You’ve got a problem? There’s a startup to solve it.
That basically explains why there are so many startups today.
However, 90% of startups fail because of a lack of market need. The other common reasons are incompetence and lack of experience.
So, it is worth not only having a bright idea but also how to build a startup and grow it right.
Do you have to plan all the processes within your project? What exactly do you need to know about your competitors? What are the best ways to monetize your idea? When to start marketing activities? We’ll speak about all of this.
In addition, we’ll talk about defining your target audience, approaches to building an MVP, planning a marketing budget, scaling up production, and raising funds.
1. 8 Tips for Building a Successful Startup
Let’s just say that success doesn’t come easily or quickly to anyone. The life of a startup can be pretty unpredictable and at times chaotic. So, in order to ease your pain, we’ve prepared some insights on how to build a successful startup.
Define the Target Audience
Why is it important to define the target audience?
– Effective Marketing Strategies
Determining your target audience helps your startup develop effective marketing communication strategies. Marketers can then focus on the consumers most likely to purchase your product or service.
Additionally, it is much more economical and effective to conduct a marketing campaign if you know exactly who to target. When you have already analyzed this segment and you are able to cover your target audience’s needs more clearly, you will gain a much higher conversion rate.
– Less Spending
If you are thinking of creating a startup, you most likely have some budget restrictions. Thus, wasting money on targeting too wide of an audience or market will result in major budget losses. To avoid this fate, novice entrepreneurs should define which people to invest their budgets in.
Note: In case you have a limited budget and you aim to target everyone, you won’t be able to interact with your audience (via ads, emails, etc.) enough to convert them into leads and customers. You will better increase your generated leads by narrowing the target audience and properly interacting with those people.
Concept Of Ideal Customer Profile (ICP)
An Ideal Customer Profile (ICP) is a detailed description of the person you are trying to sell to. When defining an ICP, it is better to use an ICP Framework. So there are 7 characteristics of the ideal customer profile. However, the most important is finding a client that is Ready, Willing, and Able to buy your product or service.
Often ICPs are confused with a buyer persona. Nevertheless, there IS a difference. A buyer persona is a description of the ideal types of customers for your services. Whereas an ICP is a description of a person that you should aim to sell to.
Tips for finding your target audience:
- Start with broad assumptions
- Narrow down the audience
- Analyze your competitors’ target audiences
- Conduct research on the supposed audiences
- Choose the audiences that are most likely to buy your product
- Conduct interviews
- Draft your ideal client portraits
- Refine your portraits
Determine the Pain You Solve
If you want to launch a successful startup, then you should know that EVERY startup must solve a market’s problem. The fact is that finding out the solution to the problem is not as hard as describing the problem.
Tips on creating problem statements:
- Identify your target market
- Focus on defining only one problem
- Be specific on what the problem is
- Discover the pain points of the problem
- Define an actionable solution
There are many techniques to identify the pain points of your target audience. But I prefer the “5 Whys” technique.
This technique originated during the manufacturing evolution of the Toyota Motor Corporation. The technique was developed by Sakichi Toyoda, with the goal of getting to the root of the problem by asking yourself “Why?” five times.
If you believe that your target audience has multiple problem roots, then the technique should be repeated for each problem, asking a different sequence of questions each time.
To test the anticipated problems of your target audience, you may also need to use a proof of concept.
For instance, you can record a video of how the product would work or what it would do, and upload it to Product Hunt or Kickstarter. Another option is to create a blackdoor page that will simultaneously help you see if there is somebody who is interested in your idea, and also gather a customer base.
Discover Your Competitors
Any good product is going to have its competitors. If you want to know how to create a startup, then you should definitely research your competitors.
If after solid market research appears that you don’t have any competitors, then you should rethink whether your idea would be valuable to your audience.
TOP 5 reasons why you need to analyze your competitors:
- To stand out: to find the strength and weaknesses of competitors and develop a Unique Value Proposition (UVP);
- To find your target audience: you may target the same audience as your competitors, or instead, target a group your competitors do not cover.
