Looking For Ways To Turn An Idea Into A Startup? Here’s How You Can Do It
Around 90 percent of startups fail before seeing the light of day. With such dire numbers, most people are afraid of taking the leap of faith a successful startup needs.
So, how does one turn their idea into a successful business?
The answer to this seemingly daunting question is quite simple actually - by following a few simple steps, you can launch a business that will help your clients and won't burn out your resources.
Step 1: Understanding the problem
Example: A young man named K.C. Gillete invented disposable safety razors after he was inspired by his employer's invention of disposable bottle caps.
A problem and/or opportunity can exist in your area of interest or your surroundings. You need to not only identify it but understand it thoroughly, especially from a marketing perspective.
If you were to create sustainable, vegan diapers for babies, your target audience would be their primary caregivers who are looking for more eco-friendly options. Understanding consumer behaviour lays the entire groundwork for the next steps of your business plan.
Who exactly is your target group?
How do your customers define value?
How do you reach your target group?
What makes your product or service superior to that of your competitors and how can you convince your target group of that?
Step 2: Understanding Your Competition
An important aspect of market research is understanding your competition.
The first step to success is to monitor your rivals. Pay close attention to both their successes and failures. It will help to offer insightful advice on how to differentiate yourself.
During the initial stages of market research, SWOT analysis is frequently utilised to analyse a competitive environment.
What is SWOT analysis?
SWOT is a structured planning process that assesses a firm, project, or idea's strengths, weaknesses, opportunities, and threats.
Analyse your company's strengths first. These include things like the location of your company, stable market segment, availability of resources etc.
In contrast, the things that put you at a disadvantage are your weaknesses such as employee turnover and budgetary restrictions.
Opportunities are speculative events that have a good chance of happening in your professional setting.
Similarly, threats are prospective elements that could pose problems for your company.
Step 3: Plan
Having understood your market, you can now create an architecture plan - focusing on the why, what and how of your idea. This helps in gaining clarity of thought.
Now you can redefine your goal, armed with the knowledge of the market. To find a viable execution plan, you should be able to answer the following questions:
- What is the necessary initial investment to start this?
- What kind of funding is best?
- What are your monetary sources?
- Which partnerships will you require?
- What kind of infrastructure is required for this business?
- What kind of team is required to launch and expand this company?
- What consultants could you ask for assistance from?
- What is the expected start-up time for this?
- How can you overcome the difficulties you discovered during the research stage?
- Over the next three to five years, what investment is necessary?
- Where does this company's break-even point lie?
- What is a customer's anticipated lifetime value?
- How can you increase customer lifetime value by retaining them over time?
Step 4: Financial Model
Construct a financial model utilising hypotheses that you come up with on your own or with input from subject matter experts. You would want to closely monitor the economics and the break-even point. This is used to project the growth strategy, timeline, and the required financial commitment.
There is no one sure-shot method for financing a business. As an entrepreneur, you must consider a variety of things, such as your personal status, your company's cash flow needs, and your long-term strategy. Don’t hesitate to invest in experts or consultants to discuss the best funding choice for your circumstances.
Step 5: Building the team
Henry Ford, the founder of Ford Motor Company once said "Coming together is a beginning; keeping together is progress; working together is success."
A successful team is crucial to the success of any business. When all involved in a project are working toward a common goal while exchanging their viewpoints, knowledge, and experience, the chances of success increase by manifolds.
Determine the traits your future colleagues will possess in order to put together an efficient team. Examine applicants in practice to see if they exhibit the desired qualities and are willing to step outside of their comfort zone. The people you work with on a start up from the scratch, need to be flexible while still adhering to your company’s primary philosophy and culture.
Step 6: Execution
You have done your research, you planned your new business, you prepared a financial model and you created a team to work with. Now comes the actual implementation part. The appearance of this stage will vary greatly depending on the sort of business. In all scenarios, this step entails working through your startup checklist and your roadmap.
This is the point where you can raise money and support that you need. Start assembling your team at this point by employing independent contractors or employees.
For a startup, incorporating is significant since it affects and is affected by numerous parts of the startup lifecycle. By doing this, you can choose your company's organisational structure and transform it into a legal entity.
Step 7: Test and Iterate
This is the pilot project stage. In this stage, a very small portion of the target group is contacted to test the product. You have the option of developing a minimal viable product before reaching the complete and final stage. Here, you can work on the simplest and least expensive iteration of your concept. You can use this rough prototype as a sample and get honest feedback from potential consumers. Depending on their feedback, the product may be further improved upon.
The allure of launching the “perfect product” is completely understandable. However, this process of testing out your less than perfect prototype is extremely crucial towards building your perfect product. This stage helps you identify whether you need to make changes at your production or your marketing stage if you are observing your test target group correctly. Hence, this is a very important phase for any startup model.
Step 8: Raising Capital
A financial investment in the business is often necessary for many startups to advance. In exchange for funding and even advice, entrepreneurs give their investors shares in their business.
Decide how much money to raise and how it will impact your company. Once you've decided on that, you should choose how you'll raise the money: through crowdfunding, an angel investor, or a conventional venture capital firm.
While raising capital is an absolute must for any startup to get off the ground, it is often the longest stage of inactivity for any business. Approaching investors and piquing their interest into your business idea can be a long, daunting and often disappointing process. However, if your research is good, goals are clear and the team is strong, it should not be much difficult to pitch your ideas and raise capital for it.
There is no “one shoe fits all” way of turning an idea into a successful business. Entrepreneurship is typically not a fast path to financial success. There will probably be more at stake and you will need to work longer and harder than you would at a typical job.
While the journey and the end results are worth the grind, it is important to manage your expectations. Unrealistic expectations can cause early failures in your business.
If possible, begin part-time and gain experience before becoming full-time. You will definitely make a lot of mistakes on your business ventures. Most successful startups are built on the back of a thousand failed startups. The key is to learn from your mistakes and incorporate them in building your business plan.
Got an idea?