CEO TO C€0,000,000 | 8 Tips While Launching A Startup

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“As a startup CEO, I slept like a baby…. I woke up every 2 hours and cried”

– Ben Horowitz, CEO of Opsware

99.7% of all U.S businesses are small businesses. Entrepreneurs usually come up with a unique business idea and are so enthralled with the possibilities that they immediately dive into it.

Only 66% of startups survive 2 years and about 50% manage to last 5 years – SBA

But a sound business idea should be backed by a sound business plan.

8 Steps On How To Launch A Startup

If you’ve never launched a business, it can be scary when you do it the first time. Remember, it takes a lot of hard work and planning. And as per data, only half of all businesses survive over five years.

 

Here are 8 basic strategies for startups to follow.

1. Start with a Great Idea

The first step on launching a startup is to know the problem and the solution. Successful startups begin from business ideas that solves the pain points of a group of customers. Your idea necessarily doesn’t have to be a new one. You can update existing products or services such that it becomes better for the consumer. This can be as simple as:

  • Changing its appearance
  • Add a new feature
  • Finding a new use that customers love

2. Make a Business Plan

After you have the idea with you, create a business plan to describe your products and services. Include information such as industry of use, operational efficiency, finances and a market analysis.

A business plan is important for financing for your startup. Banks trust companies that can clearly explain what they will be doing and will offer them loans.

3. Secure Funding for Your Startup

The cost of a startup varies from person to person. Therefore remember, whatever your cost, you will need help for finances. You can start for finances from various sources such as:

  • Bank loans
  • Family / friends
  • Angel investors
  • VC (Venture capitalists)

Also look for a business credit card that offer 0% APR promotions. That means you are not charged interest on purchases and need to pay off before the offer period completes.

If you don’t get enough funding or can’t raise money, there’s a risk of now being able to manage your operating costs. This could force you to shut down. 29% of startups fail because of revenue shortage.

4. Surround Yourself With the Right People

Launching a business has a lot of risk, so be sure to surround yourself with experienced business advisors to guide you. Like attorneys, Certified Accountants, Insurance professionals and bankers.

Building the right team in important too, so carefully select your:

  • Co-founders
  • Contractors
  • Employees

5. Make Sure To Follow Legal Steps

Designing your product, setting up your workplace, opening your dream startup can be fun. But make sure to keep abreast to all the legal formalities. These can include:

  • Get a business license
  • Register your business
  • Get a tax ID
  • File for a trademark
  • Open a bank account
  • Get to know industry regulations
  • Create contracts for clients

6. Establish a Location (Physical and Online)

Location is imperative depending on your business. Set up an office space or a storefront. Decide if you are leasing or buying space. You can apply for tax deductions for a commercial space which can benefit owning an own space.

Leasing is also a good idea as it can cut down on the investment. Leasing can be a cheaper when you want to set up in a prime location. But remember rent / lease can grow and you may not be able to move.

In this digital era, it’s important have an online presence and e-commerce platform. Nowadays customers shop online and use Google to scour for info. And websites offer advantages like:

  • You are available 24 hours a day, on weekends and on holidays, which can increase sales.
  • You reach customers around the world.
  • Providing reviews can raise your brand’s credibility.

Also include a blog to enhance your online presence. You can now establish yourself as an expert in your domain. Also use SEO to increase your visibility on Google SERPs. Also have social media presence, where millions of people are available.

7. Develop a Marketing Plan

Every startup needs to invest time, effort and money on marketing because it helps you to:

  • Establish your brand
  • Stand out in the competition
  • Create customer relationships and increase loyalty
  • Increase visibility
  • Attract new customers
  • Build an enviable reputation

Marketing should also include:

  • Using social media to engage customers
  • Offer coupons or deals
  • Giving rewards for referrals, so as to increase business
  • Offering free samples and demos
  • Sponsoring events in local communities

8. Build a Customer Base

Build a customer base for long-term success. Loyal customers can help:

  • Boost sales, because as they will be loyal
  • Entice new customers
  • Getting new customers increases brand trustworthiness
  • Gain referrals, to find new customers

To attract and retain customers include:

  • Create a great product or service
  • Launch loyalty programs
  • Using affiliate marketing along with influencers to promote products
  • Focusing on customer service
  • Carry out market research to fathom customer expectations
  • Ask for feedback

During survey it was found that 92% of consumers are loyal to specific retailers because they were offered fair prices that matched the value of their product. And 79% vouched that the product exuded quality.

Here are some things to keep in mind when starting a business

1. Thorough Research
startup, entrepreneur, financial plan

Having an earth-shattering idea is not enough, it is also necessary to do adequate research. Some of the points you need to justify are:

  • Is there a demand for your product/ service?
  • What is your target market?
  • Who are your competitors?
  • How will you finance your business?

If you have managed to justify yourself till the last question then you have reached the most important part-financing.

You may bootstrap or find an investor. You could also approach an incubator or accelerator. It entirely depends on what is needed to launch your business model.

Some entrepreneurs handle every aspect of the business on their own. Others keep people specializing in different verticals around him as the go-to council.

You need to come up with the USP of your business.  That will be the focal point of your pitch to investors and potential customers alike.

 “The best combination of founder teams is someone who is very technical and someone who has a flair for sales and marketing.” – Giles Andrews, co-founder of Zopa

2. Make a Plan

startup, entrepreneur, financial plan

Just like no two businesses are the same, similarly, no two business plans are the same. A business plan must be a blueprint that explains in detail the step by step process you plan to follow to convert your idea into a reality.