- In order to find new marketing channels for promotion
- To discover current industry trends
- To analyze the features of competitors’ products
Furthermore, you should also research both your direct and indirect competitors. Direct competitors are the ones that offer the same solution to your target audience. Indirect competitors are businesses that are in the same industry as you and offer products or services to the same target audience as yours.
Here are a couple of ways to research your competitors:
– Start with search engines
The most basic and simplest way to find your competitors and understand what they have to offer is to search for them online. Visit their website, read articles, and press releases about them, and check out their social media accounts.
Little by little you’ll see the big picture.
– Use analytical tools
Using different tools to research your competitors will help you to get to know your competitors’ SEO and web traffic, PPC and ads, blog posts, and social media.
Here are the 4 best research tools:
This is a tool that provides traffic statistics and analytics for businesses. Using SimilarWeb you can completely analyze the competitors’ website traffic: channels, geography, keywords, referrals, time on site, bounce rate, and more.
This tool is used to learn the market trends, insights, and content that works for your competitors. BuzzSumo shows the most viral content of your competitors from a number of social media platforms.
3. SEO Tools: Ahrefs and Semrush
By entering your competitors’ domain, these tools can provide you with their:
- traffic overview
- traffic sources
- top pages
- top keywords
- competitors in search engines
- referring links
- advertising research (Semrush)
You can surely use these wonderful tools not only to analyze your competitive market but also to work on your product’s SEO optimization.
BuiltWith helps to track which technologies are being used by other websites. It may help you to choose your tech stack, or discover the advantages and disadvantages of your competitors’ platforms.
You can either install a Chrome extension or search your competitor on the BuiltWith website.
– Interview your competitors’ clients
Reach out to your competitors’ clients that are no longer working with them. You can ask them what they liked or disliked while working with the company. This way you’ll have, first of all, the direct information from the source, and secondly, you’ll know which issues worry your target audience the most.
Outsmart Your Competitors – Develop a UVP
After analyzing your competitors, you should develop the benefit of your offer – your Unique Value Proposition (UVP).
UVP is a statement that explains your product’s relevancy, value, and how it differs from your competitors’ products. Your UVP may be wired into your features or your whole startup concept. Based on your UVP, you’ll be able to create a slogan or a motto that users associate your company with.
Steps for creating a UVP when you want to build a successful startup:
1) Know your customer
After you find out who your target audience is, you need to get to know it more closely, conduct research, interview customers, etc.
2) Write the first draft of your UVP
Tips for drafting your UVP:
- Be concise and to the point
The value proposition should be short, around 10 to 30 words, and focused on your product or service.
- Indicate the end benefit(s) for the customer
First of all, emphasize the main benefit and then add any additional ones. The additional benefits can be related to the price, quality, location, service, guarantee, speed, or selection of the product.
Make sure that your competitors don’t have a similar UVP, otherwise, it won’t be unique at all.
Define Your Monetization Model
Obviously having a brilliant idea is one thing, but earning revenue from it is different. If you are planning on creating a startup, a monetization model should be decided in the first stages of your development process.
Choosing the right monetization model for your kind of project will help you earn money easier and faster.
There are many revenue models; however, first try to find out first what your competitors’ monetization models are. They’ve probably been on the market and in the industry longer than you, so being aware of their strategies in making money in that market will be beneficial.
Note: While selecting a monetization model for creating a successful startup, consider not only its pros and cons but also your competitors’ experience. By being in the market longer, they might know a thing or two about making money.
On the other hand, your different monetization strategy may also serve as your UVP.
A significant example here is Netflix, a company offering streaming movies on a subscription-based model versus paying for a singular movie or TV series. Their concept revolutionized the entire experience of buying and watching movies. Needless to say, Netflix has come a long way from sending DVDs via mail to becoming one of the giants of the media industry.
Top 4 monetization models:
1) Commission revenue model
A commission-based model is a monetization model where a user is charged for each payment transaction. If you are building an online marketplace then either a supplier or a customer can be charged, or both. Besides, you can charge a percentage or a fixed fee.
This model is more commonly used when creating an online service marketplace due to the need to have frequent payment transactions.
