7 Reasons Why You Should Do Homework Before Launching a Startup
If now you are thinking about all those assignments you had or still have to write for university classes, and if such thoughts really let you down, I think I have a few words to cheer you up.
Firstly, and most importantly, we aren't going to discuss academic homework. Yes, you can breathe out.
Of course, it's absolutely fine if you were or are a responsible student who doesn't skip lectures and is always ready with papers and projects. Good for you! But today we're going to speak about homework of a very different kind.
Thus and secondly, let's try to broaden both the definition of homework and your horizons.
At the end of the day, you are considering to launch a startup, aren't you? So, now it's the right time to boost your enthusiasm and confidence. Believe me you'll need them.
Alright, I have an idea. I want to bring into being. And… what? I have to do my homework now?! It will gobble my time and my budget up! No, sir, thanks a lot, but I'd like to start with actions rather that with the theory.
That's how aspiring entrepreneurs may react to the fact that they must do quite large-scale research before they even start the whole game. And that's the reason why they may fail.
However, really successful business people, who went through the mill and know how it works, will wisely note that the I-want-it-all-and-I-want-it-now approach to the development of your own business is very likely to cost you dearly.
Just so you know what you are drawing yourself into:
- 60% of the surveyed 1,431 entrepreneurs stated that they spent half a year and even more developing their business ideas before they started realizing them;
- 45% of those entrepreneurs had set up at least one company before starting up in a new business;
- 41% could boast of having ten and more years of experience in their industries;
- 70% were one-initiator start-ups or one-employee firms at the beginning of their careers;
- two thirds (that is almost 1,000 entrepreneurs) initially invested their own savings.
The authors of the research themselves claimed that the survey wasn't aimed at making any particular conclusions about “entrepreneurship barometer". However, these numbers and the facets they are related to appear quite enough to see the clear picture of how any business gets born.
When a promising idea has struck you, it's important to put the energy it gives you on the right track and to continue feeding this idea with fresh information and experience so it doesn't fade away.
Speaking roughly, collecting this information and accumulating experience make the homework you should do before launching a business startup. And nurturing the idea from which you want it to develop is only one of the multiple convincing reasons why you should do that homework diligently.
Here I'm going to provide you with the essentials.
1. Understand Who and What You Are
It's your idea or project that will bring you recognition and funds. That's clear. But it's you who will receive the money. And your investors want to know who you are, why you want to bring your idea to life, and how it will help the world (or a part of it).
The idea in its essence is quite an obvious thing. Everybody can hear you, read a description, or even try it if it already is a material object, so everybody understands what it is.
But in order to succeed, you need to answer the three abovementioned questions. Let's check them once again:
- Who is a creator?
- Why does he or she want to realize the idea?
- How will it work, help or benefit others?
That's the first part of the homework for a budding startupper.
2. Make Sure You Go Original
Your potential competitors and customers will help you.
Competitors' reports and presentation can show you what the situation on your target market is. So you will know what innovation can make a revolution on it.
Social media, like almighty Facebook and Instagram, give a perfect opportunity to conduct a survey of any scale or run a focus group. In this way you can introduce your product or service, even though it's still not that ready for mass consumption, as well as your all creative self.
So, the other task for you is conducting your own research into the sphere of your interest to find out how exactly you and your idea will upgrade it.
3. Support Yourself with Valid Data
Successful business owners, startup mentors (yes, these people exist, and contacting them can be a good idea), angel investors, and just the whole entrepreneurship community recommend studying your market niche as much as you can.
Check each point of your business plan (I assume you have it) and decide what specific information you still need in order to make sure your plan is going to work well.
Where can you find this information? Martin Zwilling, a tech professional, author, and investor, advises to visit not only Google but also university or public libraries, SBA offices or their equivalent in your country in order to enjoy free access to key sources of relevant market-research reports and statistics.
These materials will help you learn more about the target area and get ready to enter it with your startup.
4. Learn About Challenges (and About Solutions to Them)
Again, your potential competitors or, maybe, future colleagues can stand in good stead. Read the stories of their success.
The huge businesses they run nowadays take roots from startup like yours. So, the experience they share today can help you find keys to the difficulties you may be facing as you are developing the idea and carrying our research.
I've also mentioned that you could get in touch with startup mentors or investors. Truth be told, their formal consultation may be costly. But some of these experts are more approachable and open to communication than you might think. Check if they have blogs, hold talks online, host webinars, or even welcome budding entrepreneurs to share thoughts and challenges in Messenger.
5. Check What Google Thinks
Yes, you must win its demanding heart. Yet, although it's going to be a very serious judge of your startup, it's your reliable helper too.
It will provide you with crucial information, enable you to get acquainted with and attract a target audience, as well as support and promote your business steadily.
So, the research into Google's preferences and requirements is the other part of your prelaunch homework. And the good news is that you can do it yourself, without looking for guys who know the intricacies of this search engine.
At the next stages of the business development you are likely to need assistance of such specialists. But your own brain and computer will be enough to start.
6. Estimate How Much You Cost
Well, not you but your startup, of course. And the clearer, the more confident, and the more all-inclusive the estimate is, the more chances you have to attract investors. These guys like transparency and certainty.
David Roth, a serial technology entrepreneur with more than 30 years of the industry experience, shares a few interesting considerations about startups' financing. He compares budding entrepreneurs with teenagers at the mall: no matter how much money they have, they will spend them all. And in most cases these expenses don't pay off, unfortunately. Moreover, the bigger an available sum is, the faster it vanishes.
What Roth recommends is staying as lean as possible, measuring the market, setting clear goals, and at least trying to figure out how much each step will require.
Besides, it's essential to highlight the profit which the startup will bring at later stages, after you receive the requested funds. That's what investors want to hear from you, and that's what you want from the idea you are developing.
So, make a smart plan, do some math, and brace yourself to get the money you need.
7. Be Ready to Change
The prelaunch research will help you determine what's brilliant about your original idea and what still needs improving.
Analyze your innovation and others' achievements, make comparisons, and don't let yourself be reluctant to fix things that can be better, even though fixing will take another month. After all, time is the most generous investor for your startup. So, spend its funds wisely.