Every startup company begins with a great idea. Entrepreneurs may need years to develop their ideas before they are ready to take the leap into commercializing their product. Starting a new business is a uniquely risky endeavor, and potential startup owners need to accept that they are putting themselves on the line.
Dan Lok, founder of Closers.com, a SaaS platform that connects companies to closers , and CEO of Dan Lok Marketing Inc., explores some of the areas that startup company owners should consider before forming their companies, as well as thoughts on how they can fund their enterprise and how they can take it to the next level.
The Basics of Startup Companies
Your startup company needs to have an original idea. Barring that, your company needs to be prepared to do its job better than any of its competitors. Most successful startups have a few things in common:
- Passion for Their Idea: Everyone involved in a startup launch should be passionate about the business. Starting a business is a lean and stressful time, and everyone involved in the enterprise needs to be prepared to take personal risks. Personal and family time will be sacrificed, and startup companies will not make much money at the beginning of their enterprise. This could put startup owners in a difficult position. For this reason, owners of early-stage startups are often advised to keep their day jobs as long as they can so that they will have a salary and benefits to fall back on.
- Excellent Customer Care: A successful startup needs to be customer-focused. Everyone in your company needs to have a deep understanding of customer service and how it can transform the business. Great startups also listen to their customers’ needs and make alterations to their products and services as a result.
- Intense Focus: Successful startup companies don’t take on too much at a time. It is better to have a “laser focus” and to hone in on the principles that set your company apart. Focusing on one line of business is a must.
- Strong Company Culture: Startup companies have the unique ability to build their company culture from the ground up. They keep their teams happy while adhering to their own values and principles. Some of the biggest startup success stories, like Google, spent years honing their culture before they were a household name.
Funding Your Company
Startup companies have one more thing in common, and that is a need for funding. The first funding source to explore is your friends and family. If you are fortunate, you will have a well-heeled friend or family member who is willing to take a risk on your company in return for future profit.
You will also need to invest your own money in the enterprise. Many startup owners find that they need to liquidate some of their assets in order to put money into their businesses. If you are not financially stable, launching a startup company may not be for you.
Bootstrapping your startup is difficult. This involves operating with only the profits you make from your sales. This is a good option for a company that can scale its operations quickly at the beginning stages.
Angel investors may be another source of funding for startups at the earliest stages. An angel investor is prepared to take a great financial risk to fund your company in return for a profit and partial control of your company. This often works out in the startup company’s favor since angel investors are generally free with their guidance and advice.
The process of securing angel funding can be difficult. An angel investor is not going to pour money into a company with an uncertain idea or a company that lacks a clear plan to succeed.
In order to get angel funding, a company must shop itself around with a complete pitch deck and business plan. Introductions can be hard to come by, and angel investors only take on a small percentage of startups.
Generally, venture capital funding is not available to startups at their earliest stages. They tend to come in for the Series A, B, and C rounds of funding.
Series A funding is often available to businesses that have established a good track record. They need to meet certain criteria like having a solid user base and consistent revenue. Series A funding is available to companies that have a great plan for generating long-term profits.
Series B funding comes next. With series B funding, companies have proven that they can handle a larger scale of business. This round of funding takes businesses past the development stage.
Series C funding is for successful companies that are trying to develop new products or transition into new markets. This funding can even be used to acquire smaller companies.
Being Realistic About Your Idea
If your company’s basic concept does not match a need in the market, you may not be able to get your idea off the ground. There needs to be a clear niche in the market for your company to flourish.
Beginning a startup company is one of the most rewarding events in the business world, but it can also expose you to significant risks. Surrounding yourself with an excellent team and making sure that your business has the funding it needs are two steps to success.
Lok reminds readers that a startup company is only as good as its central idea. Creativity and persistence are two of the main characteristics needed by startup owners.
Dan Lok is Chinese-Canadian serial entrepreneur, marketer, an author and a financial YouTuber. He is the founder of Closers.com, a SaaS platform that connects companies to closers, and the CEO of Dan Lok Marketing Inc.