What do you need to start a business?
- Business Plan: This is a detailed document outlining your company’s strategies, both for the short term and long term.
- Business Name: The name you’ll use for your company in all official records and legal documents.
- Business Structure: This defines the ownership and leadership framework under which your business will operate.
- Business Registration: Official documentation filed with the state that legally authorizes your company to conduct business.
- Legal Requirements: Additional licenses and permits are required for your business to operate lawfully beyond basic registration.
- Funding: The sources of capital for your business, which may include grants, loans, or personal savings.
- Branding: The unique identity and image you establish for your business to differentiate it in the marketplace.
Every aspiring entrepreneur dreams of attracting more visitors, gaining quality leads, and boosting revenue. However, launching a business is not as simple as “build it and they will come.” Even if you’re among the 26% of entrepreneurs driven by passion, you’ll still need to handle the practical side of running a business effectively.
10 Steps to Help You Start a Startup
Starting a business for the first time can feel intimidating, especially considering the significant effort and planning involved. On top of that, only about half of businesses make it past the five-year mark.
Fortunately, there are 9 fundamental strategies that can help guide your startup toward success:
1. Evaluate Your Entrepreneurial Skills
Launching a startup is not for the faint-hearted. It requires even more dedication than running a traditional business. While there are different types of entrepreneurs, successful startup founders often share key traits like passion, creativity, motivation, and self-discipline. In addition, they need to be adaptable, observant, and willing to take calculated risks.
Here are some of the most important characteristics of startup founders:
- Passion
- Creativity
- Motivation
- Self-discipline
- Adaptability
- Observance
- Risk-taking
A deep understanding of industry challenges and experience can provide a competitive advantage. However, not all startup founders come from technical backgrounds or have industry expertise. Many successful entrepreneurs possess the vision and leadership skills necessary to guide a company and hire skilled team members to bridge any gaps in their expertise.
2. Start with a Strong Idea
The first step in starting a business is to pinpoint a problem and propose a solution. Successful startups often arise from ideas that address specific customer needs. However, your idea doesn’t need to be brand new—it could be an improved version of an existing product or service. You could:
- Update the appearance of a product
- Introduce a new feature
- Find an alternative use for a popular product
For example, Apple built upon Steve Jobs’ original computer concept and has continually enhanced its offerings, such as the iPhone and iPad. By introducing new features like the iPad keyboard, Apple has kept its products relevant, contributing to its multibillion-dollar valuation.
3. Design Your Startup Blueprint
Whether you’re drafting a casual or formal plan, writing down your business strategy forces you to consider all essential aspects like your market, competitors, and industry. Depending on your startup’s stage, your plan could vary. Early on, an informal approach may include:
- Business model canvas: A visual map covering your customers, value propositions, revenue, and cost structure.
- Lean canvas: A variation of the business model canvas, emphasizing your problem, solution, target customers, and competitive edge.
As you seek investments, however, a formal business plan will be required by potential investors and lenders.
4. Secure Funding for Your Startup
Once your business plan is in place, you can begin the funding process. Here are some ways to secure funding:
- Self-funding: Start by pooling personal savings or seeking contributions from family and friends. Be mindful not to invest more than you can afford to lose.
- Venture Capital: Venture capitalists invest in exchange for equity and often take an active role in the business. While this can help with growth, be cautious, as they expect fast returns and may push for short-term solutions that could impact long-term goals.
- Small Business Loans: Unlike venture capital, loans allow you to retain full control over your business. Look for government-backed loans and choose a repayment plan that aligns with your financial forecast. Many regions, including Germany, offer startup grants and loan programs for entrepreneurs.
5. Network with the Right People
Once you have your business plan and funding in place, it’s time to start networking. Having these ready beforehand is crucial because potential contacts will want to see clear evidence of your progress. When you meet someone genuinely interested, you can immediately showcase why they should get involved with you. Build your network by connecting with a broad range of people both in person and online.
Online Networking With the rise of virtual events post-pandemic, networking online has never been more accessible. Virtual options for nearly all events mean that you can build connections from anywhere. Here are some ways to take advantage of online networking:
- Social media: Follow competitors, seek mentorship, and craft posts that reflect your brand and foster collaboration.
- Forums and online communities: Find specialized spaces where you can exchange knowledge, ask questions, and get advice in a focused environment.
- Online events: Discover virtual gatherings and track who’s attending, why they’re attending, and which speakers and attendees are regulars.
