To launch a successful startup in 2022, you should stick to a well-thought-out plan. In this article, we’ll list the nine essential steps of starting a business.
Step 1. Get a great idea
To create a business that will have good odds to take off, you need to identify a problem that your potential customers have and then offer a solution to it.
You don’t have to come up with a 100% new and revolutionary solution that no one has ever heard of. Instead, you can improve an already existing product by
- modifying its appearance,
- expanding its functionality,
- or finding new ways of using it.
When choosing an idea for your startup business, ask yourself six key questions.
- What are you interested in? You should be genuinely passionate about your product. Consider turning your hobby into a business.
- What is your previous experience? Which skills do you have? Which previous jobs did you like the most? You should take into account both your hard skills (such as coding or talking Chinese) and soft ones (such as communication and leadership).
- Are you ready to take risks?
- What’s your current financial state? How many funds can you afford to invest in starting your own business?
- If you start a business, how will it impact your personal life? Will you have enough time for your dearest and nearest? Will your friends and family support you? Which lifestyle habits will you need to sacrifice?
- What will be the structure of your startup company? Will you be working alone from home? Will you need to open an actual office and hire staff? Are you ready to open up a franchise?
If you lack ideas, you can check social platforms, such as Instagram, Twitter, and startup Quora threads. Read other people’s discussions to better understand consumers’ pain points and get a vision of the product that will generate high demand.
Step 2. Conduct market research
Once you’ve detected an idea with great potential, make sure the market is ready for it. Conduct a market research to assess the viability of your business concept and plan your future marketing activities.
- What are the demographics and other characteristics of your target audience?
- How large is the industry where you’re planning to start a startup?
- What’s your unique value proposition?
- How much funds and effort will it take you to launch?
To find answers to these questions, you can use the services of a marketing agency. But to cut down expenses, you might prefer to do the job yourself — say, find contacts in the industry you’d like to join and run a couple of interviews.
Step 3. Compose a business plan
This document will serve as a roadmap for your startup’s development. Here are the seven main components of a startup’s business plan:
- Executive summary. General information about your small business, its values, and employees.
- Company description. Explain how you can fix consumers’ pain points and why you think you will succeed.
- Market analysis. How many competitors do you have? Who are they? What are their primary advantages? How can you outperform them?
- Service or product line. What will you offer to consumers? How will they benefit from it?
- Funding request. You should include this point in your business plan only if you need startup funding. If you can fund your company from your own pocket, feel free to skip this point.
- Financial projections. How much income do you expect to receive?
- Appendix. In this part of the document, you can list your permits and licenses as well as any other required materials.
A business plan allows you to set clear goals for your company. Plus, it’s a vital prerequisite for attracting finance to your startup. A bank is more likely to give you a loan if you explain in a concise manner what you need this money for and how you’re planning to spend it.
Step 4. Secure funding
Small businesses that are just getting started can receive financial support from
- angel investors,
- venture capitalists,
- founders’ friends and family members.
Alas, banks are not interested in your startup’s success. They only want to get their money back. To convince a banking institution to lend funds to you, you should write a compelling business plan and offer valuable collateral (such as your car or house). Consider applying for a business credit card with a 0% rate.
Venture capitalists might support your business in exchange for a share in it. The more investors you attract, the more diluted your own share will become. Apart from money, VCs can provide you with knowledge and industry contacts. Typically, they won’t ask you to share profit with them.
Angel investors differ from VCs in two aspects. First, they act as private individuals, while venture capitalists create funds. Second, angel investors might be ready to provide you with smaller sums of money than VCs.
When asking for financial support from your friends and family members, you should treat them as if they were professional investors. For example, show them your business plan and answer their questions. Since your dearest and nearest will stay in close touch with you, they might want to keep informed on your startup’s progress.
Alternatively, you can fund your startup from your own pocket, using the bootstrapping method. This means you invest your own savings to help the business take off. Once it begins to generate profit, you’ll reinvest all the revenue in the company’s development and will keep doing so for the next few years. Bootstrapping won’t help you if you’re launching a tech startup that has the potential to become one of the biggest in the industry. Such a business might require up to a billion dollars to take off, so you’ll need to attract investors.
Around 1/3 of all startups fail because they run out of money. To manage your finances, you can install budget-managing apps and strive to avoid unnecessary expenses from day one.
Step 5. Find the right people
Apart from employees, your startup might benefit from the expertise of the following types of professionals.
- Certified public accountants
- Insurance specialists
A startup with a good mentor can skyrocket very quickly. A mentor is a person who knows your industry inside out. They have or previously had a successful business in this sector. Maybe they have even helped several other entrepreneurs to launch startups in this field. Overall, they’ve made all the mistakes possible and can give you advice on how to avoid them.
To find a mentor, you can:
- Ask your friends and family for help. If none of your relatives and acquaintances have relevant business experience, ask them whether they could recommend any professionals to you.
- Look into extended contacts. Think of people you used to work with. Reach out to experts who used to consult you in the past. Who knows, maybe your university teachers could put you in touch with the right people.
- Go to networking events. Pick the events that your potential mentors would visit. Collect information about these people in advance and be ready to talk with them when you meet. They will be impressed if you show that you know about their background and work.
- Use LinkedIn. It’s an ideal social platform for finding mentors for startups. To discover a list of mentors that would suit you, you can use the Career Advice tool.
- Pay for mentorship. If you tell a mentor openly that you can pay them, they might get more enthusiastic about sharing knowledge with you. But don’t expect their services to be cheap. It would be still a wiser decision to exercise your negotiation skills and find someone who could support you at no cost.