The pro of this revenue model for creating a startup is that it attracts more suppliers. With each transaction, you monetize the platform. However, there is always a challenge of whether you are providing enough value.
2) Subscription revenue model
A subscription-based model is a monetization model where a user is charged either a monthly or an annual fee for accessing the website or an app.
Sustainability is the advantage of a subscription model for creating a startup. Nevertheless, as good as it sounds, a subscription revenue model’s biggest challenge is convincing users to subscribe before even using the services. That is why many entrepreneurs use the technique of providing a trial period.
Freemium is a monetization model where a platform offers both free and premium features.
The advantage of this model for creating a startup is the ability to generate a good volume of users based on a free version of your product. The downside is that it might be hard to convert free users into paying ones. To grab the attention of your users with a free range of features first, the next step is then to offer them something even more valuable and versatile.
The advertising revenue model is a monetization model where other’s products or services are advertised. In return, you obtain revenue on a click-through or per view basis.
The core advantage of this model for creating a startup is that it’s a great additional revenue source.
However, it has a lot of disadvantages. The first disadvantage is the interruption users feel when using your website, hence they might not get what they came here to do. In addition, it is quite hard to monetize this model because people tend to turn a blind eye on ads. Another thing to keep in mind is that you may discourage your users from using your website as a result of showing too many ads.
Do Not Bootstrap
The budget is one of the pain points when creating a startup. Basically, a startup’s budget sources are in investments or bootstrapping.
Bootstrapping is funding your own project by yourself without external investors. In fact bootstrapping is not as bad as it is perceived to be, however, there are some challenges to be aware of.
Pros of Bootstrapping
- You are your own boss
No one gives the deadlines you should meet or hold expectations of immediate results. You have control over your business. Surely, you might have a co-founder but in this case, you will be working as equals and a team.
- Ownership of your startup
As a single entrepreneur, you will have full ownership of your company. Even if you are not a single founder, your equity share would still be larger than if you choose to have venture capitalists invest in your organisation.
Cons of Bootstrapping
- Survival Rate
Though bootstrapping may be acceptable for experienced entrepreneurs it may not be as good of a choice for young or inexperienced entrepreneurs. The reason why is that creating a successful startup may end up costing more than anticipated. Bootstrapping with a very limited budget could possibly lead to not being able to launch a successful startup or to giving it up later when there is high competition.
- Harder to Scale
Startup entrepreneurs have to face facts. It’s not enough to have money for development and product launch only. Other aspects that occur and arise can bootstrap your initial MVP development. You may need to then raise additional funds when it is time to scale your startup.
Pros of Fundraising
- Financial Abilities
Obviously, the more money you have, the more ideas you can bring to life. A big budget does not guarantee you success as even startups that raised millions have failed.
Investments give you an opportunity to choose the best, or better, talents, use the best tools, and promote products aggressively.
- Extra Credibility
Naturally, if Google or Facebook, or a similarly famous company or venture capitalist funded your startup, your project would get extra credibility and visibility. This, in turn, could bring more customers, beneficial partnerships, and recognition on the market.
Cons of Fundraising
- Partial ownership
A one-off fundraising event can take away half of your ownership of the company. What happens with multiple rounds of fundraising? Basically, you will be left with the minor percentage of your company, which would hardly cover all the stress and work you’ve been doing.
- Pressure to deliver
The pressure to deliver results within the stated time frame is always exhausting not to mention challenging. You’ll always have to report to investors on where you stand and how long something is going to take.
Build Minimum Features, Bring Maximum Value
After doing a proof of concept and gathering enough funds for creating a startup, your next step should be building a Minimum Viable Product (MVP) for a startup.
Minimum Viable Product is the first implementation of a product that possesses a minimum set of features with enough value to attract early adopters.
Why start with an MVP if you want to build a successful startup?
Your MVP’s role is to help validate a product, attract initial customers, and gather customers’ feedback for further product development.
Building a fully-featured product right away may be detrimental since you’ll spend an estimated amount of time of a year or so building it. Creating a startup MVP will only take around 3 months.
