Ideas For Startups
The definition of “startup” is broad and unclear. Just because your a startup doesn’t necessarily mean you work in the tech industry. But the moniker is usually attached to them. The word conjures up images of young twenty-somethings hacking away at MacBooks and eating dried noodles. But the reality is slightly different. A startup can be any business that is “starting-up”. Not just in the tech world. Plumbers and retail stores startup every day. There are no hard and fast rules on defining a startup since revenues, profits, and employment numbers shift radically between different companies and industries. From a single founder in her bedroom to some of the biggest tech companies in the world. The only metric that a startup should be defined by is their ability to grow. As Paul Graham explains, a startup is a company designed to scale very quickly. Growth should be a key metric for any startup because when they stop growing they become just companies.
You might not define yourself as a tech company, you might be a plumber or a chef or a designer. But any business that wants to thrive in today’s market needs an element of “tech company” and “startup” in them. The biggest takeaway you should get from this article is that the ability to understand technology’s capabilities and apply them to a variety of real-world problems is the only real way to survive in today’s market. Tech is so modularised that a key skill to look for in any entrepreneur should be the ability to tell a machine what to do.
In every startup you will always need three things to be successful:
- Good people
- Smart finances
Let’s break that down:
Good people. This is number one for a reason. Even if it’s just you in your business, you still need a support network. Even if it’s just an encouraging wife, a good friend who knows a bit about the tax system and some people sharing knowledge on Twitter. If you think you don’t have good people around you start here
Customers. Most people would put product here but it’s very easy to spend a whole lot of time and money developing a product that nobody actually needs or wants. I’m willing to bet large amounts of money that a lot of startups failed because they did this. In fact, “no market need” took the number one spot on CB Insights Top 20 reasons why startups fail.
Smart finances. To put it in other words, spend as little money as possible. As with point 2, you don’t need to waste money on developing products that nobody wants. The other important aspect of not spending money is by not hiring people before you absolutely need to. A lot of people will ask you “how many people do you have?” as some sort of measure of success. You should ask “how many customers do you have?” Employees should only ever be brought in to fill skills gaps when all other options have been exhausted.
Employees, office spaces, company cars/ vans, fancy “things” are often a choice between being impressive and seeming impressive. Do you want to seem impressive or be impressive? Instead of spending money on impressive things, invest in relationships with your customers, employees and partners. More than always, we need to understand our people. We need to understand their worries and frustrations. Be with them, talk to them, ask how can you add value to their plans. Ask what else you could do to help them better themselves. Ask what their biggest obstacles are right now – and resolve them. Adapt your company to serve better.
Why do Startups Fail?
It is estimated that 90% of startups will fail within the first year. This number is widely touted but fails to go into specifics. For example, how many shell companies and holding companies are created each year? How many ltd companies are registered each year simply as a means for tax avoidance? Who knows. Don’t let this figure go to your head, the fact remains that it is still very possible to start a startup today and be very successful. It is also very easy to start a startup and fail. Building isn’t easy or else we’d already be doing it and running around with millions in our pockets. But building something is one of the most fulfilling things a human being can do. I’d go as far to say it’s what we’re built for.
However, one of the most common causes of failure in the startup world is that too many wannabe entrepreneurs are too optimistic about how easy it will be. They assume that because they build a mildly interesting web site, product, or service, that customers will flock to them. Every step of the way you should be asking yourself. How can you help other people build, or teach other people to build, or take care of people who are building? The work you’re doing should either be leading to something being built or taking care of people who are building. If not then get yourself into a position where you can contribute. You should be driven by looking at existing products, services and companies and thinking, there’s a better way to do this.
By their nature, people aren’t sitting around thinking “I wish someone would change my perspective.” That’s not how humans work. We’re intensely focused on our day, ourselves, our next task at hand, our everyday life. To quote an overused quote, Henry Ford famously said, “if I had asked people what the wanted, they would have said better horses.” Steve Jobs was a little blunter. “People don’t know what they want until we show them.” If anything people actively look for ideas that confirm their worldview.
The onus lies entirely on you, the entrepreneur, to change their perspective. Many entrepreneurs don’t just underestimate this but, often, abandon this challenge altogether, going the easier route of telling people what they know they’ll want to hear. This might work for a while but eventually, something will change your customers perspective and they’ll be driven to the new shiny thing, better to be ahead of the curve. The line between offending people and making them think is small. But learning this dance is one of the most important skills you’ll ever learn. That fine line is even smaller when you think about what it meant for Ford to give his customers a faster horse. Don’t underestimate him, he completely understood the problem that people were facing when they were looking for better horses. They wanted a faster and more powerful means of transportation. And that’s exactly what he gave them.
