By definition, a startup is a business just beginning its journey into the world of commerce. Have you got a great idea for a product or service? Do you think there’s a gap in the market for what you have in mind? Have you got that entrepreneurial mindset to get up and go? Are you thinking of starting up your own business but unsure where to begin?
Then keep reading to find out more about how to start a startup.
Know your target market
You must know who you want to sell to before committing any resource to your business once you have identified your target market and stick to it. If you find that your product appeals to other needs after trading for a while, you can adjust your marketing strategy accordingly.
Create a feasibility study
Having a great idea for a product or service is just the beginning. You also need to make sure that what you have in mind is something people will want to buy at the price you want to sell.
So you will need to do some careful research on your potential markets. Are you selling locally from a brick-and-mortar location or globally as an e-commerce venture?
Next, look at how your product or service compares to what your potential competition offers. What added value will customers get if they buy from you instead. This will lead you on to pricing. You will need to ensure your product or service is competitively priced while still covering all your expenses.
But this is just the start. Every aspect of the startup will have to be considered. A feasibility study researches the market and tries to assess whether your product has the potential to succeed. It tries to identify a proposed venture’s strengths and weaknesses, giving you a good idea of how your product will perform in the marketplace.
A feasibility study will cost you money. How much will depend on the scale and complexity of your startup. However, once you have completed it, you will have a good idea about whether your startup idea is worth moving forward with. Here are a few key headings that should be included in your feasibility study;
Find out how competitive the market is. Do this by using Google. Determine how many companies are selling a product similar to yours. If the product can be sold online or posted nationally, you should include the whole country in this research. Compare the product they are supplying to the one you will be launching. The most important factors here are the actual product, its price, and the marketing tools used to sell it.
It is easy to underestimate how much an actual product will cost you before it is sold. A common mistake is to price it before considering the hidden costs you incur in the purchasing process. If you are importing a product from China, for example, there are many costs that you will incur before you arrive at your actual unit cost. Consider the following purchase overheads that you might incur;
-Freight costs from China
-Import duties on your product
-Sales tax when the product lands in your country
-Customs handling charges
-Transport to your warehouse or office
-Delivery to the customer
-Commission charged by credit card companies when customers buy online.
Access to the market
Sometimes a market can be impossible to penetrate. This may be due to one or two companies that have cornered the market. They can compete on all the aspects of selling a product and keep a competitor out by keeping the price down or spending millions of dollars on advertising. Research the market and be confident that you will be entering a business environment that you will have a chance of competing in.
Startup and operational costs
Your startup costs will always be more than you think. You should factor in the lead time of the feasibility study to the product’s launch. This will not be a fast process and will put pressure on your financial resources. If you are renting premises, you will probably have to pay a couple of months’ rent in advance on top of a deposit. On top of this, you will have to pay yourself a salary during this time.
Make sure you can legally sell your product. You will be surprised at how many imported products are illegal in the United States. This may be because of the product itself or political issues with other countries. Check out this pdf for guidance.
Decide on a name
You’ve decided what you will sell, written your business plan, but are still struggling to find a catchy name that is memorable and conveys an idea of what your business is all about.
This is where our Business Name Generator can help. It can produce thousands of unique name suggestions in seconds. You can also use our simple Domain Name Generator if you have an online presence. This not only creates some great domain names it also checks their availability. Use it to check the availability of those business names as domain names as well. At this stage, you might consider trademarking your product for extra protection.
Do the paperwork
You will have to register your business name. This is a straightforward process. You will have a few options from a sole proprietorship to LLC (Limited Liability Company). When doing this, get advice from an accountant to ensure you have the type of company that suits your business. In addition to this, ensure you have all the licenses (if applicable) to sell your product.
Finance your startup
The steps to opening a business will be the same, regardless of whether you are setting up a drop-shipping business from home or launching a new tech company. You will have to have enough finance to bring you through from the feasibility study to the launch of your product. Miscalculating these finances may lead to a delay in making your first sale, which, in turn, will cost you more money. When looking for financing, there are several options open to you
-Use your own capital
-Get a bank loan
-Sell shares in the company at startup time.