When creating a startup MVP, it is essential to know the balance between a minimum number of features and the value that they bring.
2 core factors to take into account when choosing features for an MVP:
As an entrepreneur figuring out how to start a startup company, you are probably going to have some budget limitations. Let the developers know what your budget is as that will limit features. If you hire a team of experienced developers they will help you cut costs on features without needing to abandoning an entire feature.
When choosing MVP features, work with your team of developers to be very particular and picky. This means that you should select only those features without which the product wouldn’t make sense.
In fact, there are 2 kinds of MVP features:
- Must-have features. These are the features that are crucial for your platform work. For example, if you are building a marketplace, then searching, booking, and paying are must-haves.
- Unique features. These differentiate your product from others.
Do Not Put Off Marketing
When planning on creating a startup, many people forget about marketing and resulting costs. Sometimes, marketing can cost as much as creating a startup itself.
So, the smart thing to do, first of all, is to make a marketing plan at the beginning of your startup development and estimate the required budgets both for development and further promotion of the product.
2. What Challenges Can You Face While Launching a Startup?
Not Enough Value
In a world where users have broad access to all kinds of services and products, it may appear to be difficult to impress users. Well, while that is true, it is not impossible.
The challenge that almost all startuppers face in choosing to start with building an MVP is that “minimum” is sometimes not enough to bring value to early adopters.
Today you need to focus on a Minimum Awesome Product. This implies developing unique features with awesome UI and UX.
The formula for creating a successful startup:
No Market Need
Finding a market need can be a challenge. According to CBInsights, no market need is the first reason why startups fail. This happens as a result of not having clear goals and not meeting user needs.
If a startup doesn’t solve a market problem, then no matter how interesting or technologically-equipped the startup is, no one is going to use it.
No Budget for Marketing
You cannot assume that customers will simply come on their own after a startup is launched. That is why many startup owners don’t allocate enough funds for budget and promotion at all.
These entrepreneurs then end up with no marketing budget when the product is launched, and get any market traction.
Neil Patel, a founder of marketing agency NPDigital (one of ten best marketers according to Forbes magazine), says that marketing for a startup should be a top priority, and our team definitely agrees with him. Though Sloboda Studio focuses on the tech side of creating a startup, we understand that this is only half of a startup’s future success.
Gaining Initial Traction
Traction refers to the progress of a start-up company and gaining customers or users.
Gaining traction is actually the beginning of your startup growth. This can be sometimes a great challenge for a startup when they plan to raise funds later.
Examples of “growth hacking” techniques to gain traction:
– Create an email list before the startup launch
A list of emails with your potential customers is something startup owners should have if they are figuring out how to start a startup business. You can create a landing page to promote your product or service even before your official release.
In this way, you have emails for business leads, and when the product launches they will be the first to know.
– Start an affiliate program
This is a great way to promote your brand, as well as build some networking connections. An affiliate program is a program of partnership where one company promotes another company in exchange for a percentage of a sale. These can not only include other companies but also bloggers and influencers who are well-known in your field.
Almost every entrepreneur who knows how to make a startup company successful has faced an issue of scaling up. They either do it too soon or too late. 70% of startups fail because of untimely scaling.
A startup qualifies for scaling up when it moves past early-stage barriers, has high traction, and demonstrates the potential for long-term success.
Tips for scaling up your startup:
– Have the right infrastructure
Make the job of scaling up your startup easier by creating streamlined processes for every common issue that may occur. This way your staff will know how to deal with them in times of chaos and high workloads.
– Automate and outsource
Doing everything by yourself? Well, that shouldn’t be the case if you want to scale.
By outsourcing and automating some tasks, you can focus your time on more important tasks that require your full dedication and focus.
– Improve sales and marketing
If your marketing strategies and tactics are not as effective as you planned, change, or improve them, the same goes for sales. The more customers you have, the faster you’ll be able to scale up.
Lack of Planning
Have you heard many entrepreneurs saying: “We will figure it out along the way”?
It may seem like you just can’t plan anything. You may think, “Maybe I shouldn’t”.
That would be a mistake.
