What is a startup and how to develop it into a successful business
How a startup differs from a small business
In addition to the fact that a startup does not have a ready-made business model, industry analysts highlight a number of other features of such a project:
- Novelty – sometimes startups do not even have a registered organizational form;
- Minimal start-up costs — start-ups may not have their own capital, and development takes place at the expense of third-party investments;
- Unique idea – a startup will be successful only if its idea has not been used before and at the same time will be useful for customers and profitable for investors;
- Rapid growth – a startup does not have time to build up, it needs to find an effective market promotion strategy as soon as possible.
Stages of startup development
Each startup goes through several stages before entering the market. However, in some cases, the author of the idea may deliberately skip several stages, if the situation allows. The main thing is to determine before the launch what will happen to the startup after it attracts investments. It could be going into a traditional business, selling it, or launching it on the stock market. Such information is especially important for potential investors to understand the risks and return on investment.
There are several main stages that a startup goes through:
- Problem/Solution Fit – confirmation of the problem and that the proposed product will solve it;
- Minimum Viable Product (MVP) – development of a working prototype with minimal functionality to solve a problem; release of the alpha version and testing of its shortcomings;
- Product / Market Fit – confirmation that the product has a sales market (closed beta version of the product);
- Scale – scaling the business model (open beta and release of the consumer version of the product);
- Maturity is the transition from startup to business.
How to find an idea for a startup?
Many startups fail because they are poorly copied ideas or do not meet real market needs.
There are several ways to help you choose the right solution for a startup:
- Be in trend. Read about market innovations and inventions, try to predict in which industry they can be applied;
- Become an expert. Being a market insider is always more profitable than entering it from outside. At the same time, you can combine knowledge in several industries at once in order to invent something at the intersection of technologies. For example, an employee of the investment bank Salomon Brothers,
- Michael Bloomberg, after his dismissal, decided to create his own financial agency Bloomberg. As a result, he became one of the richest and most powerful people in the world;
- Solve your problem. Come up with a solution that is not on the market, but which will make life easier for you personally. This is how Flickr photo hosting came about, as the development of the multiplayer online game “Game Neverending” needed somewhere to store images;
- Look for weak points. Being able to understand where other people are wasting their money and time sometimes helps to come up with a useful solution;
- Improve what already exists. A particularly successful way will be to work with those goods and services that are now causing negativity due to an unfinished interface or for other reasons. Richard
- Branson created Virgin Atlantic to overtake British Airways in terms of service, but went much further;
- Link unrelated. Startups work on this principle, which have found a successful combination of cheap goods and services and wealthy customers who need them. For example, the Odesk exchange helps companies find freelancers from the other side of the world;
- Copy with improvements. An unsuccessful clone will quickly fail, and a successful one, as practice shows, develops into an independent company and is no longer associated with its predecessor. This is how a start-up of printing on clothes UniFashion appeared in Russia, which borrowed the idea of
- American student merchandise;
- Travel and experience. Cases of successful business from another country can work at home as well.
- American Howard Schultz spied on the idea of coffee shops in Milan. That’s how Starbucks was born;
- Work with new markets. If you keep track of new products from companies, you can quickly offer additions and improvements for them. Bill Gates began to earn money by writing a BASIC interpreter for the first Altair 8800 home PC;
- Hang out with smart people. You can use other people’s ideas, and sometimes you need to. Many people cannot bring something worthwhile to life, but would like to delegate this function.