How to Create a Startup
Are you ready to launch your own startup company?
If you’re reading this, you most likely are ready to be your own boss by creating a startup of your own. You can’t become an entrepreneur just by wanting it, though. If you mean business about launching your startup, these are the five steps you need to take to get started.
Step 1: Choose a Startup Idea
The first step to getting your startup off the ground is to come up with an awesome startup idea, but as you probably already know — that’s easier said than done. Get started by brainstorming, identifying a widespread or personal problem, using a business idea generator, or leaning into what you’re most passionate about.
Now that you’ve got some startup ideas to choose from, you need to put them to the test. Literally and figuratively, you need to test out your startup idea before launching to ensure there is a market for it and it can deliver on what it promises to do. However, validating the value of your idea starts with knowing what makes a great startup idea in the first place. Here are some key characteristics of great startup ideas:
- It solves a problem or supplies a need that isn’t currently being met.
- It is innovative and challenges the status quo.
- There is a market for it that isn’t too big or too small.
- The risks don’t outweigh the advantages.
- You are passionate and excited about it.
Each of these is an important characteristic of a great startup idea because without one, the rest aren’t as impactful. To paint a picture for you, if your startup solves a problem with an innovative product, but you aren’t passionate or excited enough to put your full self behind it — your startup is probably not going to succeed.
Once you’ve chosen and tested your startup idea, there are a few things you should do before creating a startup business plan. That is, decide on a business structure and choose a name for your startup. Check out our full guide to naming a startup.
Already have a startup idea? Read our step-by-step guide on how to register your startup.
Step 2: Create a Startup Business Plan
Think of a business plan as a roadmap for your startup that outlines your starting point, endpoint, and all the stops you need to make on the way to get there. Not only is a startup business plan helpful for entrepreneurs, but it’s also absolutely essential to successfully find investors and start your business on the right foot.
Traditional business plan —This an in-depth, detailed blueprint of your startup’s first three to five years in business. Most investors will want to see a business plan for your startup that is this thorough and descriptive before funding your startup idea.
Lean startup plan — This is more of a diet-business plan, meaning it includes fewer details, less in-depth analysis, and is typically much shorter than a traditional business plan. Sometimes a lean startup plan is as short as one page.
While the two business plans are different in length and detail, they should include the following:
- Company description
- Market analysis
- Business and management structure
- Products and services
- Marketing and sales plan
- Funding request
- Financial projections
To make creating your startup business plan easy, free, and quick, we recommend visiting TRUiC’s Business Plan Generator.
Step 3: Get Startup Funding
Bootstrapping — For startups, bootstrapping means to build your company with no outside capital. Essentially, you invest your own savings or capital utilizing the resources you already have to build your business from the ground up.
Friends and family support — Most startups rely on financial support from friends and family to get their startups off the ground. If this is how you are funding your startup, be sure to create strict guidelines for repayment, and get it all in writing.
Business grants — Unlike loans, startup grants provide capital for entrepreneurs, such as yourself, that you don’t have to pay back. Most often, startup grants are given either by the government or an organization and typically come with requirements for how the money is spent within the startup.
Business loans — Business loans cover startup costs and are paid back to the lender incrementally. These loans can be acquired by applying with a business lender such as a bank or another lending institution.
Startup accelerators and incubators — Startup accelerators and incubators are programs that offer funding and resources such as mentorship to startups in their early stages. Incubators differ from accelerator programs in that they are a more community-based program in a shared physical space.
Venture capital firms — Venture capital (VC) firms invest in startups to gain profit as the company grows by contributing to startup costs. They typically will take an active role in the business, sit on the board of directors, or request to become a partial owner of the startup.
Angel investors — Similar to VC firms, angel investors provide funding for startups in hopes of a high return on investment (ROI). Often, angel investors are people with an excess of money to spend on risky investments.
Step 4: Market Your Startup
It’s no secret that your marketing strategy can make or break your startup. Developing an effective marketing plan starts with research.
First, you need to figure out who your target market is because if you don’t know who you’re marketing to, it is pretty difficult to appeal to the right demographic. Do your research to find out the type of people that are typically drawn to what your startup is offering and how to reach them.
Next, get to know your competitors. Identify who they are, what they do, and who their target audience is based on their marketing tactics. You can learn a lot from what your competitors are doing well and what could be improved to create a brand that is completely your own.
Developing a digital marketing strategy is the most powerful marketing tool you can have as a startup entrepreneur. These are the three pillars to an effective digital marketing strategy:
- Build a website that is well-designed, user friendly, and aesthetically pleasing. Don’t forget to make sure your domain name is available, and reserve it!
- Optimize your website to gain the most site traffic possible by using search engine optimization (SEO) techniques.
- Connect with your customers on social media, and build a strong brand across your platforms that will draw your target market in.
Step 5: Build a Startup Support System
A network of support will not only make starting your own business more pleasant, it will give you tools and resources to help you through the inevitable trials of entrepreneurship. The best way to build a startup support system is to network with individuals in your industry such as other founders and entrepreneurs that have experience in your field.
The goal is to create a network you can rely on as mentors and advisors during unprecedented stages of your startup, but where do you find these like-minded entrepreneurs?
- Use the Small Business Administration’s local resources tool
- Reach out to entrepreneurs with startups you admire
- Build a community on social media
- Research online forums and communities
- Join a startup incubator
How do you define a startup?
A startup is a young company born out of a desire to solve a problem, fulfill a demand, or bring a unique product or service to the market. Typically, startup companies are funded solely by their founders or with the help of friends and family.
What are the types of startups?
There are six types of startups:
- Scalable startups that are built for rapid growth
- Large company startups that are built to innovate
- Social entrepreneurship startups that work to positively impact the world
- Buyable startups that are built to be acquired
- Lifestyle startups that are centered around the founder’s passions
- Small business startups that are created to fulfill the needs of its founders
Startup vs. small business: What is the difference?
The fundamental difference between a startup and a small business is longevity. Generally, while small businesses are focused on sustained growth, startups tend to focus on gross revenue and rapid growth since this is a temporary business model.
What is a lean startup?
A lean startup is a methodology that tests the viability of a startup company or product through experimentation and hypothesis testing. This method is based on gauging the interest of customers to produce a product or service with a built-in market.
What makes a startup successful?
There are a multitude of ways to make a successful startup, but the foundational reasons startups succeed are because they offer a usable and unique product or service, have sufficient financial backing, and have an unrelenting dedication to making their business succeed.
What makes a good startup founder?
Starting a business takes a great idea and an even greater entrepreneur to make it all happen. Great startup founders are passionate, adaptable, confident, and have an eye for detail.