#Entrepreneurship #Guides | 23 min read | Updated: 8/16/2022

8 Step Guide on How to Create a Startup in 2022

Updated: 8/16/2022
, Founder of Sloboda Studio

Perhaps each of us once thought about how to create a startup that can change people’s lives.

And it’s not only about the money you can earn but also about a brilliant idea that will make the world a better place.

However, 90% of startup companies 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 knowing what it takes to make a startup and grow it right.

In this article, we’ll speak about all aspects of a startup’s making process. We’ll also talk about defining your target audience, approaches to building an MVP, planning a marketing budget, scaling up production, and raising funds.

startup trends worldwide in 2021

Source: Statista, CB Insights, Startupranking, Forbes, Failory, Embroker

8 Tips for Making a Successful Startup

Let’s say that success doesn’t come easily or quickly to anyone.

The life of a startup can be pretty unpredictable and, at times, chaotic. How to create a startup? We’ve prepared some insights on how to create a new startup business.

8 Tips for Building a Successful Startup

1. Define the Target Audience

Why is it the key 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 business. 

It’s much more economical to conduct a marketing campaign if you understand who to target. When you have already analyzed this segment and can cover your target audience’s needs more clearly, you’ll have the best business conversion rate.

Less Spending

If you are thinking of how to create a startup, you most likely have some budget restrictions. You need to think about money. Wasting money on targeting too wide of an audience or market will result in significant budget losses. So how can companies and their future investors avoid this fate? First, novice entrepreneurs need to define which people can be investors for the business.

Note: If you have a limited budget and 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 for your business. You will better increase your generated leads by:

  • narrowing the target audience
  • 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. We think it’s vital to find a Ready, Willing, and Able client 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 business 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 business 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
How to build a startup in 2020

2. Consider the Pain You Solve

If you want to launch a promising startup, you need to realize that EVERY new startup must solve a market’s problem. However, finding out the solution to the problem isn’t as complicated as describing the problem. We think it’s crucial to pay attention to some problem statements. They will help you not to feel confused in the market and not lose potential investors.

Tips on making 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. Then, Sakichi Toyoda developed the method to get 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 backdoor page that will simultaneously help you see if there is somebody interested in your business idea, and also gather a customer base. These ideas are effective for companies in various business areas.

3. Discover Your Business Competitors

Any good product is going to have its competitors. If you want to learn how to create a startup, then you should definitely research your business competitors.

If after solid market research appears that you don’t have any business competitors, then you should rethink whether your idea would be valuable to your audience.

TOP 5 reasons why companies need to analyze their competitors:

  1. To stand out: to find the strength and weaknesses of competitors and develop a Unique Value Proposition (UVP);
  2. To find your target audience: you may target the same audience as your competitors, or instead, target a group your competitors do not cover.
  3. In order to find new marketing channels for promotion
  4. To discover current industry trends
  5. To analyze the features of competitors’ products
How to build a startup in 2020

Furthermore, you should also research both your direct and indirect competitors. Direct business 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 business competitors:

Start with search engines 

Rest assured, your investors want to know about your market knowledge. So you should be aware of everything in your business industry. The most basic and simplest way to find your business competitors and understand what they have to offer is to search for them online:

  • visit their website,
  • read articles and press releases about them,
  • 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 learn your

  • competitors’ SEO and web traffic,
  • PPC and ads, blog posts,
  • social media. 

Here are the 4 best research tools:

SimilarWeb

SimilarWeb - analytical tool

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.

BuzzSumo

analytical tool - BuzzSumo

This tool is used to learn the market trends, insights, and content that works for your business competitors. BuzzSumo shows the most viral content of your competitors from several social media platforms. It’s prevalent among different businesses worldwide.

SEO Tools: Ahrefs and Semrush

analytical tool - Ahrefs

By entering your business 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)
analytical tool - 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 

analytical tool - BuiltWith

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 business 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. 

4. Outsmart Your Business Competitors – Develop a UVP

After analyzing your business 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 new startup concept. Based on your UVP, you need to create a slogan or a motto that users associate your company with. Companies need a memorable motto to inspire.

Steps for making a UVP when you want to make a promising startup:

1) Learn 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. It’s the key to focus on your product or service.

  • Indicate the end benefit(s) for the customer

First of all, startup companies should 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.

  • Differentiate

Make sure that your competitors don’t have a similar UVP, otherwise, it won’t be unique at all. 

5. Define Your Startup Monetization Model

Having a new brilliant idea is one thing, but earning revenue from it is different. If you want to create a startup, a monetization model should be decided in the first stages of your development process. It’s the key!

Choosing a suitable monetization model is the key to booming revenue.

However, there are many revenue models; try to find out what your competitors’ monetization models are. They’ve probably been on the market and in the industry longer than you. If you learn new strategies in making money in that market, it will be beneficial.

Note: While selecting a monetization model for creating a promising 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 is Netflix. This company offers streaming movies on a subscription-based model versus paying for a singular film or TV series. Their concept revolutionized the entire experience of buying and watching movies. Netflix has come a long way from sending DVDs via mail to becoming one of the media industry giants.

How to build a startup: Top 4 monetization models

Top 4 monetization models:

Commission revenue model

A commission-based model is a monetization model where you need to charge for each payment transaction. If you are launching an online marketplace, either a supplier or a customer can be trusted. Besides, you can set a percentage or a fixed fee.

This model is more commonly used when making an online service marketplace due to the need to have frequent payment transactions.

Related: How To Create an Online Marketplace You Can Be Proud Of

The pro of this revenue model for opening 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.

Subscription revenue model

A subscription-based model is a monetization model where you need to charge either a monthly or an annual fee for accessing the website or an app.

Sustainability is the advantage of a subscription model for developing 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. You need to be very trustworthy for your users. Our company knows that many entrepreneurs use the technique of providing a trial period.

Freemium

Freemium is a monetization model where a platform offers both free and premium features. 

The advantage of this model for making 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.

Ads

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 to 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.

6. Do Not Bootstrap Your Business

The budget is one of the pain points when making a startup. Basically, a startup’s budget sources are in investments or bootstrapping.

Bootstrapping is funding your own business 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. With business investors by your side, these problems are easy to skip.

pros and cons bootstrapping and fundraising

Pros of Bootstrapping Your Business

  • 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 more prominent than if you choose to have venture investors in your organization.

Cons of Bootstrapping Your Business

  • 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 brilliant startup may end up costing more than anticipated. Bootstrapping with a very limited budget could 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 Your Business

  • Financial Abilities

Obviously, the more money you have, the more ideas you can bring to life. A big budget doesn’t guarantee you success as even startups that raised millions have failed.

Money from your investors allows you to choose the best, or better, talents, use the best tools and aggressively promote your business.

  • Extra Credibility

Naturally, if Google or Facebook, or a similarly famous company or venture capitalist funding your startup, your business project would get extra credibility and visibility. This, in turn, could bring more customers, beneficial partnerships, and recognition to the market.  

Cons of Fundraising Your Business

  • 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 a 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. 

7. Develop Minimum Features that Bring Maximum Value for Your Business

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. It’s a great idea, we think.

Minimum Viable Product is your first business implementation that possesses a minimum set of features with enough value to attract investors.

Going to build a startup

Why start with an MVP if you’re going to make a good startup? 

Your MVP’s role is to help validate your business and attract initial customers. It’s a great idea to gather cu