A “proper” startup moves through three distinct phases:
Each phase requires a different skillset from the entrepreneur or the team. A startup that does these three steps well will have a pretty good chance of success. Most startups fail because they fail to execute on one of these steps. Planning starts a long time before you start your company and probably long before you even realise it. It can be thought of as the pre-history of a company, the time you spend before any of your ideas become a reality. The legwork that you put in in advance of even registering the name. The meandering, pondering and considering the what-ifs. It’s when you think “this product is garbage. I could do better than that.” You might ponder on this for years, but the next logical step is to ask questions. If you think that the product is garbage do other people agree with you? Do they think it could be done better? Could you build it for them? Then take action. Build it. In the aftermath of building your product it might be tempting to go out and spend your well-deserved gains but be warned, it is impossible to be in business for any length of time and not experience a tough economy at some point.
Ideas for startups
We’re in a service economy now. Service businesses (e.g., consultants, software companies, wedding planners, graphic designers, and hundreds of others) don’t require much to get going. If you’re running a business like that, avoid outside funding. What is your prehistory? Do you work in sales? Then help those that are building to sell. Are you a web developer for a large corporation who knows there are slicker, less convoluted ways to build web apps? Build them. Do you work in customer services but can’t find that “big idea” that’s going to get you out? Figure out how to make your employers customer service the best it can possibly be. Then sell that to other companies. Everybody has something to build on. Build a company that builds up others.
‘What’s so hard about pulling a sword out of a stone? The real work’s already been done. You ought to make yourself useful and find the man who put the sword in the stone in the first place.’ –Terry Pratchett, Men at Arms A lot of startups think they need to be new and shiny and never before seen. But you just need to be the best at what you know. You don’t need amazing ideas to start. Focus on what isn’t changing, not what is. Just offer people an incremental improvement on what’s already available. That’s all you need to start. Then you can offer further improvements, additional features and add-ons in the same manner. It’s a lot easier to make an inexpensive product more powerful than it is to make a powerful product cheaper. If you’re one of two campers attacked by a bear you don’t need to be faster than the bear. You better be damn sure your faster than the other camper though. The monies in the execution, not the idea.
Launch now. Use whatever you’ve got already or can afford cheaply. Then go. If the product fits, the market will respond. When will your product or service be finished? When should you put it out on the market? Probably a lot sooner than you’re comfortable with. Once your product does what it needs to do, get it out there. Build the simple, inexpensive options, It will be easier to sell at first and you’ll also be in the best position to conquer the rest of the market when you iterate and improve based on the feedback from all the questions you’ve been asking.
Don’t just rely on your ability to identify problems but become a master at finding quick, easy and cheap ways to test and iterate on your underlying assumptions until you reach your tipping point. Every time you level up and achieve a new breakthrough, audit your cycle. Every time you grow and expand into a new experience, audit your current offerings. Every time you hit a new business goal, audit the outcome. It’s easier to make an inexpensive product more powerful than to make a powerful product cheaper.
Sell your by-products When you make something, you always make something else. You can’t make just one thing. Everything has a by-product. Observant and creative business minds spot these by-products and see opportunities. When sawmills chop wood they inevitably make sawdust which they sell to pet owners around the world. Think laterally and draw inspiration from other industries. How can a solution to pet bedding solve a problem in architecture?
It’s a common thing for business advisors to say walk in your customer’s shoes but go a step further. Be your number one customer and walk in your own. What problem can you solve that can make your life better? Need a better pair of shoes. Design them. Sara Blakely started cutting up her pantyhose to find a more comfortable and body-shaping fit. Once she found what she was looking for she took Spanx to market.
Watch mid-sized companies and watch how they do business. Define their processes and figure out how to do it better. Why not a large one? Surely they have more money but have fun getting past the gatekeepers. Any small business or startups will be bootstrapping and not spending money right no. If do then there’s little chance they’ll be around in a few years to buy from you.
If your building a freemium model put your users first. If you have the users the advertisers will come. If your platform is built around advertisers the users will inevitably look for a product that doesn’t spam them. Advertisers won’t pay for a product with no views. Design a product that makes the user happy. Then think about how you’ll make money from it.
