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Rules Of A Successful Startup. How To Turn An Idea Into A Profitable Business

Reading time: 15 min.
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Valerij Zhur
Project Manager ITprofit

For ten years, our company has been promoting online business. During this time, we have helped startupers transform their idea into a business with development and constant income. During our work, it was possible to conclude that up to 95% of startupers do not correctly approach to creation of a new startup and subsequent promotion. As a result, they end up with burnout of business, loss of time and money. Below we can look at some mistakes of beginner startupers and give advice on how to transfer an idea into a profitable business.

 

 

For ten years, our company has been promoting online business. During this time, we have helped startupers transform their idea into a business with development and constant income. During our work, it was possible to conclude that up to 95% of startupers do not correctly approach to creation of a new startup and subsequent promotion. As a result, they end up with burnout of business, loss of time and money. Below we can look at some mistakes of beginner startupers and give advice on how to transfer an idea into a profitable business.

 

 

Mistakes Of Startupers

  • Business starts with an idea

    The most common mistake is to think that a business starts with an idea. In fact, this is not the case. An idea is an intangible thought in a startuper’s head that is incapable of making money, it has no economic value and worthless. And we cannot exclude falseness of this idea, but this does not stop startupers from constant worries: theft of this idea by competitors and loss of money in business in the future. This attitude obstructs beginner entrepreneurs to share startups with other people. As a result, the whole business ends with an idea in his/her head.

     

  • Necessity for investments in business

    Usually beginner startupers are sure that they cannot start without investment or personal contribution. Most online projects start from scratch or small investment of money. When attracting investments it is also worth to remembering that such money is a kind of debt obligations issued in exchange for receiving part of a profit from business in the future. Investor’s assistance may be required in the future when a startup is brought to the MVP (minimum viable product) stage. When a product will be able to meet minimum needs of its end user, but more startup capital will be needed to improve it..

  • Adolescent syndrome

    Another problem is thinking that you know everything about a startup and that any proposed idea will grow into a business that will help you to achieve success. Even a properly drawn up business plan does not guarantee 100% success; as you work on a startup everything changes hundreds of times, as it was planned at the beginning of the path – this will definitely not happen.

  • Marketing

    It is obligatory to think about marketing at all stages – when working on a startup, at the first presentation of a product, during the further formation and business development. A properly organized marketing campaign will ensure an uninterrupted flow of customers and final income from a business will depend on your buyers. The common mistake of beginner startupers is spending all money on product development and not leaving funds for marketing.

     

    Reasons of startup burnout
    Market does not need it 42%
    Not enough money 29%
    Bad team 23%
    Pushed out of the market 19%
    Problems with pricing 18%
  • Focus on narrow audience

    Investors are interested in startups that will help multiply their invested money. The larger the audience of a business, the higher profit it will be able to get in total. If a startup is intended for a narrow audience, so it will be used by a limited number of clients and you cannot count on big money.

  • Absence of unicity

    Startupers try to persuade investors and buyers that their proposed business is unique and it has no competitors. Such statements will be just words; the first request on web gives out similar startups in the IT field (mobile applications, plugins, websites etc.). Look closely for your competitors, analyze strengths and weaknesses and predict further business promotion in your niche. Create a unique selling proposition that will have no close analogues.

  • Problem with staff

    Absence of people in a team who are competent in certain issues will certainly reveal problems at the stage of implementation. A first-class team knows how to create, promote and manage a business. It is advisable to give preference to co-owners of business who will be interested in launching and not to ordinary hired employees who simply work for a salary. Only 100% involvement of all company members in a startup will ensure the final success after its release.

  • Unwillingness to engage external consultants

    Some startupers try to implement a startup only by their own forces without recourse to help of third-party consultants. In fact, a business project has to reckon with necessity to solve many tasks during a work. A hired third-party consultant will greatly simplify the process that will soberly analyze the entire business, find possible weaknesses, propose solutions to problems etc. In Western Europe, a startup usually involves specialists who are capable of consulting assistance in any matter.

