Top 5 Steps on How to Start a Startup

Many young and experienced professionals are yearning to launch their startup venture. Seldom they know how. Here is a five step process.

What I am going to share are key things which you need to be aware of before you jump into starting your venture.

These are not taught in any MBA class, these are from personal experience of being an entrepreneur myself and other fellow entrepreneurs who have gone through the grinding journey and have either tasted success or have failed.

It doesn't have to be like this. In this article, we'll show you how to start a startup in 5 steps. We're using our own personal experience to simplify the process and make it less intimidating. We've done the work to make all the mistakes, so you don't have to. We have 5 ways to get you started and ready to create your startup idea.

These are the ‘5 steps to start a startup’ which I am sharing with you.

Source-The startup race

First Step: Product Idea and Validation

The idea is the key element of any startup, it's true that ideas are a dime a dozen and what matters is execution. But the seed of the venture is that thought that comes into your mind with a flash and you say to yourself, that you want to do it. Validation of the idea is also very important. Two broad things you should take care of:

a.      Is my idea unique, avoid a ‘Me Too’ idea
b.      Does it solve a customer pain problem?

If you are able to solve a customer problem which is unique, then you will surely have a buyer who is willing to pay for it. In our experience or day to day life we will come across such challenges or issues which the customers are facing and would love to have a solution for it.

Take that idea and start to build around it, go into the very details of the idea and how you would go about execution of it. Check the competition, there is no such thing as no competition, there will always be some form of competition out there.

Second Step: Founding Team

You need to have a strong team to execute your idea else it will be a challenge to grow. If you think you are Rambo, the one man army, who will go in and kick ass and the venture will work, well let me tell you it does not work like that in the real world.

Source- business2community.com

It's not that easy, you could be a solopreneur, but it will take longer to scale when compared to startups with teams of two or more. With a team you are more likely to attract investors and experience success sooner.

They are your sounding board who will validate the thoughts and directions which you plan. It shows to the world that there are more people, other than yourself, who believe in the idea.

The next question is what is the right number of founders, well generally speaking it would be good to have between 2 and 3 in total as the founding team. You could have more but then you will only be inviting chaos.

The perfect founding team will have these three roles, the Hacker, the Hustler and the Hipster.

The Hustler is the visionary of the business, more often than not he is also the CEO. He is the dreamer who is able to see the future and has the unique ability to articulate the dreams to others.

He builds your overall strategy and roadmaps, right team, looks at sales, marketing, partnerships and guides the team along the journey.

He is the number man with a keen eye on the financials, cost structure and user metrics, can make investor pitches and take tough decisions.

The Hacker is your tech person who will do the development of the product, generally he will play the CTO role in the company.

He is the one who will be developing the intellectual property of your product and the technology platform that will form the building blocks of your venture.

The hipster is your creative leader who is thinking about the design of your product, he is the one who will deliver the wow experience in your product. He is one who will manage and build the brand identity, set best marketing practices, user experience, and the look and feel of the product.

Third Step: Get Funding

One of the most critical aspects of any venture is money i.e, funding, but I will here break it down into two parts

•       Personal Funding
•       Company Funding

Source-  deltacapitalgroup.com

Personal Funding: If you are single and bachelor then you could probably survive on your parents' money. But if you have a family with kids and liabilities, then financial planning is very important.

For the first year your venture probably won't return much money to you which you could take home, most of the money will keep getting plowed back into the venture. So plan for this worst case scenario.

The minimum advisable is to have 12 months of personal funding to run the house and all liabilities, best case is 24 months. Anything less than 12 months will be inviting trouble, you don’t want to remove your focus from the venture you plan to build.

Fourth Step: Company Funding

There are few ways to get the funds to start your venture, you should plan for 12 months of finance to run the company, this will be mostly for salaries and other misc. items. Don’t count founders salary in this

•             Self funding from savings
•        Accelerators / Incubators
•        Loans, if you are lucky
•        Friends and Families

Raising funds from Friends and families is right down in my list, personally I would avoid this route, It could cause you to end up breaking your relationships with them forever or create unnecessary tensions.

Loans depend upon different countries, but generally are hard to get unless you have any collateral to provide.

Accelerators and incubators are a good way to get some seed funding, they will also provide you space and guidance to grow your venture. But getting into them is a tough challenge as there are many startups competing.

  Source- fundable.com

If nothing works, then self financing is the only option you will have left. Hard truth but it’s the truth with which you need to live.

If you are not very deep-pocketed, like many of us are, then ensure you have the plans to raise funds to grow your venture. There are very few ventures who have totally survived on their funds when doing their startup.

Fifth Step: Business Plan

Ensure you have done this document, it's important to write things down. Many entrepreneurs I know, don’t believe in documentation and believe that they have it all in their heads.

 But the reality is when you start to pen your thoughts down, that’s when you will also self validate your own idea. That’s when you have to answer the tough questions. A typical business plan consists of the following elements:

• Executive summary
• Company description
• Market research
• Description of products and/or services
• Management and operational structure
• Marketing and sales strategy
• Financials

I want to highlight here is the Exit Strategy, it is an entrepreneur’s strategic plan to sell his or her ownership in the company to an investor or another company, IPO or even shutting down.

If the business is successful, then it’s a good way to make substantial profits. If the business is not successful, then the exit strategy will help you limit your losses. Ensure you plan your stop loss and get out at the right time, don’t keep stretching. Stick to your word.

Mentors or Advisors

Yes you need these guys on your side if you really want your startup to succeed. Although mentors and advisors are commonly mentioned in the same breath, we can differentiate between the two:

Mentors are typically close friends who will help you grow as an individual, rather than financially. They are generally older than your age and using their wisdom will guide you in both personal and business matters. They are generally not on your payroll.

Advisors on the other hand are professionals whose main goal is to help grow the company rather than you as an individual. They are experts who will provide insights and assistance in specific business areas. They will be on your payroll.

So plan to have an advisory board, with people who are experts in their fields who will help you grow. Having a board will help increase the success of your venture, either you get them on day zero or maybe 6 months down the line. The important thing is that you plan for this in the beginning and start finding the key people who you would like to be part of your board.

Conclusion

So, these are the five steps on “how to start a startup”. Remember that, Success in business will need more than just hard effort and good fortune, it will necessitate making the optimal judgments from the beginning.

Aside from these five key phases, there are a slew of additional difficulties and tasks to address while starting a startup. It takes a lot of effort just to wrap your brain around these options.

You must identify and learn about each phase in the process of beginning a business. If you want your business to prosper, you must make the correct decisions from the start!

Ramandeep Singh Bakshi
Product Management Specialist