In scenario you do have some, albeit limited, time to plan, there are several techniques to plan better and faster.
At Sloboda Studio, we focus on creating a startup by using agile methodologies in development. The agile method encourages:
- flexible planning
- progressive development
- early delivery
- being able to adapt to changes
Finding a Team of Experts
Some say startup development is no different from other business development. We at Sloboda disagree. Though we know how to build a startup from scratch, we are aware that there are other types of creating a startup.
Startup development is very specific and requires:
- business-oriented planning
- quick problem solving
- precise time
- cost estimates, and meeting those estimates.
The challenge is finding a team with needed expertise at an affordable cost. All entrepreneurs are aware of this when considering creating a startup.
Hiring an in-house team isn’t cheap, however, finding the right remote team can be risky. The best solution is outsourcing your development. Doing this necessitates finding a team with a good reputation and positive reviews.
There are numerous ways to find a remote development team. For example, the most widespread is word-of-mouth, especially if you have connections to startuppers who have already built their businesses.
The second most popular method is checking out rating websites like Clutch. There you’ll find companies specializing in your industry. You can always read the company’s feedback, check out their previous projects and see their average developer’s rate.
If you are looking to hire a team of developers, then Sloboda Studio may be your solution. Sloboda has been on the market for almost 10 years and has built more than 150 MVPs.
Effectively Managing Payroll & Finance
A founder is the one to accumulate the total cost of running the business. The total cost includes the aggregate amounts of your:
- fixed costs, costs that do not change no matter the number of goods or services that a company produces.
- variable costs, costs that do change depending on the volume of produced products or services.
These costs are important as they impact how soon you convert your startup into a profitable one.
Typically, wild expectations happen at the idea and an MVP stage. Many will not take into consideration their resources and abilities. Entrepreneurs desiring to launch a successful startup light up with an idea to build something grand in an unrealistic time frame and at the cheapest price.
Unfortunately, it doesn’t work that way.
It may be hard, but try to establish the most realistic goals for your project considering all the available resources.
Additionally, you need to know when to stop. If the startup is not going well and keeps straining the staff and financial limits, then it is time to consider shutting down. However, don’t get discouraged too soon. There should be enough significant reasons before going through with shutting down the business.
3. Our Experience in Building Startups
Sloboda Studio is a web development company located in Eastern Europe. Sloboda for nearly10 years has specialized in building software applications in the following industries:
- Food and Beverages
- Marketing and Advertising
- Media and PR
TikkTalk is a B2C marketplace startup with headquarters in Norway. They offer video interpretation services for people who don’t speak Norwegian.
Sloboda Studio built this startup from scratch. We met the client at the idea stage of the project. We started with building an MVP. After launching, Tikktalk raised $1M and continued to work with Sloboda Studio.
Since the first release, the company has grown a lot:
- connects users from 72 countries
- supports 67 languages
- has 1,247 monthly web visitors
- offers online translation services
- has more than 1700 interpreters
Located in the UK, CityFalcon is a financial news aggregator. It rates financial tweets, news, and authors by using Natural Language Processing and E-learning.
Just like we did with TikkTalk, we started working with CityFalcon at the beginning stage of its creation. The client, a former Skype employee, first created an MVP on his own. However, the startup needed scaling and improvement, so he reached out to Sloboda Studio.
Since its launching, CityFalcon:
- has featured over 1 billion stories
- started to feature stories in around 20 languages
- has been a finalist in the “Digital Business of the Year” category in the Amazon Growing Business Award
To wrap up, knowing how to build a startup doesn’t necessarily give you an upper hand in becoming successful. However, knowing the tips and challenges of building one is extremely beneficial.
Here are a few tips for creating a successful startup in 2020:
- Have an awesome idea
- Find the right audience
- Do a proof of concept
- Have a Unique Value Proposition (UVP)
- Decide on the revenue model
- Find a team of experts
- Build an MVP, not a fully-featured product
- Develop both core and unique features
- Choose to fundraise, not bootstrap
- Never forget about marketing
In case, you are wondering how much creating a startup is going to cost and what features to include, ask our development team for their consultation. Just drop us a line.