How to Start A Startup: 6 Steps to Succeed
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Launching a startup is taking a leap of faith. You’re trusting in your idea, your abilities, and your perseverance to see through a personal dream of yours. If you’re starting a startup with partners, you’re also putting relationships to the test, because businesses demand a great deal from their collaborators.
Of course, you know all this. You’ve already decided you can do it and you’re going to see it through all the way. The question then, is, how should you get started?
In this blog post on how to start a startup, let us walk you through the steps you need to take after landing that leap of faith. Learn about planning, funding, networking, and marketing. Start your startup the right way.
How to start a startup in a nutshell
- Choose between a thorough traditional business plan and a quick lean startup plan
- Secure funding by approaching friends, considering venture capital, and applying for small business loans
- Find people to network with both on and offline
- Ask yourself what you need from your physical space and how you want to communicate your brand in your digital space
- Consider both traditional and digital marketing techniques before drawing up your marketing plan
1. Set up your business plan
There is no successful business without a good business plan. At the beginning stages of your startup, you want to develop a clear and structured layout of your goals, methods, and projections. You will likely present this to investors and other interested parties who can help you on your way to success, so crafting the right kind of business plan is crucial.
When developing your business plan, there are a few things to take into account. First of all, which kind of plan will work best for your startup? There are two categories into which business plans fall.
Traditional business plan
The traditional model for a business plan is most popular because it is the more thorough of the two. It will require more work, but you will end up with a comprehensive and detailed plan.
Traditional business plans usually include:
- Company description: detailed information regarding your company, the problems you aim to solve with your product/services, the experts you have at your disposal, what sets your business apart from others
- Market analysis: a critical survey of the market you’re about to enter into, laying out the advantages you have and challenges you’ll face
- Marketing strategies: your specific approach to advertising and promoting your company, including what kind of techniques and professionals you will employ to carry this out
- Financial projections: a convincing series of projections which demonstrate your business to be a financially stable one
Lean startup business plan
The lean startup model is preferable for those who wish to get their business idea off the ground quickly. It also works well for anyone who may need to change their business plan regularly, for example if you are in a highly fluctuating market or are adding different services your company will provide.
By the way: If you’re still struggling to find the next big innovation to build your business around, learn more in our article on how to find a business idea.
Lean startup plans often include:
- Key partnerships, activities, resources: who you will work with, what you’ll do to get ahead, and which resources you’ll use to do it
- Values and relationships: what your company stands for and how you plan to implement these values into your customer relationships
- Revenue streams and cost structures: your strategies for maximising value and reducing costs, and your plan for doing this
2. Get funding for your startup
Once you have put together a suitable business plan, you can better approach securing funding for your new business. It’s important to have a clearly laid out plan at this stage because this is when you will begin to present your business to others. Secure funding by tackling it from different angles.
This method isn’t likely to cover all your costs, so you shouldn’t expect it to. Self-funding means pooling together what you can put towards your business venture without causing problems for yourself. You can also approach family and friends under the self-funding model. Just always make sure you are never spending more than you can afford.
Again, this is something you need to be careful about. Venture capital can be very useful especially at the early stages of business foundation. But there are things to be wary about, too.
First, understanding venture capital investing: Venture capital differs from investment funding because there is no specific return expected on the investment made by the venture capitalist (e.g. interest rate). They buy shares in your company in exchange for an active role, like a seat on the board of directors or influence over future decisions.
If you’re considering seeking venture capital investing, research venture capital firms and speak with potential investors to understand who you’re getting involved with your company. Present your business plan and make sure you’re clear about what kind of role the venture capitalist plans to play in your business.
Finally, you should be wary of venture capital for a few reasons:
- Growth—and fast: venture capital investors are investing in you because they expect growth, and they expect it quickly. This can put a great deal of strain on your business and influence changes in your business plan
- Too much (or bad) input: taking on venture capital means giving up portions of ownership of your business. Research, interview, and cross examine your venture capital investors, you don’t want them taking your venture away from you
- Short-term thinking: related to the problem of fast growth, venture capitalists may encourage short term solutions to secure the results they expect to see. This can result in long term damages to your business
Small business loans
Unlike venture capital, a small business loan will allow you to retain full control over your business decisions. Your only obligation will be a financial one, to of course pay off the loan.
Secure a business loan by surveying the options in your region. Look for firms with government backing and excellent professional credentials. Then, decide on the kind of payment plan you feel comfortable with based on your financial projections, and weigh it up against your other modes of securing funding.
There are many grants and loan options offered in Germany, some of which are offered by major banking institutions and government institutions. This list of startup grants from I Am Expat offers a comprehensive overview of the many options for entrepreneurs in Germany.
Financing can also be simple! With Penta you can find business loans from €1,000 to €250,000.
3. Network with the right people
With a solid business plan and financial backing in place, you can begin to build your network. It helps to have these two things sorted first because when networking, interested parties will want an intimate portrait of your business—and concrete evidence of a strong beginning. So when you meet someone who takes a genuine interest, you can immediately convince them they would do well to get involved with you.
Find the right people by networking widely, both in physical spaces and online.
Since the pandemic, online networking has undergone a swift and massive overhaul. There are more events now than ever, physical events are always equipped with options for people to attend remotely, and just about everyone has gotten used to talking over each other in Zoom calls.