- Join a program where mentorship is included. It can be a networking program or you can start your business as a franchise that involves training.
Now, let’s focus on the tips that should help you find good staff members. There are three steps to good hiring.
Make your job description clear. Write it so that your potential employees understand who you’re looking for at a glance. To make the text skimmable, list the duties and perks of your job position in bullet points.
Ask the right questions during the interview. Compose a set of questions that you can ask each candidate. Put down their answers and pick those professionals who impressed you the most. For example, you can ask people about career projects they’re most proud of. Or, you can find out why they decided to apply for your position.
Use social media. Again, the best platform to resort to is LinkedIn. Check the education level and the certificates of professionals who might suit you. Read the posts that they share and like to assess their preferences.
To make the most of your professional contacts, don’t forget to continuously improve your management skills. Aim for becoming a leader who inspires and empowers their team members as well as other people in the business environment.
Step 6. Make sure you’re following all the legal steps
To create a startup, you should do a lot of paperwork.
- Double-check whether your business name is not taken yet. Make sure it is legally available and not protected by someone else’s copyright.
- Register your company. It can be a corporation, LLC, or a sole proprietorship.
- Get the necessary license and permits. The list of the papers depends on your industry and location.
- Get your federal and tax ID. Tax authorities will use this data to identify your business, and you’ll need to declare taxes on your earnings.
- Open a business bank account. You’ll need it to accept checks in your business name.
Failures can result in government fines or unnecessary personal liability, so get to know your industry regulations very well.
Step 7. Establish a location
By ‘location’ we mean both offline and online presence, whatever suits your business. If you need an office or a manufacturing facility, you can either buy or rent it. A perfect physical premise should meet the following criteria:
- Within your budget
- Easy to find for potential customers
- Zoned for your business type
- Situated in a safe and attractive area
The less competition for your startup there is in your area, the better. Plus, you should investigate the business history of the neighborhood. Do startups take off here quickly? How many of them close? If yes, then how fast?
You can do without an office if your business is service-based. For example, if you repair gadgets, you can come to your clients’ homes and offices. Alternatively, you might be able to work from home if you run a digital business and can coordinate the efforts of all your team members remotely. Almost 70% of entrepreneurs in the United States of America start their businesses at home.
If you already have a commercial premise, you can use it fully for yourself or rent out some part of it to cover a percentage of your business expenses. But if this space fails to meet the criteria that were listed above, you might prefer to find a better one for yourself.
As for the online presence, think about building your own website. Even if you’re planning to sell your products on marketplaces, it’s important and highly beneficial to have your own ecommerce page.
- You can customize it more freely than your marketplace page.
- You won’t need to pay a fee to the marketplace for the purchases made through your website.
- It will boost your brand awareness.
In your online store, consumers should be able to not only buy your products but also find useful information, such as guides, tutorials, item descriptions. Plus, people who have already purchased your products should be able to rate and review them to help others make the right choice.
If you start a blog on your website, it will help you establish yourself as an expert in your field. As soon as a new post goes live, share it on your social media profiles. A regularly updated blog with relevant keywords will improve your website’s SEO rankings — which means it will become more visible in Google search.
The visitors of your website will want to get in touch with your support crew quickly and easily. Ideally, there should be a live chat where human professionals attend to consumers instead of robotized AI bots. Besides, it’s always useful to offer alternative communication channels — at least email.
Step 8. Draft a marketing plan
At the initial stages of your business development, your resources will probably be limited. Nevertheless, here is what you should focus on.
- Website optimization. The navigation on your website must be intuitive. It needs to be fully mobile-optimized and feature compelling CTAs.
- Digital marketing. Having a blog, using social networks, and advertising on Google are the most universal digital marketing tactics. On social media, you can share your news and updates, promote coupons or deals.
- Networking. Strive to stay in touch with the professionals of your industry and consumers. For example, find time to visit important online and offline events. Join discussions and try to be helpful to people. When your brand becomes mature enough, you can start sponsoring events in local communities.
- Free samples. If you sell physical products, you can distribute samples offline as a gift. If you make digital products, let your clients have free trials.
- Referrals. When your already-existing customers bring new clients to you, think of ways to reward them for their contribution.
The ongoing marketing should enable you to strengthen your business reputation, establish a brand identity, differentiate yourself from your competitors, improve customer loyalty, and expand your client base.
Step 9. Build a customer base
Now, we’ve come to the last step of our plan. You should strive to get as many loyal clients as possible to boost your sales, convince other people that your brand is trustworthy, and gain referrals.
To make sure consumers come back to you, offer five-star customer service. Whenever someone purchases your product, ask them to provide feedback. Launch a loyalty program. Use affiliate marketing on social media — that is, pay influencers to promote products to your target audience. And of course, keep continuously improving your product line and the quality of your goods.
Extra step applicable on any stage of your startup development
As your business takes off, its initial concept might change drastically. During the first years of a startup’s life, the team needs to be very flexible.
Be ready to constantly adapt your business model to your quickly evolving market and industry. Always take into account consumers’ feedback about your products and quality of service.
It would be wise to hire forward-thinkers who gladly embrace innovations. Plus, your team members should always stay updated on trends in your field.
Hopefully, now you have a better understanding of how to start a startup in 2022. First, get a great idea, conduct market research, and compose a business plan. Then, you’ll need to secure funding, find the right people, and make sure you’re following all the legal steps. Plus, it’s important to find a location for your business, draft a marketing plan, and build a customer base.
As your startup begins to take off, stay flexible and ready to adapt to the evolving market conditions.