Struggling to Turn an Idea into a Startup? Here are the Keys to Navigating the Startup Journey
The business world has evolved over the decades. What startup entrepreneurs face today is much different than the ones who came before them, with new challenges and new opportunities.
Disruptions of all types and an ever-changing economic climate are impacting businesses in all industries. One of the biggest challenges remains, however – how to stay profitable while scaling.
For startups, these challenges can add up, especially in the process of getting a new idea launched, developing products or services, and gaining traction as a newcomer to the market – not to mention raising capital to weather the early stages.
Fortunately, there are a few keys to success for startups that you can apply to set yourself up for success.
Identify Your Market Needs
A common problem among entrepreneurs is building an exceptional product or service, only to find out that there’s no real market for it. Sometimes, it’s because the market has satisfying solutions and a loyal customer base. Other times, it’s because there’s simply not enough customer demand to keep it viable.
You may have a great idea, but that’s not enough for a viable business model. You need to evaluate your potential customers, their pain points, and your market competitors to determine their true needs.
For example, home remodeling services may seem like a strong business idea for a specific location. After all, people are busier and busier, new homeowners may take on fixer-uppers, and some people just prefer to hire the work out and know it’s done right.
However, you have to be sure that your prospective clients are actually looking for these services. Is the local housing market hot or beginning to cool? Are people choosing full renovations for homes, or are they more likely to choose a kitchen remodel? In a hot market, are homeowners looking for renovations to prepare their homes for resale?
These types of questions need to be answered in your market research. No matter your industry, the upfront work to understand your customers, market, and challenges can help you align your business model to the market demands and pivot as needed.
Conduct a SWOT Analysis
Every experienced entrepreneur knows that the market can throw some curveballs your way. In business, a SWOT analysis helps you prepare for the unknown and stay strong in the face of uncertainty by evaluating your strengths, weaknesses, opportunities, and threats.
Once you have this information in front of you, you can craft strategies to capitalize on your strengths, mitigate risks, seize opportunities, and defend your business against possible threats. Here’s how to create a SWOT analysis:
- List your strengths and what sets your business apart.
- Identify your weaknesses, vulnerabilities, and areas for improvement.
- Consider external opportunities, such as growing market need and future market expansion.
- Look for external threats, such as new regulations that may affect your industry.
From there, brainstorm some ideas. Let’s say you’re looking to compete with a market trend like a competitor releasing a product that’s similar, or even better, than your idea. You can’t eliminate that product, but you can take cues from it to make sure yours is even better and develop a marketing campaign that can offset an initial decline in sales.
Stay Adaptable
Startup environments can be unpredictable and chaotic. It’s possible to achieve seemingly overnight success, but most startups have a slow and steady path to growth – and potentially more staying power.
Ultimately, what matters is that your business has a solid foundation that’s designed to scale and adapt. If you look at some of the top brands in the world, many of them started out quite differently from what they are today. Being married to your idea and your entire business model can cause you to miss opportunities, fail to adapt to a changing market, and possibly lose revenue. Worse yet, you may not be sustainable in the long term.
Early feedback can be an important part of the process. The more feedback you receive from your customers early in the process can ensure that you’re on the right track to serving them. If you find that you need to pivot, you have an opportunity to make small changes to your product features, service offerings, or other aspects of your model before you hit the market.
Always be ready to accept feedback and make those changes. While your passion matters, your customers are the most important factor in your business success. Make sure you’re focused on them, not yourself. Verify your assumptions with data about customer wants and needs to ensure you’re staying objective.
Keep It Lean
There was a time when businesses had an inherent advantage. There was market demand with few competitors, so the customers came to them and growth happened naturally. Now, with new businesses sprouting up constantly, it may take some time to gain brand recognition and a steady flow of customers.
Adopting a lean startup mentality is a safe and scalable approach to ensure that your business can operate during this waiting period. This means you take a more tactical approach to making decisions for your business and validating your product or service hypothesis.
For many startups, this means creating a minimum viable product (MVP). The MVP is the most basic, stripped-down, tangible version of the product or service that’s central to your business. This gives you a cost-effective way to penetrate the market, introduce your product, and generate buzz with a lower risk of financial loss. You can also validate your business’s potential growth.
It may be tempting to go “all-in” on your idea and your passion, but the reality is that startups often take time to gain traction. Staying lean allows you to manage risk in the meantime and ensure that you don’t burn through your resources before your business can take off.
Build a Resilience Network
The foundation for your startup can have a lasting impact on your ability to set and reach future goals. One of the most important aspects of a great startup is building a network of mentors, investors, vendors, and other industry professionals to help you gain momentum.
Sure, you want to “go your own way.” It’s part of the entrepreneur’s nature. You want to do things your own way and find your own path. While this is honorable, it can be a mistake and may lead to more setbacks and hurdles that can prevent you from taking advantage of opportunities when they come around.
With a resilience network, however, you can get advice and recommendations from people who have done what you’re planning to do. This learning experience can be invaluable in the early stages of your business, especially if it comes from people who have lived and learned in the process of building their own business empires.
Prepare to Bootstrap
“Bootstrapping” is a common term in the startup world. This refers to entrepreneurs who rely on their own resources and the business’s growing revenue to help it grow and expand. While bootstrapping can be an effective way to turn a profit as quickly as possible while maintaining full control over a business, it requires a lot of efficiency and creativity.
If you want to bootstrap and gain its benefits, you will need to rely on free or low-cost tools for your business. This keeps your startup lean and limits how much of your capital you have to tap into. It’s important to get creative with recruitment, retention, and your problem-solving approach.
While bootstrapping does involve more work than launching with everything you need, it can make an incredible difference in your profit margins. You can build your business on your own terms, according to your research and instincts, without concerns for how a group of investors will assert control.
Seek Funding
If bootstrapping isn’t realistic for your business, you may need funding. You have a few options, such as crowdfunding, which is raising capital through the efforts of friends, family, and others in your network, or relying on traditional business funding through banks or other financial institutions.
Another option is investors. Angel investors are a common route for startups. These are affluent individuals who provide capital for a business startup, typically in exchange for convertible debt or equity ownership.
Venture capitalists (VC) are another common option. These professional investment firms manage funds from many investors to invest in startups. They usually have stricter criteria for investments, however, such as a proven business model and startups that are ready to scale, not just launch.
If you decide to rely on an investor or VC, you will need a pitch that’s clear, concise, and compelling. Investors aren’t following passion. They need to understand your business model, value proposition, and the potential of your idea in the current market.
What’s Next?
The startup journey can be long and arduous, but it also comes with exciting moments and plenty of satisfaction. It’s crucial to set your business up for success, however, by taking the right first steps, building a foundation, and preparing to enter the market in a strong position. Doing the work prepared will help you ensure that your business is viable and that you have the necessary components for a profitable, long-term startup.