Starting a Business! From Idea to Launch

Preparatory steps are needed in order for a startup to be successful.

Starting a business is very difficult. It requires a lot of planning and forethought before you leap.

This Guide is for the aspiring business owner and entrepreneur for the purpose of spuring thinking and investigation that will lead to the creation of a business plan followed by the business launch.

Once the decision has been made to go forward, there are very basic steps to setting up a business that formalizes the creation of the business and makes it operational which is addressed in a related article. 

1. Personal & Professional Assessment of an Aspiring Entrepreneur and Small Business Owner

Starting up a business is very stressful and demanding. Therefore, being able to apply prior experience is important. By conducting a self-assessment of strengths and weaknesses, an entrepreneur is better prepared to meet the challenges as they arise.

The following offers the key points about personal and professional self-assessments:

Personal Self-Assessment as Leadup to Starting a Business

Pursue Self-awareness: Reflect on your attributes, values, goals, relationships, and life experiences. As the prospective leader of a new business, it is important to have the self-confidence necessary to engage with a broad range of people. Personal values are also important when interacting with employees, business partners, and customers.

• • Seek out Insight from others: Seek out friends, family, co-workers, and mentors who may offer insight about your strengths and the areas needing improvement.  Request situations where they had an opportunity to observe your actions. Don’t decide to start a business in isolation.

• • Remain Committed: Starting up a business and running it day in and day out for many years requires an unrelenting commitment to achieve success. Consider events or circumstances in the past when you persevered to attain something important. Having had prior tests of fire will help you overcome hard-to-solve challenges along your entrepreneurial journey.

• • Leverage Passion: Most entrepreneurs advise others who want to start a business to choose one that evokes passion. Passion is what empowers you to survive the ups and downs of starting and growing a business. While passion provides self-motivation, it also serves to attract talent and investors to the venture.

• • Build Relationships: Because an entrepreneur typically spends a lot of their time working alone, particularly during the startup period, they must seek out and build relationships that are important for long-term success.

When facing the challenges of starting a business, a founder needs to be resourceful—and that includes having a network of contacts who are supportive and available to help. Relationships may occur with potential employees, mentors, consultants, suppliers, and customers. Along your entrepreneurial journey, you may never know when a prior contact becomes valuable to your business building.

Find the networking arenas that align with your industry and entrepreneurial passion. Seek out industry associations, taking advantage of community events such as conferences, workshops, training opportunities, and more.

• • Focus on Time Management: Since owning a business is a 24/7 endeavor, being able to efficiently manage one’s time is critical for success. Take a look at your management skills in terms of prioritizing tasks, the ability to set and meet goals, and how well you delegate lower-skill tasks to others—all of these areas add up to effective ways to move a business forward with less stress.

One may never have all of the skills necessary to be successful in starting a business, but identifying and acknowledging areas of weakness may lead to the pursuit of a founding partner or to search out organizations that assist with skill building.  

• • Entrepreneurial Personality Traits: While there is no proven formula to predict who will be a successful entrepreneur, some traits common to entrepreneurs have been identified. They are passionate, resilient, strongly focused, risk-taking, decisive, and adaptable. How do you match up?

Personality tests for entrepreneurs are available such as a free one offered by Psychology Today, titled “Can you be an entrepreneur?” or a fee-based one offered by The Enneagram Institute.

2. Professional Skill Assessment and Development

When beginning the startup journey it is very helpful to have gained skills that can be readily applied to the new business. But, also important, is knowing where to access top resources to help start a business that can be tapped to progress the business more quickly.   

Assess Your Professional Skills:  Take an inventory of existing skills that can be used when starting up a business apply to a startup that includes sales, marketing, operations, financing, human resources, hiring, communication networking, problem-solving, and more. Problem-solving is a very valuable skill for starting and growing a business because it is used almost every day once you decide to go down the startup path.

If you are missing a skill, research ways to fill in that gap. Seek out professional organizations in your industry, attend training sessions at local workshops, go back to your college for outreach programs they may offer, or seek outside talent such as consultants or part-time employees who fill a gap—without having to establish a full-time position.

Online tests are also available for skills assessment offered by several companies such as Coursera, Udemy, LinkedIn Learning, and others.

