A startup is a young company or business established by entrepreneurs to create unique, innovative, and irreplaceable products and services. It aims at solving problems with solutions better than the existing ones in the market.
Difference between business and startup
Startups through work like any other company where a group of employees works together to create a product that is sold in the market but makes it different from other businesses is how they go about it.
1. New ideas
Regular firms and businesses duplicate the products and services already existing in the market like purchasing a franchise of an already existing restaurant. However a startup creates an entirely new template like offering meal kits, it provides the same thing the restaurants do but with a convenience that no one else does.
2. Speed and growth
Another factor that distinguishes startups from businesses is their way to speed and grow. Startups targets to build on ideas at a good pace. They do this through the process of iteration where they ask their customers for continuous feedback and use the data to make improvements. They look out for expanding their customer bases rapidly which helps them to increase large market shares which then leads to raising more money and lets them grow their product and audience even more.
Unlike many businesses, startups don’t build their model on existing market demand, making it a risky process. There are many internal and external factors affecting its fate. Thus, their survival in long run is uncertain.
The context of innovation separates a startup from a typical business. The problem can be existing or induced but a startup comes out with a unique solution for that particular problem. For example- the demand for packaged drinking water was created by convincing people about the dangers of drinking tap water.
5. Business age and Revenue
However it’s a highly debated issue, but according to the Indian government, a company in business for more than 5 years can no longer be called a startup.
A startup isn’t considered a startup any further if its turnover has reached over $50 million.
How are startups funded?
Money is raised in startups via several rounds of funding.
Bootstrapping – it’s the primarily round of funding whereas the founders, their friends, and family invest in the business.
Seed funding – it’s the next round of investing where money is received from so-called angel investors. They’re the individuals with high net worth who invest in early-stage companies.
Series funding – the next is series A, b, C, and D funding rounds. These are primarily led by venture capital firm which invests hundreds of millions of dollars into companies.
Public company – when a startup decides to become a public company, it opens itself up to outside money via an IPO by an acquisition by a special purpose acquisition company (SPAC) or a direct listing on a stock exchange.
Usually, the initial stages of startup funding are limited to those with especially large pockets as their net worth helps shield them from the potential losses. The early-stage investors even have the possibility of seeing 0% ROI.
How to build a startup?
Here are 7 steps guide to help you build your own startup from scratch.
1. Find a good idea
To be a successful entrepreneur, you need to have a good knowledge of the market. Before launching a product or service make sure to analyze the demand, customer needs, and wants. Look out for at least 10 clients who’d buy from you. This will help you decide what to create and in which direction to move about it. Keep your marketing search and competition analysis strong.
2. Develop a business plan
Statistics have shown that people with a plan succeed to obtain investment capital and growing their startups.
Converting your idea into a business plan is very crucial. A business plan is basically a document that mentions the nature, goals, objectives, etc. Of your business. It also describes your business strategy and future. Following a plan always yield better outcomes.
3. Secure adequate capital
The cost of a startup varies from one industry to another. Whether you need more or less funding, depends on your business type and situation. Some might cost you in tens of thousands while some in millions. The initial source of financing is mainly through the entrepreneur himself.
4. Pick the right people
You Cannot handle anything and everything on your own. Additional help will always be required to manage the work more efficiently. So make sure to choose people whom you can trust wisely. You’d a manager run the company while the number of workers would depend on the nature and size of your business. It’s advisable to keep a small team initially of maybe up to 10 employees.
5. Choose a location and create a site
For customers to easily find your company, you need to have a solid offline and online presence. You’d need a physical space to operate your company so consider buying or leasing a small property. However, purchasing is cheaper in the long run so make sure to have enough costs. It is very important these days to have online dominance as it helps you to reach your target audience faster. Design a site to promote your startup, take pre-orders, and make possible appointments for the same.
6. Learn digital marketing techniques
For a successful business, there should always be successful marketing. You can learn digital marketing strategies like SEO, content marketing, email marketing, PPC, etc. to boost your customer engagement. While this online marketing works wonders, you can also take advantage of traditional methods like television, print advertising, radio, etc.
7. Create a customer base
After engaging with all promotional and marketing activities, it’s now time to build your customer base. You can do so by providing your customers with a seamless experience on your website, providing high-quality products, delivering excellent customer services, etc which would help bring repeated customers. Treat your clients as the main priority in the whole business model.
How to have a successful startup?
While many startups fail, not all of them do. Before you want to have your own startup, ask yourself the following questions and if you’ve answered to all then the risk is worth a shot.
1. Is your team obsessively passionate about the idea? The secret to every successful plan lies in its execution. If your team isn’t convinced with your idea and doesn’t support it wholeheartedly then it can fail to engage the audience and potential customers.
2. Do you have domain expertise? It’s very crucial for founders to know everything about the space they’re operating in.
3. Is everyone willing to put in the time? In a brand new startup, the employees usually have intense work schedules stretching up to 14 plus hours long workdays ( according to Metlife survey, 2018). If the team is not willing to devote their time to this idea, it may be difficult to thrive.
4. What is unique about you? If your idea is new, why didn’t people try it earlier? If it’s already existing, why do you think you’ll be able to crack the code?
5. How big is the market? Your target market defines your opportunity scale. Small markets might lead to financials that aren’t enough to survive.
Why you should work in a startup
Startups open doors to new possibilities and challenges that would in turn help you to grow. Let’s talk about a few reasons why working in a startup can be beneficial to you.
1. Flexible schedule: sure there’s a lot of work to do but you can schedule all that work according to your convenience and comfort. In some cases, you can also have the advantage of working remotely.
2. Task variety: unlike a typical job, you won’t be asked to focus on a particular field or domain in a startup. You’ll face different opportunities and challenges every time which will allow you to adapt to the situation and master new skills.
3. Creative environment: entrepreneurs have a lot of creative ideas and are always open to creativity and innovation. They can help you build a new vision and see everything from a new perspective.
4. Friendly team: initially startups have a small team which makes it easier for you to interact with everyone personally. You can openly share your ideas and thoughts related to work. It increases the sense of belongingness.
5. Professional growth: working in a startup enhances the very required skills and knowledge. It helps you gain experience in many functional areas and teaches you to take responsibility for multiple tasks at a time.
Startup ideas for beginners
If you want to have your own startup but you’re struggling as a beginner, here’s a list of startup ideas to help you out a bit!
- Start a podcast
- Create an online delivery service
- Develop a drop shipping business
- Create an online language learning app
- Develop a blog
- Create an online fashion boutique
- Sell your book
- Sell handcrafted and homemade goods
Now that we have given you all the important insights into a startup, what are you waiting for?