If your idea is to build “the next Facebook” or “the Uber of…” Then ask yourself first why Facebook and Uber haven’t done it already. Instead of starting from successful companies and working backwards. Look for problems and imagine the company that might solve them.
Build Your Platform Before You Build Your Product
As we said earlier, extremely productive and accomplished people and teams capitalize on the power of community to push their ideas forward. The use of communal forces will give you invaluable feedback and idea refinement as well as providing you with additional resources, support, and inspiration. Technology allows creators (that’s anybody building, not just arts and crafts) to interact with your fanbase, i.e. customers, directly.
Build your community before you even think about releasing your product and keep your fans in the loop right the way through the process. If you can establish your authority in your chosen market, when the time comes to convert fans into customers you will already have a crowd of evangelists at your disposal. When a large number of influential people read your blogs, your tweets, follow you on Instagram, read your emails or watch your YouTube channel you’ve already built the authority you need if you decide to engage outside investors or manufacturers.
Can you create a business process that involves watching the market for the latest trend and constantly iterating and rebranding for the latest market, then jumping on it ASAP? Then do this repeatedly for the life of your business. If your business is trends and fads that’s ok. If your business IS the latest trend then go home now. How many fidget spinners and myspace apps are still selling today.
Think of all the businesses that started in the dot-com bubble. The ones who survived had the staying power because they looked for things that would make their user’s problems go away. PayPal, Amazon, Google etc. The ones who failed looked at the online landscape and formulated ideas that would fit into that bubble. See pets.com if you don’t believe me.
Focus on things that don’t change very often. Newspapers and magazines might be dying a slow death right now but people will always read the news. Whether that be via paper-based publications, apps, social media or other means. How can you deliver that news to them in a better way? A lot of companies will latch on to what’s hot and new. Following the latest trends. That’s a fool’s path, you’re focusing on fashion, not substance. The core of your business should be built around things that won’t change. Things that people are going to want today and in ten years from now. Those are the things you should invest your time in. Remember, fashion fades. Features will never go out of style.
The 80/20 Rule
20% of your activities account for 80% of your income. Figure out what these critical activities are, then do more of them. Then figure out what 20% of those activities are really keeping your business alive and create the optimal conditions for them to thrive. Remove any features, process, or efforts in your products that do not directly contribute to the overall objective.
Look at everything you’re company is working on and delete what isn’t serving your best interests. There will always be a handful of activities we simply need to delete, and here’s your chance. Really think about the top two or three things you need to do to create more income. Now put those in your schedule consistently so you can assure yourself that you are creating income. Constantly ask yourself if what you’re doing is profitable, and focus on doing what you should versus what you feel like. Impact drives income.
What kind of business plan so you need?
Are you writing for investors, if you are we can help you with that. If not then you can forgo the usual dry templates and opt for a more straightforward business plan. Can you distil the main points of your business plan down into a series of tweets?
- What does your business do? Seriously, if you can’t fit this into 280 characters then it’s time to start over.
- What is your customers biggest problem?
- How will you solve it for them?
- Who is your customer?
- Why will they come to you over your competition?
- In what scalable way will you acquire these customers?
- How will you monetize those customers? (Specifically, how will you monetise your fans at a significantly higher level than your cost of acquisition).
- When will you go to market? Even if your working in isolation you need to set yourself firm goals.
- What are the risks involved? If the risks outweigh the benefits then it’s time to start over. If not then build > release > iterate.
- What are your key metrics, how will you measure that?
You don’t need to write a personal statement. You don’t need to write about yourself, your demographics, your market analysis, your SWOT, your fancy charts and graphs. All of that will come later. Get the fundamentals in place and go create a solid product. Worry about the finer details once it’s proven. Organization to strategy to recruiting, funding to public relations. These are all part of the process. These all come after your ideas. Why waste your time producing all this stuff before you know you have a product that will actually sell?
Building a company requires patience and fortitude. Lots and lots of patience, just as much as it relies on boldness or courage. Are you able to be a teacher and a student? Are there habits or systems that are holding you back? What groundwork can you carry out now to get your feet on the first steps of that ladder? What will be the prehistory of your company?
Everyday things can be made better and brighter by everyday people. A business shouldn’t be all about making bank. It should be about making dreams come true for others, as well as your own. Starting a company is a great way to improve the world while improving yourself. You might not have the next big idea but it’s more than possible to build a framework that will put you in a position to succeed.
Today is your opportunity to build the tomorrow you want.