources. Then you can work on developing your small business idea into something big. In any case, you need to answer these three questions before launching a startup.
The three important questions
First, what problem or problems does your startup solve? You need to be able to define the problem as clearly as possible and come up with a unique solution. Answering this will also help with defining the purpose of your business.
Second, who are you making the product or service for? They will be your target demographic for your new business. Knowing them will be important when you start to develop your solid business plan, which is next on the list.
Let’s say you want to start a digital marketing firm that handles search engine optimizations. Many of them are out there, so you decide to focus on providing SEO services to local businesses. That’s question number one and two answered. The third question will be: what new thing are you bringing to the table? You need to develop something that will set you apart from the rest. It might be a completely new product or service. Or it could simply be a new way of doing something. You’ll stand a better chance of succeeding if you bring fresh ideas.
2. Create a startup business plan
Putting together a business plan is essential if you want to grow your business. Writing a business plan involves comprehensively describing your startup’s objectives, target demographic, marketing and competition analysis and strategy, revenue model, and financial projections. Most sources on the internet agree that you should start your business plan with an Executive Summary that offers a concise overview of your goals for the startup. The next other things you need to add are:
- Company Description
- Market Analysis
- Products or services offered
- Marketing and Sales Strategy
- Business Structure
- Funding Details
- Short-term projections
Your business plan will serve as your guide to get your startup up and running and help set up milestones and a timeline for goals. These steps may be done out of order depending on your business requirement. It can also be used as an initial presentation if your goals require the assistance of an outside investor. The important thing is to have it prepared before launching your business.
3. Choose your business structure
Before you begin to build your business, you must define what type or structure best fits your goals. The most common structures are sole proprietorships, partnerships, limited liability companies, and corporations.
Sole proprietorship
This is the smallest and simplest business type. There is no legal distinction between the owner and the business, as far as the law is concerned. This means that all obligations, including debts and taxes, are the business owner’s responsibility. Many business owners start with this type of structure.
Partnership
This business structure is formed between two or more individuals or organizations. In this case, every business aspect is considered and shared among the partners, including rights, profits, and responsibilities. Finding a business partner with the same vision for your startup is your best bet. Some of the world’s biggest startup companies, like Procter and Gamble, Hewlett-Packard, Google, Microsoft, and Apple, started as partnerships.
Limited Liability Company
LLC combines elements of a partnership and a corporation, which we will discuss next. An LLC structure provides limited liability protection to its owners while allowing for flexible management and pass-through taxation. This means that profits and losses are reported on the owners’ personal tax returns and are not reported through a separate entity. Which brings us neatly to—
Corporations
Corporations are legal entities that several owners and shareholders control. Once a company is “incorporated,” it is a separate legal entity with the same rights and responsibilities as a person. This structure is better for when the startup has scaled up, and you’ll need to start bringing in more people. The good news is that you can engage professional business formation services like ZenBusiness, reviewed in this detailed GovDocFiling guide, for consultation and registration.
4. Secure funding
In an ideal world, you’ll have enough money to cover startup costs. But that’s not always the case, and getting into business involves finding the money to get it off the ground. Once you figure out how much money you need to start, there are a few ways to acquire funding for your startup.
Fund it yourself
This is the most straightforward way to get funding. You can use your savings account or previous investments or ask your friends and family for support. Using your own money gives you complete control over your business. However, you risk losing your initial capital if the business fails.
Apply for a small business loan
Banks and other financial institutions usually offer personal loans for entrepreneurs and businesses. You’ll have to prepare a few documents to apply for such a loan, which vary depending on your location. But the usual ones are a completed business plan and expense and profit projections. Depending on how much you want to loan, you might also need to put up collateral.
Apply for the Small Business Administration funding programs (U.S. only)
The SBA is a government agency dedicated to helping entrepreneurs with their goals for startup success. They have several loan programs like Small Business Investment Company (SBIC), Small Business Innovation Research (SBIR), and Small Business Technology Transfer (STTR). Most SBA loans offer lower down payments than most bank loans, flexible overhead requirements, and no collateral requirement for some programs.
