What is a Startup?
When I tell that I'm writing about startups, most people think about companies like Google or Facebook that raised $1 billion in venture capital and are worth billions of dollars. The reality is that the majority of startups do not get off the ground. According to research done by Harvard Business School professor William Sahlman, less than 2% of ventures backed by VCs turn a profit within 10 years. If you're going to start a startup, you need to be prepared for failure. You should be ready for rejection and failure from investors, customers and employees. Don't let this scare you! If you're passionate enough about your idea then keep going! This post will help give some insight into what it's like to start a startup from my personal experience with one company called Pluggd Inbox (PI). PI was started in April 2014 by our team at UCF's Student Government Association (SGA), which consists of students who have real world experience running successful businesses in different industries such as finance, health care and telecommunications before they came to UCF's business school. I have been starting a business for the past three years at UCF, and I am excited to share with you what I've learned about starting a startup.
How to Start a Startup - The Basics
It's important to be prepared before you start your own company. Before we started PI, we needed an idea that was both unique and relevant in the marketplace. We also needed a solid business plan that outlined how we were going to make money. We had no clue what it would take or cost us to run this company when we started, but thankfully someone in the business school told us about another student who recently completed a similar project for his senior project during his time here at UCF. We met with him and he was able to give us some great advice. Here is what we learned:
Find a market need that you can solve. This is the first step in starting a startup, without it there's no money to be made. If you can't find a problem worth solving, don't start your own company! Find people who are willing to pay for what you're offering. In order for your business to be successful, there needs to be a defined set of customers who will purchase the product or service that you have developed from time-to-time. You may have an amazing product or service idea right now, but if nobody wants it then it's pointless! Be prepared for failure and rejection along the way. Many times this goes hand-in-hand with point number one above since most investors will not invest into companies that have no market need or customers willing to pay money for their idea/product/service.
Once you have an idea and potential customers, you need to think about how you're going to make money. There are a number of ways that you can do this, such as:
Selling goods or services directly to your customers. Selling goods or services directly to your customers and then selling the whole business for a higher amount than what they paid for it. Selling goods or services indirectly through other companies (referred sales). Paying affiliates (people who promote your product for free in exchange for a commission if it's sold) online using affiliate networks like ClickBank or Commission Junction. Offering an ad-supported version of your product/service online where people download the app but don't pay anything upfront but will view advertisements before using the app. Offering premium/paid versions of your products/services online where people must pay money upfront before downloading the full version of what they want. Offering premium/paid versions on mobile devices with in-app purchases where people pay small amounts of money within apps without leaving them on their phone bill each month.
It will help you to start a startup.
