If you have an innovative business idea that you think could be the next market disruptor, you might be thinking about founding a startup. Startups are small, innovative firms designed to move fast and grow quickly by changing the current paradigm of a given business. Uber is a good example: they completely upended the taxi and ride-service industry by connecting drivers and passengers through a mobile application and made money using demand-based pricing. This novel approach to transportation has made it far more convenient for riders to find reliable, safe passage to their destinations. So how do you go about transforming your idea into a real-life startup? What are the startup secrets that you need to know?
Begin With a Problem
Many businesses begin with an idea. For example, perhaps you’re detailing your car one day when the idea comes to you to start a mobile detailing service. This is a good and viable business idea, as demonstrated by the fact that you can find a mobile detailer in almost any decent-sized city or town. However, a mobile detailing service is unlikely to be a startup in the real sense of the word. Instead, it is a reasonably conventional business idea.
One of the most fundamental startup secrets is to begin not with an idea but with a problem. Problems lend themselves well to startups. The best kind of problems to build on are problems that fall into one of the Four U’s: unavoidable, urgent, underserved, or unworkable.
Unavoidable problems are things like taxation, regulatory requirements, and bookkeeping. These problems are fundamental to any legitimate business, and they are unavoidable. Other unavoidable problems include chronological issues, like the aging of people, products, and infrastructure. If your startup focuses on solving a problem like this, you have a built-in customer base.
Urgent problems are, as the name suggests, problems that require immediate solutions. For example, a house fire is a critical problem, although not one conducive to a business venture. An urgent business problem might be network infrastructure failure or a loss of customer data, or even something like a supply-chain disruption. These problems need to be solved quickly for businesses to survive, which makes them ideal for startups.
Underserved problems lack current solutions in the market. For example, perhaps you live in a growing city. There is an increasing population of people who enjoy a vegan lifestyle — but no restaurants or cafes cater to this demographic. Or maybe you’ve noticed that Gen Z kids are having a hard time finding fair deals on entry-level credit cards. But, again, these are underserved markets that are likely to be responsive to a new business.
Last but not least are unworkable problems. These kinds of business problems have severe consequences if they are not solved. For example, suppose your healthcare business doesn’t provide adequate documentation. In that case, insurers will refuse to reimburse you, and you will go bankrupt: thus, sufficient documentation in the medical environment would be considered an unworkable problem. On the other hand, if you have the knowledge and background, a startup that improves medical documentation could be very viable.
Keep It Simple
When we think of a startup, we often think of technological whiz-kids developing robust, high-functioning, complicated products. Robinhood, for example, disrupted the stock brokerage industry; but creating a profitable, user-friendly, mobile-based brokerage service that complies with relevant tax laws is not something that the average person can do.
So how do we keep it simple? The best way is to focus on developing a minimum marketable product.
Minimum marketable products are designed to deliver a core functionality that meets the customer’s immediate needs while also generating value for the business. They are built from a framework established by a minimum viable product, which is a version of the product that allows the development team to collect validated learning from customers.
In simpler terms, a successful startup will develop a product that focuses on a core set of features and then refine that product based on what they learn from an initial group of customers. Focusing on functionality that brings value to the user and the business is the essence of this strategy, which is known as Agile. Agile is a collaborative business process focused on delivering functional software that meets the user’s needs. This is achieved through an iterative product design process. First, a primary product is developed and tested with consumers, whose feedback is used to refine the product before sending it back to the market, and so on. This primary product can evolve depending on consumer needs, but its functionality never strays far from solving the core problem that it is designed to solve. As a result, agile is a potent development tool that can bring viable, marketable products to consumers in a startlingly short period, making it one of the most valuable startup secrets.
We Americans love the idea of the solo entrepreneur who bootstraps a giant company with nothing more than grit and gumption. However, no man is an island, and no modern business can succeed with only one person at the helm. When you launch your startup, you’re going to be tempted to take on more than you can handle. For example, you might decide to take on the challenges of financing a business and try to draft policies compliant with local law while also tweaking your code. Tempting as it may be to try and do as much of the work as possible by yourself, it is okay to let experts help you. An attorney will be better than you are drafting compliant policies or ensuring that your terms and conditions are appropriately written. An experienced developer is likely going to be better than you are at tweaking code or leveraging APIs. Don’t be a victim of the bootstrapping mythos: hiring experts and sharing responsibilities is not just okay. It’s good business.
