If you are currently reading this blog post, it clearly indicates that you have a startup idea lingering in your mind.
It is said that, on an average, every individual, irrespective of the age, gets hundreds of ideas every single day. Every time you get in touch with a business, right from a grocery vendor to a smartphone dealer, you get ideas on how to improve such business. Or, in other words, you get ideas on how you as an entrepreneur can do differently as a grocery vendor or as a smartphone dealer.
Ideas are with everyone. Some ideas are readily implementable as a startup, while others need nurturing and improvement.
I have come across hundreds of startup companies, which miserably failed before it celebrated its first anniversary. And a few others, after a decade. In both cases, the root cause was the same. Lack of idea validation. The only difference between the two is – the former was lucky to fail early, while the latter was taking a ride on a tiger for quite some time.
In this blog post, I have guided you on how to validate your idea and launch a successful startup. This guide is in general and not limited to any particular business vertical.
This guide is particularly written for newbies with an excellent business idea but lacks information and relevant experience in launching a startup. If you are an experienced entrepreneur, I bet you will still find loads of information useful.
8 Tips to Turn your Business Idea into a Startup Company
Tip #1: Write a business plan
A business venture without a well-documented business plan is very much likely to fail. Though many business insiders argue that, a business plan is not vital for startup success, I consider it as one of the most important ingredients to launch a successful startup that attracts huge investments/funding.
With a well-written business plan, your startup’s success rate is up by 50 percent.
A business plan is a roadmap on how you will go about implementing your startup idea. Its a written document or a blueprint that outlines the working model of your business.
It must contain reasons why your business idea is achievable and ways to achieve it. A well-documented business plan must contain information about the current organization’s health in terms of investments, quality of resources, the core team running the show and more importantly – a clear exit strategy.
The common components of a business plan include the following;
- Vision & Mission (Optional)
- This is the emotional part of the business
- Problem Customers Are Facing
- This should explain the problem your startup idea is going to solve
- Solution Your Startup Provides
- This should explain the solution to the problem and how is it different from the existing solutions
- Market Analysis
- Proof of how big is your customer segment
- Product Description
- Showcasing your product in action
- Showing month on month improvement or growth in business
- Core Team driving the show
- A detailed description of your competitors, their strengths and weaknesses
- Financials (Budgeting)
- Financial Forecasts for running the business
- Amount being raised
The above-mentioned points should be documented in detail with realistic numbers. Do not worry about how simple your startup idea is, go ahead and write a great business plan.
When someone reads your business plan, he or she should be able to visualize the real-time working of your startup.
Tip #2: Laser target your audience
The common mistake committed by every startup entrepreneur is being everything to everyone. Just because everyone liked your startup idea, does not really mean, everyone can become your paying customers.
Understand the fact that, there is no – one size, fits all – kind of product/service anywhere on this planet. If you are going ahead with – one size, fits all – formula, you are preparing yourself to fail.
To make your product/service a great success, you need to define your target audience called – buyer persona. Having a clearly defined buyer persona will enable better marketing, leading to more conversions. Research says, defining a clear target audience will reduce and thus save marketing expenditure by 50 percent.
Buyer persona can be identified by various parameters like age, gender, location, and other demographics.
For example, if you are into a premium saloon business, your buyer personal can be described as follows:
- Between the age group of 25 and 50
- Upper Middle Class
- Residing in Metropolitan Cities
- Both Men and Women
- Belonging to working class
Once you identify a buyer persona, you can drill down further to laser target your audience with more brainstorming, like
- Drives a sedan
- Earns a monthly salary above INR 50,000/-
- Loves Fashion
When you have a clear idea about buyer persona, you will know whom to target and whom not to target as part of your marketing efforts. That is the big saviour.
Tips #3: Conduct market research
In the previous step, we did a theoretical experiment of identifying our buyer persona. But, what’s the proof? That was only our assumption based on our thought process. This is where tip 3 comes into the picture.
It’s time to validate our beliefs about our buyer persona. For this, you got to do some real extra work. Get out of the building and talk to real people. Validate if your assumed buyer persona really wishes to have your solution as part of their daily routine. What is the whole purpose of coming up with a product or service which has no buyers?
No amount of assumptions can give you the right answer better than the getting it from real people themselves. Do not confuse validating with selling. Ask them about their problems and check if your solution can help them. If yes, do not ignore to validate if the solution is a right fit for the assumed buyer persona.
Other ways of testing your assumptions include:
- Online Surveys
- Social Media Community Discussions
- Market Trends
- Influencers interviews etc.
Apart from validating your buyer persona, you got to research on competition. Chances of over-saturation of a particular niche should not leave your broken.
For example, let us consider a small example. Assume you wish to set up a book shop in your locality. However good is your service, your chances of making profits remain at bay if there are already 25 shops existing in the same locality? Getting overcrowded in the same locality is a sign of a bad business strategy.