Possibly the greatest insight about being an entrepreneur is that it is a commitment to ongoing learning.

Financial Readiness: Many startups fail because the founder has underestimated the amount of capital needed to reach sufficient revenue and/or profitability.

Before starting up, conduct a full review of your financial health and assets. Most startups will require ongoing capital investment for years, while generating little to no income. Inventory your savings, learn your credit score, and familiarize yourself with basic financial and investment vehicles such as bank loans, grants, and investor funding.

If you have a low credit score, work to improve it in anticipation of one day needing outside financing. Seek out financial advice because it takes time to improve a score. Assistance can be obtained from companies such as Credit Karma, myFico and others. 

Education and Training: Many universities and colleges offer degrees or certificates in entrepreneurship. Not only do they provide coursework and training, but some offer venture funding and mentoring.

Centers of Entrepreneurship often host workshops, conferences, competitions, and online training courses. Many of these activities draw in professionals from the local entrepreneurial community to foster networking.

Mentorship:  Having access to someone with much greater experience is of tremendous value to a first-time entrepreneur. Mentors can provide situational insight during tough challenges, make introductions to others and bring to the venture a range of skills and experiences to fill gaps when one is starting a business through its growth stage.

Seek out a mentor who is an entrepreneur or someone who is involved in entrepreneurship such as those affiliated with universities or outreach programs.

3. Evaluating a Business Idea and Choosing the Right Business Model

Evaluating a potential business idea and the associated business model requires a lot of work. The following areas should be explored to determine the feasibility of the business under consideration will become sustainable and profitable.

The most important fundamental question is whether or not the founding entrepreneur has the right skills to take on the business model they choose to pursue. If not, finding a business partner may be needed.

Matching skills to the requirements of a business model may be accomplished thoroughly through the preparation of a business plan. An interim step to this is the validation of the startup idea.

Validate the Startup Idea

When starting a business the following preliminary steps will help validate the startup idea and the associated business model.

There are two types of startups: replicative and innovative. The former is a business model that has already been proven such as a computer repair shop or a restaurant, enabling the founder to follow what others have done to be successful. In contrast, an innovative startup must establish a business model or develop and introduce a product that has yet to be proven. The latter entails a lot more risk and other factors to succeed.

Is your idea to start a business a replicative model or an innovative model? Establishing a computer repair business may be validated through online research of already existing businesses or by speaking with former or current owners to learn their experience and gain their advice. The aspiring founder may also survey potential customers and analyze industry trends to reach a satisfactory validation.

However, validating a new innovative product or service is generally more difficult because the innovation occurs in the absence of a similar existing product and solution for comparison. Validation may be made by speaking with experts, doing surveys, creating a prototype for potential customers to use, and more.  This last point leads to the use of a Minimum Viable Product (MVP) to assess a new innovation.

Build a Minimum Viable Product (MVP)

Specifically in the case of the development and introduction of an innovative product/service, constructing an MVP can save a lot of time and money when starting a business. This is achieved by testing the intended product or service without making the expensive commitment to full production.

Once a prototype of an innovative product or service is made, test it with a number of prospective customers who agree to provide critical insight about its value to their business, as well as the price they would be willing to pay.  Very often changes need to be made to the innovation after conducting an MVP that better meets the needs of customers and is then brought to market at the right price.  

Through the use of an MVP, one may learn that there is no market for the product or service at all and the idea should be abandoned. Another insight might be that the company is unable to make the product or service at a price that is profitable to the company. MVP testing provides an enormous amount of insight on a relatively small budget, potentially saving a tremendous amount of money.

Know your Value Proposition

Every company has competition in some form that must be fought with better prices, quality, and service. This is known as the Value Proposition—-the benefits offered to customers that give them something of value in return for payment.  Knowing the Value Proposition is key to establishing a marketing strategy that distinguishes a company from its competition.

Every startup founder should know how the quality, delivery and price of their products/services stand up against the competition when deciding to start up a business.

Conduct Market & Industry Research:

When you are considering the startup of a business, market and industry research should be done to assess the potential of the business. Assess the target market which includes the size of the market, the customers’ needs, and if possible, the acquisition cost per customer for your product or service.

