A startup is a young innovative company with strong development potential. These companies operate in the new technology sector, often on the internet.
This article explains what is a start-up, and then informs you about all the particularities attached to this very particular category of companies
The startup: Definition
A start-up is a young innovative company in the new technology sector. Many of these companies are operating in the new information and communication technologies (NICT) sector on the Internet today.
From an etymological point of view, the word “start-up” is broken down into two
- ” Start “, for starting a new business
- ” Up “, for the acceleration phase of the business.
The start-up is much more than a business. It is a real state of mind. A team sharing values and united to pursue an innovative joint project.
Characteristics of startups
Start-ups constitute a very specific category of companies in the professional world and on several levels.
First of all, a project to create a start-up is riskier than a more traditional project. In addition to the risk inherent in starting a business, the company must also face the risk associated with innovation.
A start-up is an agile structure. It must have the ability to adapt very quickly to its environment and then to its changes. Generally, these companies operate in emerging markets in which the rules are not yet defined. Agility is a key success factor.
A temporary state
Then, for a company, the start-up state is temporary. The project can fail, and therefore disappear, or succeed and then become a classic business when its model is found and stops evolving.
Significant Funding needs
For their start-up and development, start-ups often need a lot of funding.
- First to start, because they generate little income at the start. If at all, but have needed to finance (recruitment, product or service development, etc.),
- And then to accelerate, because these companies are looking for rapid growth. They, therefore, do not have the time to finance themselves and sometimes have to raise funds to develop faster.
Most start-up projects have a high potential for profitability. At first, the company loses money because of the first cost more than they bring. Then, the more the company accelerates. The more its margin per customer increases because its model is scalable.
The Business Plan of a Startup
For a start-up, the business plan approach is especially interesting for structuring the business creation project:
- Summarize the project in a few lines,
- Define your business model,
- Identify the key success factors,
- Identify key skills and build the project team.
Forecasting turnover is a complicated exercise for most innovation projects. It is almost impossible to project future income into innovation projects.
For an innovative company, the realization of the forecast is a useful exercise to quantify all the needs of the project (investments, recruitments …) and determine a break-even point.
As we mentioned a little above, start-ups are companies that often need significant funding. This need is first used to design and launch an innovative product or service, and then to accelerate to seek rapid growth.
Financing in the world of innovative companies in the famous fundraiser. This financing operation is to welcome investors in its share capital. In return for their participation, investors inject capital to allow the company to start its activity or accelerate its development
Innovative start-ups can also benefit from several innovation support systems
Previously, investors were wary of startups, but in our time they appreciated the full potential of these projects. Startups invest in:
- Business angels choosing a suitable project to invest their own money in it. These investors are best for startups just starting a business. They do not control the activities of the organization and the processes that occur in it. But they are ready to invest in an idea if they consider it promising in terms of future profit;
- Venture Capital funds distributing funds in investment funds. Such funds usually analyze the situation in an operating company, when there is a minimum of possible risks and it is possible to monitor its activities.
One of the most important components of a startup’s success is an investment. A variety of thematic platforms are very popular where you can find investors and find valuable information. You can get financial support for a startup:
- In various funds that conduct investment competitions (programs) each year, providing for their participation conditions, terms and amounts of financing;
- Among friends or relatives. Sometimes investors can be relatives or friends of the founders, especially when you need a little capital to start. In technology parks combining various educational institutions, institutes, business centers
- In business accelerators – Express programs for training startup founders (with further support in exchange for a share of the business);
- Business incubators offering premises for work, information and administrative assistance, access to databases;
Searching for investors for a startup is necessary at thematic conferences, forums or exhibitions. People gather there who are interested in investing their own capital. It remains only to interest them in their project. If the startup is worthy, there will be an investor. In addition, at such events, you can:
- Make an examination of a business project.
- Introduce a large audience to the project.
- Find future customers.
What you need for a successful startup
A universal formula that can bring success to any endeavor does not exist. In any field of activity, its own laws and regulations apply. In addition, external conditions are rapidly changing, and you need to have time to adapt to them in a timely manner. Each project has individual characteristics that determine its fate. However, there are some principles of organization that help a startup, at least, stay afloat:
|Innovative consumer appeal||The project should stand out among many ordinary and unremarkable companies|
|Competent and professional team||If the founders have a minimum of ideas about their product or are completely incompetent, the idea will fail|
|Search for sponsors and investors||Without the necessary financial support, the project will not develop and will not win the target audience.|
|Product Promotion||Proper PR is required: publications in the media and on the Internet. Without this, the company will be quickly forgotten by the target audience or will not know about it at all.|
|Close-knit team of founders||In case of disagreements and conflicts within the team, the project will quickly close|
|Good preparation||Before starting a project, it is necessary to take into account every subtlety and carefully work out all the details. Deficiencies will make themselves known, which will affect the attractiveness of the product to sponsors and the target audience.|
The most common mistakes startups consider.
- Unwillingness to share an idea. In some cases, startups think that if they share their idea with someone, they will immediately steal it and realize it. However, in the end, this idea is not needed by anyone, including investors;
- Misallocated material resources. At an early stage in the development of the project, you should not rent an expensive office or spend money on maintaining the image. It is more efficient to invest funds in the development of ideas.
- An attempt to create a project for a wide audience. Most startups are focused on a specific narrow, targeted audience. When developers create a product for everyone, it becomes unnecessary for anyone and does not find its niche in the market;
- Refusal to work at the initial stage. Having suffered several setbacks, developers can quickly abandon the project due to fear of failure or laziness. You must understand that to achieve everything and immediately impossible. Before a project takes its niche in the market, one may encounter many difficulties and setbacks;
- Loss of time. Ignoring and putting off tasks for later are real enemies for the realization of an idea. To avoid such problems, it is necessary to use time management and clear deadlines (deadlines for completing the task);
- Unwillingness to seek the help of specialists. It happens that startups overestimate their own knowledge and skills in implementing a business project and advertising. In some cases, it is better to attract a good specialist or turn to a service that will adjust the development of the project;
- Too complicated project. There are times when developers launch a too complex business project, the implementation of which they cannot afford. The result of such a project will be disastrous.