Same is the case with the business of any scale. Getting into an already overcrowded nice is a bad idea. Having said that, if you have a better strategy and strong gut feeling to overcome a giant competition, you are free to do so. But, definitely not my recommendation.
Tip #4: Build A Strong Brand
A brand is a strong emotion people carry in their mind about business. It is an identity by which people recognize you. Branding is setting a perception about the quality of a product or service in people’s mind.
Branding is a single word synonym for trust building. All your brand building efforts will reflect the image of your business you are trying to portray.
Brand building is very much important to stand out from the crowd in the highly competitive market. Especially, if you wish to scale your business, then, branding must be your topmost priority.
Having a strong brand value for your business will, therefore, help you stand out from thousands of other organizations from the across the world that is into the same business as yours.
Your business name, logo, colors, marketing collaterals, websites etc. everything relates to each other in your brand building campaigns.
As the saying goes, the first impression lasts forever. Therefore, your first steps into the brand building should be for a positive outcome. If your brand reputation is built positively for the first time in the minds of customers, it will remain forever. On the contrary, negative branding also remains. So be careful and do not rush into anything without proper planning and thoughts.
Tip #5: Hire the Right Team
As Andrew Carnegie rightly said, teamwork is
“the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.”
The above statement is true, only if the team is right. Hiring the right employees can make or break your business. A wrong team is a disaster to any sort of business. Here are few tips to hire the right candidates for your team.
- Hire employees who have relevant experience in a specific domain
- Avoid hiring family and friends as both business and relationship will not go smooth
- Look for someone with a commitment to their Career
- Hire employees having diversified skill sets
- Hire employees who have flair towards startups and entrepreneurship
- Hire someone who can lead without a leader
- Hire someone who can put in extra efforts to take your startup to the next level
- Think twice before hiring people who were comfortable being in the established organizations
- Do not hire a person based on his experience. His experience may be more, but check out his energy levels while contributing to a startup
Tip #6: Look for Investors and Investment
Obviously, the core part of running a business is money. You need an initial investment to take off. The amount of investment needed depends on the type of business you are into.
Make a list of things needed to set up your business and recognize your business costs.
It is always good to outline the total investment needed to run your business for at least a year without expecting any returns. This is the time when your business starts to grow and establish itself.
Investment is needed to set up the following for a startup business:
- Leasing business property
- Hiring and paying core employees
- Types of Equipment
- IT Infrastructure
- Legal procedures
- Operational Costs
- Startup costs…etc.
All expenses and financial projects should be clearly outlined in the business plan to secure funding from investors. A rough number or guesswork will not secure you funding. Investors are more wise than you, because, they invest. So make sure you give an exact estimate of investment and returns that investors can expect.
Some of the ways you can secure investments for your startup include:
- Family and Friends
- Angel Investors
- Venture capitalists.
All the above investors expect equity in your startup. If you aren’t ready to sell equities out of your startup, you can initially check for bank loans for business. Though it is difficult to secure a bank loan for a business venture, it is not impossible. They might not expect equity, but, their interest rates for the principal amount will be very huge. So you might have to do thorough research before accepting loans from banks.
Tip #7: Create Buzz Around Your Startup
Your business plan is ready, you have done a complete market analysis, you have understood your exact customer persona, you have got the best team and also secured enough investments to run the show. Next what? Create Buzz or Hype around your startup.
To kickstart your fundraising efforts, you need to create strong momentum for your startup. Investors love to be invest in startups that are in the headlines for good reasons. This can be considered as your guerrilla marketing for attracting high profile investors to fund for your startup.
Some of the ways to create buzz or hype around your startup include:
- Launch of MVP
- Get Expert Interviews On Your Startup
- Get Your Product or Service Features in Conferences or Summits
- Create A blog and start social media marketing
- Attend competitions and etc.
Creating hype will also make your customers know about you. It will be easier for you to convince them about your product/service.
Tip #8: Question Yourself – Are you ready to take the plunge?
Entrepreneurship might not look as fascinating as you hear stories of Bill Gates and Steve Jobs. There are a lot of sacrifices behind their actual success.
You have a great idea, team, and fund. But, ask yourself – Are you ready to take the plunge into the world of entrepreneurship?
As an entrepreneur you got to live life with stress, sacrifice sleep, cannot expect a steady paycheck, work twice or thrice your regular 9-5 job, you cannot take sick leave at times and many more. But, on the other side, if things go as per your plan, it is worth the efforts and sacrifices. The rewards are 100 times the sacrifice.
If you’re willing to take these risks and get to work, proceed with your business plan, and make it happen.
if we have the courage to pursue our dreams, they will definitely come true. For the true entrepreneur, tough times don’t last, but they do. Whenever you feel like quitting, think and remember why you started at the first place.
To launch your business:
Get your business plan ready
Validate your idea with laser targeting your audience
Conduct absolute market research
Build a strong brand
Hire the right team
Look for investors
Create buzz around your startup
Question yourself for your commitment
Get started ! All the vest best for your new venture.