Given that AI and digital technology are now quickly altering competitive landscapes, look at industry trends to gain some insight and assurance that your prospective model is not being challenged by a new trend. That may occur as a result of a technology innovation or changes in customer preferences.

Seek to identify the pain points in the industry and the target market that can be monetized.  Then, build a strategy behind your assessment that will be part of your business plan.

Assess Risk

Businesses face a broad range of risks that must be managed to minimize its impact and potential liability to the company. Inside the business, maintaining proper human resources policies lessens the possibility of a lawsuit, while insurance is taken to limit cost of fires and natural disasters.

Of particular concern are the growing risks associated with climate change—necessitating steps such as maintaining a Disaster Recovery Plan which establishes how the technology within the company and associated business processes are to be readily re-constructed in the event of destruction from a natural disaster. 

The 9/11 terror attacks brought to the forefront the need for redundant networks and equipment and for the establishment of remote locations in the event, there is widespread destruction of the primary operations of the company.

Many risks are specific to an industry, so at a minimum, know industry standards for what will be required to set up the business operations, and how much it will cost.

Sales and Marketing Drive a Business:

Sales channels and sales cycles differ by industry. In addition, the digital economy is transforming almost all businesses, requiring them to have a strategy for online sales and online marketing. For the business idea and model being considered, identify and evaluate the various ways to grow sales and the role that digital technology now has in a business for it to compete.

When a starting a business as a single founder, carefully review if the individual possesses the sales skills and training for solely taking on the enormous challenge of bringing in customers and executing all aspects of business development.

Marketing strategies vary greatly by industry, so inventorying the marketing efforts associated with your business is a start—making sure that digital marketing is included.  Establishing a brand, knowing marketing influencers, and identifying current trends are all part of a solid marketing plan.

The sales and marketing plans are key components of a business plan.

Value Customer Service

Customer service can also be viewed as customer retention. Providing attentive services to existing customers, supports the sales and operations of the business. Consider a checklist that includes sound policies and procedures, and ways to assess customer satisfaction such as surveys and training of personnel to meet high standards set by the company.

Maintain Technology Proficiency

Since the digital economy is transforming businesses around the world, the assessment of the role of digital technology in a business is critical. Most technologies require an investment that may add significantly to startup costs. However, SaaS technology enables the use of technology via monthly subscription instead of the expense required for outright purchase.

Determine what skill set is needed in the business to be able to use the standard technology of the industry, particularly in the operations of the startup needed to deliver the product or service.  As a founder, evaluate your technology skills and then decide whether another individual such as a Chief Technology Officer or IT Manager is necessary to serve this role in the company or outside contractors should be pursued.

 Adapt and Innovate

Technological change driven by artificial intelligence and digital technology is occurring throughout business and society. In order for a business to remain competitive, it is essential they stay on top of new technologies being introduced into their industry.

Adaptability to the changes and being prepared to pivot the company’s strategy to deal with emerging challenges are critical for long term success. A business that is standing still—is moving backward relative to direct competitors.

Exit Strategy:

How is it possible to choose an exit strategy when you have not yet started a business? The key point is that in certain circumstances such decisions can be thought out in advance and be part of the long-term vision of the company.

One example is a pharmaceutical startup—which may be undertaken with the full intention that the company will be acquired by a large corporation.  Another example is a technology company in which the innovation causes an explosion of growth. With that hoped-for result in mind, the founders at the outset of starting the business may make early decisions such as the type of legal structure (LLC, C-Corporation, S-Corporation) that will work best for bringing in investors and potentially take the company public via an IPO (initial public offering).

Fintech entrepreneur David Hait shares how he successfully achieved an exit via acquisition by a private equity firm.

Typically, small businesses that grow in increments over a long period of time are exited via sale to an outside party or passed on to a family member. During the startup stage, consideration of the exit is generally not as important.  However, at a later date, the owner may bring in outside consultants to prepare the company for sale or to be transferred to a family member.

The Startup Competitive Landscape

Innovative ideas behind the startup of a business very often arise when someone identifies a gap or pain point that is not being met in the marketplace. Therefore, when assessing an innovative business idea or model, check out the competitive landscape in terms of the number of competitors, size of competitors, their access to resources to compete.

