Being your own boss sounds fantastic, doesn’t it? It’s a dream many of us have, yet it requires strong entrepreneurial spirit and skill to actually put into motion.
There’s also the point that it’s a lot more work than most folks realize. Ask any budding tech founder today, and they’ll tell you before they hit it big they were scraping for pennies, working long hours and likely exhausted.
Dedication is something you’ll need in the long run, but there are a few other things you should consider before jumping into the fray.
5 Things to Consider when Creating a Tech Startup
If you’re looking to get a tech startup running, these tips should help.
1. Is Your Product Necessary?
In order to have any kind of impact in the market, you need to ensure your product, service or whatever it is you’re offering is a necessary component. That is, does it complement something people need and will it ultimately make their lives better?
Before doing anything, ask yourself these three questions:
- Is your product or service going to help someone complete a necessary action more efficiently?
- Will your product or service save others time and money?
- Will your product or service alter the way people behave, think or operate?
If you answered “yes” to at least one of those questions you’re on the right path. If you answered “no” to all of them, you might want to go back to the drawing board.
People spend their money on leisure and convenience items all the time; that’s not what we’re trying to argue against here. We’re merely pointing out if your startup produces something that’s a “must-have,” you’ll have so many more opportunities. When things are just starting out, that’s extremely important.
2. Choose a Product or Service You Know
You’d be surprised how many people try to jump into the waters of the startup ocean with a product or service they absolutely do not understand. That’s a terrible idea. Why?
When launching any business — which is exactly what a startup is — your experience, background and education must support what you are doing. There are many reasons for this, but the most important is that it will help you raise capital. Investors prefer to see someone who’s experienced and knowledgeable at the top of the food chain. If you don’t know much about the goods you want to create, you’re going to make the process more difficult for everyone.
For instance, consider for a moment a firm that offers security for your computer hardware. Such companies cannot be established by someone with a lack of cyber-security and coding knowledge. If they were, they wouldn’t get anywhere. All employees, including the company head, must understand the goods and services they are peddling. They must understand the possibilities, limitations and even achievements that will come from their product.
You see, it’s not simply your ideas that are going to propel you to the realm of success. Inventors can sit around and come up with ideas all day long, but they’ll never make a living out of that. It’s the people who put those ideas into action, and you cannot do that unless you fully understand what it is you’re working with.
Point being, choose a product or service you know well and one that you have the experience, education and skills to support.
3. Are There Opportunities to Make Money on the Side?
Businesses take a long time to grow, and it may be years before you see a sustainable influx of funds. That’s especially true if this is the first startup you’ve ever created and you don’t have prior experience as a business owner.
Ask many entrepreneurs and they’ll tell you, life would have been a lot easier if they had their own funds coming in. Don’t quit your day job just yet, but if you find yourself having difficulties balancing your work hours, cut that day job down to a part-time position.
The point here is you shouldn’t expect your new startup to make you a billionaire overnight. The likelihood of that happening is slim to none. You may need to find other ways to fund your lifestyle and even your business ventures.
4. What Is Your Expansion Potential?
Once everything is up and running and things are going great, it’s then time to assess — and tackle — the future. But why wait until then? It’s always better to prepare beforehand, especially when it comes to something as important as a business.
This is something you’ll need to look at for your business plan and proposal as well. What is the expansion potential of your product? What is the market appeal and how long is its life expectancy? Knowing these things will help you identify when the business will reach its potential, and that in turn will help you with the next step: Coming up with a good exit strategy.
Revenue growth — which is directly tied to your startup potential — is one of the most important metrics early-stage investors will want to know about your business.
Keep in mind, things will be constantly evolving. The expansion potential, like so many other elements, may change as soon as you enter the market and offer your product for sale. Being prepared for some of those additional scenarios is also part of the challenge.
5. Do You Have a Viable Exit Strategy?
Finally, you must ensure you are prepared for any scenario. That’s exactly why you need to come up with a viable exit strategy before you launch your startup.
If the business doesn’t work out as planned, are you prepared for the fallout? Do you have a backup plan for generating additional funds? What are your options if you need to step down?
If and when the business is fully grown and reaches its full potential, do you know what you’re going to do? Have you decided when you’re going to make an exit? Have you found some potential buyers?
Some of these questions may seem premature, especially since you haven’t actually launched your startup yet, but that’s okay. Plans change over time, obviously, so there’s no way to guarantee your exit strategy will go according to plan. That said, you want to ensure you are prepared for anything in advance.
Anticipating the future is part of the business. It is a challenge, yes, but knowing what you want before you reach those milestones will help out considerably.
Image by FirmBee
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