A traditional business plan is what you need if you wish to raise funds through an investor or a financial institution.  It is generally long and thorough and has a common set of sections that investors and banks look for when they are validating your idea.

If you plan on bootstrapping, a simple yet detailed step by step plan should serve your purpose.

Plan your finances

startup, entrepreneur, financial plan

An initial investment into essentials as well as operating expenses is needed before turning it into a profit.

You need to be aware of every single way of utilising your resources to earn money and every place your money is going into.

Get a ballpark estimate of the one-time costs of gearing up a start-up like licenses and permits, legal fees, insurance, branding, market research, trademarking, etc.

Try to limit your fixed expenses in the beginning to make room for variable expenses.

Some of the most common expenses incurred are as follows

  • Equipment: $10,000 to $125,000
  • Incorporation fees: Under $300
  • Office space: $100-$1,000 per employee per month
  • Inventory: 17-25% of the total budget
  • Marketing: 0-10% of the total budget
  • Website: About $25 per month
  • Office furniture and supplies: 10% of the total budget
  • Utilities: About $2 per square foot of office space
  • Payroll: 25-50% of the total budget
  • Professional consultants: $1,000 to $5,000 per year
  • Insurance: An average of $1,200 per year
  • Taxes: Variable
  • Travel: Variable
  • Shipping: Variable
    Ensure that the first year you spend on necessary and inevitable expenses.

     Cash Flow Management

    startup, entrepreneur, financial plan

Cash requirements are what you need to keep the business operational.

You need to be at the top of your cash flow management or your business might come to a standstill. Too many startups focus on the wrong things — like fancy offices and over-the-top amenities — and forget that generating revenue should be their top priority.

Keeping a razor thin operating margin will ensure longevity and allocate most resources to operational growth.

Limit your expenses in the beginning. You must have clarity regarding what you need the money for.

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Hiring the right people

startup, entrepreneur, financial plan

Do not hire too quickly or too late in the game. Finding the right team is extremely important to ensure the business takes off the way you want it to.

“I’d sacrifice skill set for the attitude, but luckily we haven’t had to.” – Gemma Young, co-founder of Settled

While it is important to find a talented workforce, it is more important to ensure that your team shares your vision and can contribute to your passion and zeal.

Above all make sure every appointment is documented.

Maintain Financial Statements

startup, entrepreneur, financial plan

 “Entrepreneurs need to quickly become good at making tough P&L [profit and loss] decisions and deciding between things the company really needs to achieve its goals and things it would just be nice to have.”

– Aunkur Arya, Braintree

Although the balance sheet, profit, and loss statement and cash flow statement are usually complicated, at startup there isn’t much to include. However, it is a record that should be readily available.

The balance sheet tells you where your business stands at any given point of time. It is a self-explanatory snapshot that shows the value of the assets you have purchased for the startup, how much you owe to lenders and other creditors, and any initial investments you have made to get started.

Cash flow statements are quarterly reports that show the flow of money in and out of the company. It is a reflection of the true cash profit of the company and lets investors see where the money goes.

The income statement or P&L statement shows how much revenue your business is generating. Investors want to know that you are generating revenue and are staying ahead of the expenses. It also lets you know how much you have to keep in the bank to manage expenses.

Breakeven Analysis

startup, entrepreneur, financial plan

A break-even analysis shows your lender that you know the point at which you will start making a profit.  While the break-even analysis is primarily for businesses making or selling products, it can also be useful for service-type businesses.  Be sure to include a break-even graph, and be able to explain it.

It instills confidence in investors if they know by when they can start expecting returns from your business.

 Have the ability to pivot

startup, entrepreneur, financial plan

As we all know the customer is king. You could provide a product or service of unparalleled quality but if that is not what the customer wants or needs it won’t sell. You have to constantly evolve or “pivot” with the changing market trends.

Changing your business model or tweaking your product could be the difference between survival and obsolesce. Flickr was originally an MMORPG (massively multiplayer online role-playing game) called Game Neverending from Canadian firm Ludicorp. However, the tool to share and save photographs was the most popular feature. This led to the game becoming a platform for sharing photographs, Flickr.

The only way to win is to learn and to adapt faster than anybody else.


Words Of Wisdom From A Serial Entrepreneur

Rahul Sharma, CEO of Appscrip and a proud bootstrapper

startup, entrepreneur, financial plan “ Read. Read. Read. You can never read enough to keep abreast of the latest business and technology trends. Keep yourself informed of every trend whether relevant or far-fetched.

Trust your gut. All the advice and information in the world can help you make an informed and data-driven decision.
But is it the right decision? Only your instinct can tell you that. So trust your instinct.

Don’t be afraid to make mistakes. As a serial entrepreneur, you can take my word that you will be blindsided more times than you can count. But trial and error is the only way to succeed sometimes.

And don’t forget to have fun. You are not a machine. Don’t take yourself so seriously. Your startup story should be a story to tell your grandkids! ”

startup, entrepreneur, financial plan

 

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Disclaimer: The Blog has been created with consideration and care. We strive to ensure that all information is as complete, correct, comprehensible, accurate and up-to-date as possible. Despite our continuing efforts, we cannot guarantee that the information made available is complete, correct, accurate or up-to-date.

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