  • Absence of trust

    Some startupers try to implement a startup only by their own forces without recourse to help of third-party consultants. In fact, a business project has to reckon with necessity to solve many tasks during a work. A hired third-party consultant will greatly simplify the process that will soberly analyze the entire business, find possible weaknesses, propose solutions to problems etc. In Western Europe, a startup usually involves specialists who are capable of consulting assistance in any matter.

     

  • Absence of trust

    If you hire specialists then you need to trust them. Startupers often worry about other team members completing their assigned tasks. As a result, they begin to involve in areas in which they are incompetent. This desire to control often ends with anything good.

 

 

 

How To Succeed

The main mistakes of startups are considered, it remains to highlight a number of rules that will increase the probability of success, help you enter 5% of successful startups and help you create a profitable business in the future.

 

  1. Test your niche.

    It is important to test your niche before launching a product. For this, method of verbal agreements and preliminary trial sales of a product is used. In the sphere of IT startups, a landing page is used for testing, information about future business is posted on a website and polls are created to check user’s reaction. Within the limits of test, it is possible to start implementation of a startup not on empty guesses, but on real reaction of people to work.

  2. Start selling at early stages.

    Successful business people follow to the principle that with a right approach it is possible to sell air to customers. It really works – you can start selling far before the final launch of a startup on the market. Early sales will help form a base of potential customers, convey basic information about a product to them and receive an advance payment. Even by selling preliminary agreements, a startuper receives money; in the future it can be directed to implementation of other stages of a startup and do without third-party investors. In any startup, a sales department should appear at the initial stage of development.

  3. Team..

    The main difference of a successful IT startup is its top class team of professionals. Employees are able to perform a full range of work – create a startup, promote and advertise it on the market, manage a process, make changes, load updates etc. Startupers must evaluate what skills will be important for development of a startup; determine what jobs they can take on. On the basis of the collected information, it is need to select a part of enthusiastic assistants; some work can be outsourced to third-party companies. It is convenient to hand one-time or small projects for outsourcing companies, this will help save on wages, you shall not have to pay a specialist who will spend no more than 2 hours on this process within 8 full working days.

     

  4. Methodology.

    Competitiveness of any company is associated with the chosen approach to solving business tasks. There are proven management methodologies and sometimes you have to revise your approach for a specific startup to highlight its strengths. A well-chosen business management methodology will help startupers bring all ideas to life and achieve the set results.

  5. Start small.

    Your desire to bring your project to perfection and only then bring it to the market will turn into bankruptcy. It is important to divide your startup into several parts and certainly to highlight your beta version. It includes basic functions of a startup and is introduced to the market first so that customers can evaluate a product. In the future, it will be possible to make changes and updates on a monthly basis. Starting from a beta version will help quickly and inexpensively bring a startup to the market. Even shortened version meets minimum requirements of a consumer and can compete on the market, attract clients and constantly increase their total number.

  6. Engagement of external consultants.

    Startupers have opinion that it is unnecessary to recourse to help of third-party consultants. This becomes a mistake that cramps implementation. A startup consists of a set of tasks that require a prompt solution. Any team often suffer from shortage highly specialized professionals. Trying to resolve issues in which you are not competent will end up costing more than hiring a third-party consultant.

     

  7. Investments.

    At the initial stage, the investor will not be a plus, but an extra burden that will pull the startup along and require making certain changes, including financial assistance and debt obligations. Suitable stage for investment is when there have been successful attempts to sell a product. Investments work only in proven startups and accelerate growth and business expansion.

  8. Choose tight age for start.

    You can start an online business at any age, but there are several periods when it is easier to do this. The first one is from 20 to 25 years. This type of startuper often supported by parents, does not have a family and can direct all his/her time for development. The second startuper is from 30 to 40 years, during this period there is accumulated work experience and capital for start.

  9. Don’t be afraid of failures.

    With a 99% probability, a startuper will have a moment of wreck and failure. Do not be upset when your first problems appear. In history of many world companies, there are chapters when they literally turned into bankrupts even with accumulated multi-billion dollar capital, but were able to settle their work and come to the surface.

     

     

  10. Development paradox.

    The faster development, the more money is required to maintain growth. Authors of a fast-growing startup are often faced with the fact that popularity of their business is growing, but instead of profit it mainly brings losses.

