It seems as though everyone is creating their own startup these days. While the avenues for starting a business have opened up amidst the digital age, there’s no denying the simple fact that starting a business is hard. In fact, nine out of ten startups fail after five years of business. Daunting as this statistic may seem, your focus should be on the 10% of startups that succeed and go one to become hugely lucrative and influential companies.
Beating the odds means taking the time to develop a detailed plan to ensure your company thrives in your community and in your industry. Need a couple of pointers on how to run your business like a well-oiled machine? We’re here to give you the rundown on the five most important elements of a successful startup.
#1: An Innovative Idea
Google, Airbnb, Uber—each of these major global-leading companies all started out with a single brilliant idea that aimed to make life for the everyday person a little easier. It’s a simple matter of fact that not every startup will amount to the success of these business titans, but there is plenty to learn from their stories. Growing a business from the ground up can be intimidating, but a good idea with great execution is bound to succeed.
When it comes to generating an innovative idea, think about your own life. What products or services frustrate you? What can be improved, and what is a viable solution? Coming up with a clever way to make something easier, more entertaining, or more impressive is the perfect place to start. This could be something as small-scale as opening a taco shop in a town that doesn’t have one or developing a smartphone app that connects people.
Whatever your idea is, make sure it’s one that stands a chance against the modern market. Do your fair share of market research to determine if there’s a need for your product or service, and if there is a need, figure out what steps you’d need to take to prosper.
#2: A Plan
A good business plan outlines all of the nitty-gritty details of your company ranging from your marketing strategy to your financial projections. Ultimately, a thorough business plan should plainly demonstrate to potential investors how you plan to manage, operate, and grow your business.
According to the Small Business Administration, the most integral components to a solid business plan, include:
- Executive summary: General overview of your company, mission statement, and other basic information.
- Company description: The “about” information of your company detailing the target consumers you plan to serve, the problems you aim to solve, and the strength factor of your business.
- Market analysis: Intensive research on your competitors to best exemplify how your business will compete against other businesses in your niche industry.
- Organization and management: The structure of your business, executive board, and employees.
- Service or product line: Information about the products or services you will offer and how they benefit consumers.
- Marketing and sales: Your marketing strategy and the methods you plan to use to attract and retain customers.
- Funding request: A comprehensive outline of your funding needs and where the money will be allocated upon receipt.
- Financial projections: A financial outlook for your company over the next five years, including forecasted income statements, balance sheets, and cash flow statements.
Even with a detailed plan in place, it’s important to keep in mind that a plan is only as good as its execution. If you have a great plan, but botch the execution, you could quickly become one of the 9 out of 10 failed startups. Just as you would spend plenty of time hashing out the details of your business plan, be sure to take as much time to plan the execution as realistically as possible.
#3:A-Team
So you’ve finally broken ground on your business—now it’s time to build a team to help in bringing your idea to startup life. To hire the best candidates for your company, you’re going to need buckle down and carve out the perfect job listing, sift through resumes, run background checks, and conduct interviews. and to create a job description, read through resumes and cover letters, and conduct interviews. To ensure your small business succeeds, you need reliable and responsible staff, and that’s made possible with a rigorous hiring process in place.
Ultimately, you want to build a workforce that is committed to working hard to make your vision a lucrative reality. Selecting those individuals out of your pool of applicants can be a painstaking process, but it pays to be diligent with your hiring procedures as you’ll want to hire on people who could eventually become lifelong business partners.
#4: Funding
Starting a business is a costly venture that requires plenty of capital before you’re able to spread your wings and fly. Fortunately, there are a number of clever ways you can seek and receive capital. Whether it’s through an investor or by means of opening a line of credit, intelligently securing capital is crucial. You’ll need enough money to accommodate the costs of everything from licenses and equipment to rent and inventory.
Some ways you can source funding for your startup include:
- A small business loan
- Investors and venture capitalists
- Self-funding with your own money
- Internet crowdsourcing
- Friends and family
#5: Passion
Not to sound like a broken record, but starting a business is a challenge—we truly can not stress that enough. You will inevitably run into roadblocks and headaches that may have you feeling ready to throw in the towel but to keep yourself on the pathway toward success, you need to assess, cultivate, and embrace your passion. The world of startups can be cutthroat, and it takes plenty of elbow grease, blood, sweat, and tears to soldier on in pursuit of your business goals.
Pour your everything into your business, especially during its earliest stages. At the end of the day, if you don’t fight for or believe in your product, who will?
