“What do you need to start a business? Three simple things: know your product better than anyone, know your customer and have a burning desire to succeed.” – Dave Thomas, founder of Wendy’s.
You must have heard of companies like Uber, Airbnb, Spotify and Instagram. These are some of the most famous start-up companies in the world. If you’ve always wanted to start your own, read on to get a more in-depth idea of how to get started.
What is a start-up company?
The term ‘start-up’ has been thrown around with increased frequency over the last few years, and has been used to describe disjointed ventures, new age apps and huge technology companies; but what is really a start-up?
In a nutshell, a start-up is a company in the early stages of its development. These ventures are started by people who wish to take advantage of market demand in a particular field. According to Neil Blumenthal, co-founder and co-CEO of Warby Parker, “A start-up is a company working to solve a problem where the solution is not obvious and success is not guaranteed.”
A successful start-up has certain facets, including:
- Having an innovative product that captures the demand in the market;
- Having an in-depth knowledge of their customer base and what their customers want;
- Having a well-thought-out strategy that is executed perfectly;
- Having a flexible and adaptable start-up idea;
- Taking care of customers and implementing their feedback to improve the product or service;
- Carrying out proper communication with clients, employees, investors and vendors.
How to devise a business plan for a start-up
A business plan is a written depiction of the firm’s future. In other words, it is a document that outlines the firm’s goals and how it can achieve them. Creating a business plan for a start-up is akin to creating a strategy for a football match: it is basically the blueprint for a new company.
If you are preparing a business plan for your start-up business, there are certain elements that must be included in it:
- Summary: It should contain the elements of the business you intend on starting.
- Start-up description: Here, you describe your company and its business concept.
- Competitor and market analysis: In this element, you should include detailed information about your soon-to-be competition, their market share, their strengths and their weaknesses. It is also recommended that you include information about the market as a whole and the percentage of the market that you wish to capture.
- Goals and strategies: In this section you should include your short-term and long-term goals, as well as how you plan on achieving them with particular strategies in mind.
- Products and services: Here you have to describe your products and/or services in great detail so it is easy for potential investors to understand.
- Marketing and sales strategies: This should contain the marketing and sales strategies that you will implement once the start-up is officially founded.
- Management and organisation: In this element, you must elaborate on the management, organisational style and strategies that you are planning on implementing.
- Financial forecasting and requirement: The information required in this section can be broken down into two parts — financial projection and financial requirements. The financial projection should include the revenue and profits that you expect the start-up to earn once it is established. The latter should include the capital and assets required to launch the start-up.
- Additional documentation: If you wish to include any materials to support your business plan, it should be added to this section.
When you are preparing a business plan, certain tips can help in elevating it:
- Make the business plan concise and accurate to showcase your professionalism.
- Incorporate the latest professional technologies and resources in your plan.
- Include a cover letter with the business plan as it goes a long way in impressing potential investors.
How to develop a start-up
If you are interested in starting your own business, the following steps will help make it happen:
- Step 1 - Hone your idea: You might have some amazing start-up business ideas, but you have to improve and develop those ideas to achieve their full potential. For example, you can conduct a thorough analysis of the industry you wish to enter with your start-up, studying the weaknesses of your potential competitors to convert them into a strength.
- Step 2 - Write a business plan: It is extremely important to create a business plan with your start-up ideas. Start-ups could end up making the mistake of rushing through their business plan, which can lead to their failure. Ensure you devote a considerable amount of time to writing your start-up business plan and making sure that it is immaculate and thorough.
- Step 3 - Assess finances: Starting any business requires money, so you must determine how you will cover these costs. Will you try to obtain start-up funding, invest your own money or try to get a commercial loan? Moreover, it is advisable to get an investor on board, because without investors backing up your company, it might get difficult to cover the steep capital costs.
- Step 4 - Define legal business structure: Here you must determine what kind of business entity you wish to form. The business structure you choose has ramifications in all aspects of the start-up, as it affects from how taxes are filed to company liability if things don’t work out. You have multiple business structures to choose from, such as sole proprietorship, partnership, corporation and limited liability corporation (LLC). However, bear in mind that denominations and details of business structures vary greatly from country to country, so it is important to thoroughly research each kind of structure in your company’s country. For example, the LLC business structure, which is specific for companies created in the US, has been used by some of the best most successful start-ups, such as Apple, Microsoft and eBay. This is because it provides them with the tax benefits of a partnership and gives legal protection similar to that of a corporation.
- Step 5 - Register the start-up: Once you have chosen your business structure, the next step is to register the start-up with the government and tax authorities.
- Step 6 - Set up your team: Hiring a good team is key for the establishment of your start-up. According to Joe Zawadzki, CEO and founder of MediaMath, “Your product is built by people. Identifying your founding team, understanding what gaps exist and determining how and when you will address them should be a top Figuring out how the team will work together is equally important. Defining roles and responsibility, the division of labour, how to give feedback and how to work together when not everyone is in the same room will save you a lot of headaches down the line."
- Step 7 - Advertise and market your brand: Once your team is in place, the next step is to build your start-up’s brand. This includes creating a catchy name and designing a logo for the company, promoting and advertising the brand through various marketing channels and setting up the start-up website.
These steps are also of great help to those who are starting an online business.
If you are interested in starting a business or have some interesting business ideas in mind, GISMA Business School offers a variety of courses to help you succeed, such as MSc Strategic Business Management, Grenoble MSc Innovation, Strategy and Entrepreneurship and MSc International Business Management.