  11. Minimal personal income.

    The most startupers begin their business in search of a better life. It should be clearly understood that at the initial stages (and they can take several years) income will be minimal. Get ready for the fact that you will not become a millionaire and increase your income several times until you turn your startup into a stable business.

  12. Documentary registration.

    Agreements with partners, investors, and outsourcing companies must be documented, and all agreements must be drawn up in accordance with established legislation. Contracts will help you secure your funds and rights if someone tries to cheat you.

     

  13. Development of future strategy and tactics.

    A clear action plan for the next 2-3 years should be developed with description of tactical ideas and strategy of conduct. This plan can be written in the form of a goal tree, where the trunk is the result to be aimed at, the branches are methods that will be applied to reach the main branch. On your path to a multi-billion dollar company, you need to solve many small goals.

  14. Thriftiness.

    A startuper can have a big initial capital, it will make easier to start a business. At the same time, it is important to be careful with money. It is important to remember that regardless of amount of money, it will not be enough in any case. Follow to the principle – weigh a decision ten times before making a purchase. It often turns out that it is quite possible to do something without a certain item, hence saving money.

  15. Allocate responsibilities.

    Learn to reallocate responsibilities between subordinates, shifting part of responsibility onto them. Attempt to keep everything under control will result in a startup author being overloaded with constant work and his/her subordinates will sit idle. You should not completely refuse control, otherwise you may face the fact that work will not be done the way a startuper wants.

     

  16. Website on the first place.

    A modern and functional website plays a huge role in implementation of startups in the sphere of IT business. Before developing your website, make a list of the goals that you need to achieve with this product. Further, your work is carried out in the following stages – design, marketing, writing selling texts, coding and other. A website for a startup will help increase conversion, expand list of ways to communicate with a client and become your PR and promotion tool.

  17. Efficiency indicators.

    Use efficiency indicators to measure everything in your startup, this can help control and correct development of your startup. Decide what indicators are important at one stage or another during implementation of your business idea (website traffic, net profit, number of visitors).

  18. Refuse to use high-sounding words of big business.

    Legal entities, offshore companies and other terms only distract a startuper at the initial stage of entering a business. It is necessary to start formation of a legal entity status before conclusion of the first serious transaction. In the IT business, in a process of working on a product it is important to purchase a domain, register a copyright for your website and register your own trademark.

     

  19. Lack of time.

    At the initial stages of implementing a startup, each author is faced with the problem of lack of time. It will not be possible to solve it completely, but if you follow a number of rules, your life can be much easier. The main principle is drawing up work plans for a day, week, month and year. For convenience, you can use special mobile applications in which it is easy to mark tasks that have been completed during a day. Next, divide your work processes into groups according to the degree of importance and strength; do not forget about the paragraph with distribution of responsibilities.

  20. Fulfill promises.

    A simple reason of failure of the most startups is that the obligations given to investors and customers are not fulfilled completely. Be very careful with your list of promises to avoid face a problem.

  21. Refuse help of your relatives and friends.

    This rule works in every business, regardless of a sphere of its implementation. In 100% of cases, you will have to forget about good relations with close people because of disagreements, misunderstandings in business matters. Many requirements shall be forgotten in your work.

     

  22. Do not be afraid of changes.

    People are constantly changing and perception of the world around them becomes different, a new look at some moments appears. Changes with a startuper take place in stages – after disclosure of your idea of a new startup, hiring the first employees, transferring your startup into a profitable business.

  23. Save energy until the end.

    Working on a startup without breaks or days off will eventually provoke a manager’s burnout. At this stage, an author notices that work has become uninteresting, that motivation has decreased to a minimum. Burnout is a psychological problem, which is eliminated by changing your approach to a work process. Try to find a balance between a work process and rest. When doing business, do not refuse travel – strive to increase positive emotions in your life.

  24. 24. Do not delay with start of business.

    According to statistics, the most lucky and successful startups remain only in minds of their creators because of their fear of failure. In fact, nothing prevents you from coming to our company right now and starting cooperation on the way of implementing a business project.