There’s really no excuse for not leveraging online communities in today’s world. It’s easy and natural and you can do it all from your bedroom or favourite cafe. Here are some of the online channels you can hit up to start networking the easy way:
- Social media: follow the competition, reach out for mentorship, start crafting tweets and posts unique to your brand that show a desire to collaborate
- Forums and online communities: a more specialised space than social media, finding a discussion board suited to your specific market will mean mingling with professionals, receiving pointed answers to your questions and talking shop in a safe space
- Online events: find events through the above means and discover who’s attending which ones, why, who’s speaking, and who are the regulars on the circuit
Putting aside all our rapturous praise for the possibilities of online networking—don’t limit yourself to your laptop. Networking in person may take more time and require more resources, but if you expend the effort intelligently you’ll see better returns.
Close your laptop and get out there. Now that things are opening back up, people are starved for in-person interaction and this includes the working world. Try these methods to maximise your rewards for changing out of your sweatpants:
- Organise dinners: incomparable in its benefits to online video calls, a dinner with a potential collaborator or mentor can foster friendships and provide better understandings of each other, and even spill trade secrets after that second glass of wine
- Brainstorming sessions: host a night at your place or rent an office space and gather your friends and potential collaborators to exchange ideas, take notes, and free-associate in a comfortable environment. In-person brainstorming sessions allow for the strange ideas to come out when the filters go down—sometimes these are the best ones
- Attend events in person: don’t always opt to attend from home. Watching talks and engaging in workshops in person arrests your attention in a way that online events can never can
4. Get informed on the legal requirements
This point is going to be specific to the country in which you practice business, because different legal requirements apply for business owners depending on the region. When investigating these requirements, take advantage of the following resources:
- Friends and acquaintances running their own startups
- Government websites and literature
- Reputable blogs on startup culture
- Tax specialists in your region
Once you’ve surveyed these resources, approach them with the following questions in mind:
- What is my specific tax class and how does this affect my business plan?
- Does my service or product conflict with any regional or international laws?
- Do I need a licence for the product or service I am offering?
- What are the labour laws in my region and does this affect my hiring goals?
5. Set up your online and physical spaces
Setting up your workspace means two things: arranging where you physically stay to do your work, and what potential clients see when they visit your website. Putting these together properly means different things for each, so it’s best to approach them separately.
Your physical space
Where do you like to work and what do you need in order to do your work? These are the two overarching questions which ought to drive your quest to find the perfect physical space from which to work. Many factors will influence your decision:
- Family or flatmates in your living and working space
- Cost of office rental in your area of work
- Commute to and from working space
- Product manufactured or services offered by your business
Your online space
While your website is important, this doesn’t encompass your online space. Think of your digital space more metaphorically: it is a public presentation of you via your business. Everything you do under your brand should be done with consideration of your reputation. Instead of merely inhabiting your digital space, you embody it.
Ask yourself these questions when crafting your online presence:
- What values does my brand uphold?
- How can I communicate these values?
- Which online channels best serve my product or service?
- How important is an active online presence for my business?
- How closely tied is my personal life with my business?
- What do my potential customers and clients expect from me?
- What aesthetic best represents my brand?
6. Develop a marketing plan
Your marketing plan is closely connected to your online space. Think of them in the same way (how do I want to communicate what my brand represents) but with results in mind: what kind of results will I see based on my efforts to establish my online presence?
To help you begin to funnel your digital brand into actionable marketing techniques, let’s go over a few of the major marketing styles which may or may not be suitable for your brand:
Interruptive, costly, memorable, and historically popular, traditional advertising may show a downward trend in recent years, but used sparingly it can be very effective. Traditional advertising channels include:
- TV spots and ads
- Radio commercials
- Full page magazine ads
Digital advertising and content marketing
The wave of the future, digital advertising is disruptive where traditional advertising is interruptive. More cost effective and easier to implement as a small business owner, the digital advertising space is nonetheless competitive and more difficult to stand out than a costly mass media advertising campaign. Methods include:
- Company blogs
- Twitter hashtags
- Social media polls
- Podcast spots
- Sponsorship of creators (Youtube content creators, Instagram influencers etc.)
Drawing up your marketing plan
Once you’ve chosen your advertising methods (preferably a mix of the two if possible), it’s time to draw up a marketing plan. Like putting together a business plan, your marketing plan will include financial projections, goals, potential setbacks, and business growth plans. However in this case, your calculations based on these categories will be strictly related to marketing:
- Financial projections: once this marketing campaign is implemented, how much do I hope to earn from it? Does this easily cover the cost of the campaign and leave room to afford another?
- Goals: how many conversions do I hope to see from this series of blogs? Which podcasts do I hope to do guest spots on this year?
- Potential setbacks: this TV spot will be an expensive venture, can I recuperate the losses if it doesn’t work as hoped?
- Growth plans: Once my earnings increase enough to hire a content marketing team, what do I hope to achieve with them?
There’s a lot to do after the bolt of lightning strikes you with inspiration for a startup. You’ll have to temper your electric excitement so you can soberly consider how to proceed with your idea. The idea behind this blog post has been to provide a roadmap for how to start a startup, assisting you in considering the most important things and asking you questions that get your thinking about your approach. Ultimately, your startup success comes down to you—but that doesn’t mean you shouldn’t take all the help you can get.
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Like your favourite cup of morning coffee, Penta’s business account can be packed “to go”.