In-Person Networking While online networking has its merits, don’t underestimate the value of face-to-face interactions. Physical networking events offer unique opportunities to engage on a deeper level. Now that in-person events are making a comeback, take advantage of them:
- Host brainstorming sessions: Gather collaborators for a creative session in a relaxed setting, where ideas can flow more freely.
- Attend events: Engage with people in person by attending talks or workshops, where your focus will be sharper than in a virtual setting.
6. Ensure All Legal Requirements Are Met
While building your startup can be exciting, don’t forget to handle the necessary legal steps to set your business up for success. Key tasks include:
- Securing a business license
- Registering your business name
- Applying for a federal tax ID
- Filing for trademarks
- Setting up a separate business bank account
- Understanding industry-specific regulations
- Drafting contracts for clients and business partners
7. Build a Strong Founding Team
Find Co-Founders Research shows that startups with two founders are 19% less likely to grow too quickly compared to those with just one. Having a co-founder can also help you achieve faster growth. However, not every entrepreneur needs a co-founder—what matters is finding the right people to fill essential gaps in areas like:
- Skills and expertise
- Leadership capabilities
- Industry knowledge
- Startup experience
- Fundraising capabilities
- Complementary personalities
Hire a Lawyer if Needed A skilled lawyer can ensure your startup’s legal formation goes smoothly and stays compliant with regulations. If you plan to implement custom vesting schedules or share allocations, legal guidance will be essential.
8. Establish Your Physical and Digital Workspaces
Creating your workspace involves two key aspects: setting up the physical environment where you work and building the online presence that clients will see. Each requires a different approach, so let’s break them down.
Your Physical Workspace Think about where you feel most productive and what essentials you need for work. These factors will guide you in selecting the right physical workspace. Consider the following when making your decision:
- Do you share your space with family or roommates?
- What are the costs of renting office space in your area?
- How far are you willing to commute?
- What type of product or service does your business offer, and how does that affect your workspace needs?
Your Digital Presence Your online presence is more than just a website—it’s a reflection of your brand. Every interaction you have online contributes to how people perceive your business. Treat your digital space as a representation of your professional identity. When building your online presence, ask yourself:
- What are my brand’s core values?
- How can I effectively convey those values to my audience?
- Which online platforms are most appropriate for my business?
- How crucial is an active online presence for my brand’s success?
- How much should my personal identity overlap with my business identity?
- What do potential clients expect from my brand’s digital persona?
- What visual style best represents my brand’s image?
By thoughtfully designing both your physical and digital workspaces, you create an environment that supports your productivity and aligns with your business goals.
9. Create a Marketing Strategy
Every startup requires a tailored approach to marketing, with varying budgets and time investments. It’s a crucial expense because it helps you:
- Build your brand identity
- Differentiate from competitors
- Foster customer relationships and brand loyalty
- Increase visibility to attract new customers
- Enhance your business’s reputation
Some marketing tactics you might consider include:
- Utilizing social media to connect with customers and promote discounts or deals
- Offering referral rewards to encourage word-of-mouth growth
- Providing free samples or demonstrations to showcase your products or services
- Sponsoring local events to boost your brand’s presence in the community
10. Launch and Scale Your Business
Your journey doesn’t stop at the launch or after making your first sale. The next phase involves executing your business plan, staying on top of industry trends, and expanding your company. This phase demands commitment, persistence, and an eye for opportunities that can fuel growth.
Growth opportunities could include entering new markets, expanding your customer base, or diversifying your product or service offerings.
You might also explore innovation, enhance quality, focus on customer-centric improvements, or optimize your business model.
Internal growth is equally important and can come from expanding your network, growing your team, and building a strong company culture.
Strengthen Your Startup’s Marketing Efforts
A solid marketing plan should guide your startup’s promotional efforts and serve as the roadmap for your strategy. Start by outlining your business’s critical goals, especially in the short term, and ensure they are SMART goals:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
Next, identify your target audience and craft a compelling message that resonates with them. An attention-grabbing, clear message is essential for engaging potential customers.
Craft a Growth Strategy
Although growth can happen organically, you’re more likely to achieve your startup’s goals if you design a deliberate strategy for it. Once you’ve secured early customers, focus on expanding beyond that base to ensure sustainable growth. Consider both profitable and sustainable growth tactics.
To build your strategy, reflect on these key questions:
- If you plan to raise additional funding, what milestones will justify a new round of investment?
- How much time do you expect before needing the next round of funding?
- What is a reasonable “burn rate” given your startup’s current operations and projected growth?
By addressing these questions and setting clear objectives, you can steer your startup toward sustainable growth.