Sharing responsibilities means finding high-quality people who can help you build your startup into the next global giant. One of the best ways to find that talent is to network. Networking might not seem like one of the best startup secrets out there, but it is a deceptively powerful tool that can help bring your startup from a back-of-the-napkin idea to a household name.
Networking is the art of getting to know people and getting them to like and trust you. The objective of networking in a business context is to find people who would be willing to do business with you or even work with you on a sufficiently good idea.
When we think of networking, we might think of something like LinkedIn, where we can collect contacts and colleagues in one centralized online location perfect for information sharing. And indeed, forging connections online is a vital part of networking that encompasses social media sites, online publications, emails, webinars, and even online conferences.
As powerful as the internet is, it would be foolish to underestimate the power of in-person networking. For example, attending an industry conference or a trade show is a great way to meet like-minded people who have similar backgrounds and expertise as you, which makes them excellent potential partners or employees. In addition, many cities have co-working spaces or business incubators that let you mix and mingle with other entrepreneurs, some of whom may have synergistic ideas or relevant expertise that you could use.
Networking is also a great way to build prospective sales leads. For example, if your startup is making a product designed to simplify bookkeeping, networking with other entrepreneurs and businesspeople gives you a chance to pitch your business to them and potentially develop customers.
Don’t Fear Failure
We don’t like to fail: it is embarrassing, frustrating, and stressful when all our hard work implodes and we’re left with a failed business. And those are valid feelings! Failure is not a fun experience. However, successful entrepreneurs know that one of the best-kept startup secrets is that failure is valuable — and since many startups fail, it is crucial to know how to embrace failure.
Embracing failure may seem counterintuitive, but it is highly productive. First, failure is a learning opportunity. Maybe your medical documentation company failed because you underestimated how complex developing an electronic health record is. But despite the failure, you probably learned many valuable lessons about business in general and the EHR industry specifically. When you fail, you learn what doesn’t work, which helps you focus on what does work.
Failure also helps you discern who is a reliable business partner. If your business fails and all of your associates shrug and leave you in the dust, you have learned a valuable lesson about how far you can take your trust in them. On the other hand, you may find some people sticking by you, even if it’s just moral support or an offer to meet for beers to decompress. Failure can flush out your network and show you whom you can rely on when the chips are down.
Finally, failure can be motivating. When you fail, you may find that the experience makes you want success even more. For example, the Wright Brothers experienced countless failures while they were trying to learn how to fly. They crashed prototypes and experienced numerous weather and technical problems that set them back, and yet they stuck to it. Each crashed glider or broken engine component was just another push for them to work harder and find a way to succeed — and eventually, they did, soaring over the dunes of Kitty Hawk and launching the age of powered flight.
Listen to the Market
When you have a startup idea, you might become obsessed with developing it precisely as you envisioned it. The problem is that the market does not always see things the same way you do. If your product is not performing as well as you expected, don’t buckle down in a hubristic attempt to make the market accept your product. Instead, ask consumers what they dislike about your solution or what it is that’s missing from it. If customers tell you that your bookkeeping software has a clumsy interface, listen to them. When the winds of change blow, adjust your sails. Find out what customers want or need and then give it to them, even if it’s a pivot or a deviation from your original idea.
Write a Business Plan
Is a business plan really one of the best-kept startup secrets out there? Surprisingly, yes. Business plans are not sexy or high-tech, and they are certainly not glamorous or fun. But they are important because they help guide your business along the path to success. Your business plan should include things like a description of the business, a competitive analysis, technical details like operations and development plans, and of course, financial details. Sussing out the bland and routine details of running a business enterprise is key to the success of any business, especially a startup. When your idea takes off and you find your company growing, having a thoughtful and comprehensive business plan will help you manage the growth sustainably and productively.
Destined for Success
Founding a startup company is no small task. First, you have to develop a business from scratch. This includes the core business idea and the nuts-and-bolts details like how the business operates, how it makes money, how it is structured, and so on. But as daunting as it may seem, it is possible to take your brilliant and disruptive idea and turn it into a significant money-maker that could completely upend the existing market. And while it may seem like there is some big secret to success, the truth is that most of the startup secrets out there are just good business practices. When you want to take your business to the next level by launching a disruptive new product, remember: keep it simple, focus on the customer, and listen to the market. Hire experts, share responsibilities, and seek out talented colleagues who can help catapult your business to the next level. Do this, and you’re destined for success! We’ll see you on the Fortune 500.