You may do this through a venture capital company if your business requires a lot of capital investment. To attract investments of this size, you will need a detailed business plan. Your plan should outline all the aspects of your start up business like running costs, profit and loss projections, your target market, and pricing.
Perfecting your product
Test your product on a target audience before you launch it. Ask them to check out your product and fill in a product questionnaire that asks all the relevant questions. After analyzing the answers, you will know how to modify your product, whether on price, functionality, or appearance, before you market it. This will save you a lot of time and money.
A crucial part of this will be determining the right price for your product. Your questionnaire should ask questions to find out how much they would be prepared to pay for your product. You might be surprised by the answers you get here. The acceptable price might not be the same as you had planned for. This is good news if the average price comes in above your price, but you will be in trouble if it is well below. If this is the case, you will have to reconsider if your idea will be viable in the long run.
Creating a sales platform
You should sell your product online. Everyone else does it, and your customers will expect it. Creating a professional website is vital if you are to succeed. You will need a user-friendly, attractive and efficient site to keep your customers engaged. The customer should be able to sell the product in high definition. It would be good to employ a professional photographer to do this for you. Write an honest product description. Place CTA (Call to Action) statements on the website.
Make sure you have a secure payment system that your customers recognize and trust. From your point of view, check that you are paying a reasonable commission to the payment providers. The one I would recommend is Stripe. They have a competitive commission structure and facilitate small payments(micropayments).
Once you have received an order, dispatch it as soon as possible, informing your customer of the delivery progress by allowing them to track their delivery. If they are satisfied with your service, they will come back a second time and tell their friends about you. Having a helpline on your site will help you gain the confidence of your customers. Encourage them to write reviews about your product and service and have a part of your website dedicated to just that.
Use all the marketing tools available
Create social marketing accounts with all the big players. Facebook, WhatsApp, Instagram, and Twitter. Create them with the same name as your company to give uniformity and increase customer awareness. Keep all your accounts up to date with relevant content. Lead all your followers back to your website.
Use Facebook Ads to advertise to your target market and increase followers on your page. Google pay-per-click ads are helpful if you have identified your market from the start. If you haven’t, you might not see a return on your investment.
Review your business
It is essential to review all aspects of your business regularly. Compare your projected sales to your actual sales. If they are less than projected, try to find out why. Is the price too high? Are your competitors undercutting you? Find out the answers to these questions quickly. Don’t leave it until it is too late.
Although your company might be making a profit on the actual product, find out if the company is making a real profit after all the other costs involved in running the business. Create a detailed Profit and Loss account and identify the areas where you can cut costs without affecting the overall running of the company. Making incremental changes to your company’s finances can lead to increased efficiency for the business as a whole.
Have good people around you
As the company becomes more successful, employ like-minded people to help you grow it with you. You should be able to create synergy within the business if you pick the right people, and the company will grow at a reasonable rate. Apple and Facebook have super-intelligent and capable CEOs, but they also need highly talented top management beside them to lead the companies in the right direction. Choosing the wrong people will have the opposite effect. You will be carrying dead weight in the company, which will lead to decreased performance and potentially a lousy working culture.
Start up companies come in different forms and sizes. But they all have one thing in common. They must go through the same pre-launch regime. The first thing to do is to identify your product and market. Then you must do a feasibility study to see if your idea is viable.
When you decide to go ahead with your idea, you must have all the paperwork and finances. There will be a considerable lead time between your feasibility study and your product launch. Make sure the company has enough finances to survive until then.
Get both your purchase price and sales price right. Your purchase cot will have many additional costs that you might not have thought about. Your sales prices will have to be profitable and attractive to your customers. Decide on a marketing strategy that targets your market most efficiently. Make it easy for your customers to access you with a solid business domain name that describes your business well. When potential customers are on your site, increase the chances of a sale with a user-friendly sales platform.
Doing all of these things will not guarantee success. However, if you haven’t done your research correctly, there is a high probability that your product will not make an impact on the market. Take these considerations seriously, and you have every chance of success.
Related: Business Name Generator
Related: Startup Name Generator
Related: Domain Name Generator