The First Steps
Whilst startup businesses require an innovative business idea, there is obviously more to do for the budding entrepreneur. Importantly, the selection of a suitable business model as well as the elaboration of a detailed business plan belongs to the initial preparations. Additionally, funding is a prerequisite before an idea is turned into a marketable product. However, this does not always have to be financed by a bank. Financing can be made by strategic investors or other founders.
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Starting Up a Startup!
All startups are created by an entrepreneur who has a vision for the company or project, they’re also known as a founder and there can be more than one. The startup process can take several years as ideas, designs and prototypes are evaluated. During this time, the founder will do plenty of research, consider market demand, and create business models. Maintaining the effort involved in this and seeing many ideas fail can be difficult leading to many startups failing.
Mistakes and How to Avoid Them
Many founders of startups think they will be able to have a product or service up and running in a matter of months. Sadly, this often isn’t the case and they will start to suffer from burnout. This feeling of failure is one the main causes of startup failure. This overconfidence in themselves or their ideas can be a huge downfall. Being too narrow minded can also cause problems, pushing an idea that’s very unlikely to work just because it’s favoured is not a smart move.
Additionally, poor research means what a founder might think is a great idea isn’t good in actuality. Not finding out what’s in demand can lead to a startup owner creating a product that no one wants. Also, some founders can get carried away with how muc control they actually have over a situation. As with many businesses, startups are not immune to the basic laws of chance. Whilst many do not like the idea of not being in control, sometimes it’s best to just see where ideas lead to. Otherwise, a sudden loss of control can have a devastating effect.
Mindful Mentors
Wise founders of startups will at the very least consider a mentor. Mentoring doesn’t only just keep the creator on track and grounded, they can open up new leads and ideas. Mentors can introduce founders to all kinds of people via networking. Thankfully, for some startups this can even bring in new investors meaning a betterchance of success or expansion on original ideas. Knowing how to network and how to research properly can make or break a new company. Having a mentor from the start benefits founders and helps to prevent them from making too many mistakes early on.
Funding A StartUp Business
One of the main things that puts people off creating a startup business is having the money. Raising money for what feels like a good idea to you may not gasin the attention of those who can help. Therefore, it’s vital to pitch the idea or invention to that you can turn some heads and really garner some interest. This isn’t always easy and it takes money to make money! So how else can people generate income for their startup? Here are some ideas:
- Government Funding
- Loans
- Credit
- Grants
- Crowdfunding
- Angel Investors
- Family/Friends
StartUp Funding Options
It may seem that there are many options for funding but some can be rather limited. The creators may not live in an area that offers government funding or their idea may not qualify even if they do. Government funding can be quite limited and specific and some may even run out before the next financial year. Loans can be a great way to gain funding for a startup but there are many options.
A financial advisor may be best placed to advise the startup creator which is best, a personal, business, or specific startup loan. Each have the advantages and disadvantages. Also, it will depend on the credit history or score of the person who wants to borrow. Similarly, there is credit, whether it’s a line of credit from a business or using a personal or business credit card. Additionally, grants can be hard to find as well, they usually have specific limits too. Friends and family may want to help but many won’t have the funds and some creators won’t want their family too closely involved.
Crowdfunding for Startups
Crowdfunding is an ideal way for a startup business to try to raise capital. Also, it can be easy to set up thanks to sites like IndieGoGo and Kickstarter. This process involves sourcing finance for a group of people, known as the “crowd”. These can be individuals or organisations that wish to invest in the company. They will usually get some kind of a reward. This is often the product that is being made or something related to it. Occasionally, startups will share their idea with extremely in-depth explanations, design processes, manufacturing updates and more. These are well liked due to their details making investors feel well informed. Additionally, debt-based and equity-based funding sites like Seedrs and LendSecured are available. These are crowdfunding sites that are financially regulated and where people can invest in the company and own a small part of it.
Angel Investors
Many of us watch shows like Dragon’s Den and Shark Tank where investors watch budding entrepreneurs pitch their business or product in the hope gaining an investment. For a startup, an angel investor can really help them to get their idea off the ground. An angel investor is usually a business person with a lot of money to their name. However, these investments aren’t made out of the goodness of their hearts, they want to see a return. Therefore, it’s vital for the creator to pitch their idea well. Additionally, they share their knowledge and wisdom to help the startup to thrive.
Successful Startup Businesses
Air BnB
In 2007 the two founders of Air BnB set up a small, simple website after they experienced a shortage of hotels during a larger conference in their area. They decided to rent out their home during these occasions and invited others to do the same. However, this startup did not grow overnight. It took several years for them to get funding and even longer to make a profit. However, today they are an extremely profitable company and a well known name.
SpaceX
An interesting startup is SpaceX owned by Elon Musk who is the richest man in the world. Of course, he didn’t need to ask anyone to help him fund it. However, it is still a startup company and as such he used his own money to the tune of 100 million US Dollars. Unfortunately, to date, all of his launches have failed but that doesn’t seem to stop him!
Instagram
Many assume that Instagram was made by one of the tech giants but this wasn’t the case. Originally named Burbn and used as a simple check-in app it was created by two entrepreneurs. Interestinly, they changed the name of the app to Instagram and focused the purpose on photo sharing. This along with the $500,000 granted in 2010 meant the app grew very quickly. Further funding saw the business grow exponentially and in 2012 it was bought by Facebook for 1 billion US Dollars.
Doordash
This well known food delivery company was originally called Palo Alto Delivery. Surprisngly, it saw the founders delivering food orders to students on campus! They were originally working on a different idea but a business owner gave them an idea and they ran with it. They realised that small businesses were struggling to fulfil food orders so they worked on that. By 2023 the company was worth almost 25 billion US Dollars.