Get Investors
Venture capitalists are people or firms that provide funding for startups or companies in the early stages. These people want to invest in a company in exchange for shares or partial company ownership. VCs favor startups with high growth and earning potential or companies already demonstrating high growth.
Crowdfund your business
One of the newer ways to get money to start a startup is to go the crowdfunding route. It allows businesses to collect funds from people in exchange for incentives. Different crowdsourcing websites exist, such as Kickstarter, Patreon, Indiegogo, and GoFundMe.
5. Get the right people for the job
Popular startup founders like Bill Gates, Mark Zuckerberg, and Elon Musk didn’t do everything independently. They got the right people to help them with their vision, and now their companies are some of the biggest in the world. This proves you cannot launch a successful business without the best people you can find.
Building a team is one of the most crucial things you need to launch and grow your startup. People with the right skills and experience can impact your business in all the right ways. They can help you make informed decisions, reduce your onboarding costs, and assist you with reaching your business goals. You might also need to learn how to start networking if you haven’t yet.
Aside from hiring employees, you’ll also need to find the right vendors and service providers. Identify your essential raw materials and business processes and look for the best ones to work with. For example, some businesses require transcription services to maximize their workflow, while others might need a supplier that caters to their raw material specifications.
6. Register your business name and acquire all licenses and permits
Choosing a business name is important in defining your startup’s identity. It’s usually the first thing other people see or hear, and having a great first impression never hurt anybody. Once you find a name for your startup that fits your brand identity and company objectives, you must register it for trademark purposes. Business registration is different everywhere, so check your local business agencies for more details. Once you’re done, you will usually be presented with an employer identification number or something similar to use moving forward.
Aside from registration, you’ll need to get a business license, appropriate permits, and other government requirements. Business insurance might not be mandatory in some places, but it’s better to be safe than sorry. If unsure of what you need to get to start your business, you can search for online resources or ask a startup lawyer.
7. Develop a minimum viable product
In order to conduct business as a lean startup, you will need to create an MVP. A minimum viable product (MVP) is a version of a product or service with base features. Like any prototype, it’s made to pique the interest of early customers and see if your idea is viable. This is also a great way to get a product to market quickly. Once that’s done, you can gather feedback and learn from real-world user interactions to be used for future development.
However, your MVP is not some half-baked or unfinished product. It should be a fully usable version that delivers what it promises. The goal is to create a solid foundation for the product to grow and evolve based on user feedback and market demands. Remember, this is just for the launch of your startup. Additional features and improvements are incorporated as the product matures, gradually moving towards a more complete and polished version.
8. Develop a marketing plan
A good marketing plan can transform your business from a viable idea into a successful startup. It will serve as a comprehensive map to better sell your product and services and understand your target market. The plan will need things like your short- and long-term marketing strategies, the things you need to build your brand, which advertising options you’ll take, and other important marketing details. Getting this right will significantly increase your chances of success.
9. Create business bank accounts and set up accounting
Setting up business bank accounts is important for organizing your business expenses. Search and select a suitable bank with business banking services to get started. Look for ones that offer low fees, account options, online banking, and good customer support. Remember to set up business credit cards for the people who need them.
Business accounting is another important matter. You can do it yourself or hire an accountant to handle your books. You can also use accounting software like QuickBooks, Xero, or FreshBooks to make recordkeeping easier. This can help you stay on top of business taxes and other mandatory fees.
10. Launch your business and aim for growth
Starting your own business is a very rewarding experience. But that shouldn’t end there. Any business that doesn’t aim for development is just a big waste of time and money. You need to start AND grow your startup. Some of the best ways to grow your company are:
- Enhance existing products with new features
- Develop and offer new products and services
- Offer new experiences to your customers
- Expand your customer base and target demographic
- Find new revenue sources
- Increase your capital
- Scale up your covered areas
- Improve your network and increase the number of people you’re doing business with
Ready to create and successfully launch your startup?
Making the right decisions when launching your startup can make or break your business. Reading a comprehensive guide on how to start your startup may not be enough to give you all the tools and information you need for success. That’s why here at Potential, we offer comprehensive courses and programs that cover all aspects of starting and running a business. Click here to learn more.
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