In contrast, when starting a small business, determine if the market is composed of large direct competitors to the startup or if there are a number of smaller niche players, of which your startup small business may be one. 

In the arena when there are large competitors, a small business should avoid competing directly on price—given the larger company’s resources to outlast a price war.  Rather, focus on quality and service to distinguish the business from those larger competitors, finding a niche or segment sufficient in size to pursue and be profitable.

All of the above is part of the market research that should be conducted to qualify the startup opportunity being considered and will later be part of a written business plan to go forward.

Become Knowledgeable about Legal and Regulatory Knowledge:

Given the broad range of startups, research is needed for any regulatory requirements such as licenses, registrations and certifications that exist at local, state and government levels.

In the technology and innovation areas, review requirements for protecting intellectual property such as trademarks, copyrights and patents.  There are law firms who specialize in intellectual property and can assist an entrepreneur with filings, as well as offer strategy.

Also, become familiar with various agreements that are commonly used in business such as non-disclosure agreements, and contracts, among others.

4. Planning and Strategy

Business Plan

The Business plan is the foundation for starting a new business. Plan templates are easily found on the internet offering different ones for a range of industries. Writing a business plan is a thoughtful process that covers the key areas of a business such as the startup’s mission, the founder’s vision, target market, competition, revenue model, financial projections, marketing strategy and more. Since it is a thorough process, it is a great way for a founding entrepreneur to learn areas of weaknesses that they can address early on.

When done well the business plan serves as a strategic tool and roadmap to start the business as well as a fundamental tool when fundraising from investors.

Financial Projections

Estimating startup costs is one of the more difficult challenges facing a founder. It is very hard for a startup to project into the future as to when they will begin taking in revenue and how much. As a result, many startups run short of cash over time, jeopardizing their viability.

In addition to revenue, the projections include all associated expenses projected over three to five years. That includes personnel hiring, product development, marketing, and operational expenses.

Projections are essential for fund raising from investors or obtaining a bank loan. While it is difficult to accurately forecast out over a long period, investors seek to know if the founder understands the financial essentials such as gross margins, customer acquisition costs, sales cycles and more that are specific to their industry and underly the projections being presented.

Working with a chief financial officer who has handled high growth startups can provide great insight on this process, while controllers and bookkeepers are relied upon for starting a small business.

Legal Structure

Establishing a business requires the selections of a legal structure: sole proprietorship, partnership, LLC, S-Corporation or C-corporation. The choice of structure affects liability, taxes, and regulatory requirements. Consulting with an attorney and an accountant provides the insight necessary to choose the legal structure best suited for the vision of the company in the future, particularly if the business is expected to be acquired.

Establishing the Startup Team

One of the fundamental decisions in starting a business is whether or not to have a business partner.  There are advantages and disadvantages for sharing ownership. Choosing a partner who has complementary skills is recommended, but consider very carefully whether ownership will be divided 50-50 because over time some partners contribute significantly more to the growth of the company.

First hires can also be a critical asset for a startup.  Bringing on personnel who share great passion for the business can take on key responsibilities that reduce the owner’s stress. Finding the right employee who also has an entrepreneurial mindset is very difficult, but they often work as if the company is theirs, but are not interested in the responsibility of ownership.

Company Culture

Many founders underestimate the importance of having a healthy company culture.  They also do not realize how their values and behavior greatly influence the culture that emerges as the company grows.  A great example of this is Sri Solur, CEO of Kenmore Brands, a guest on the podcast series Experienced Voices. Sri shares how he changed the culture of Kenmore Brands to re-brand Kenmore for the digital economy of the future.

To be a competitive company, a company needs to have a positive culture to attract the right talent.  Many employees will compromise on salary if they feel they have a stable position in the company and will have a satisfying role into its future. Ongoing training often keeps valuable employees who want to feel they are developing in their position.

When making first hires in a startup business, be aware of the values you are emphasizing within the company, evangelize the mission, and set expectations of what you want to achieve as a team. Diversity is found to be a positive contributor to the company because it brings in a range of other skills and different thinking that furthers success. What is most important is that you have the mindset to build a culture that it focused on success.

5. Funding Your Startup

Small businesses and startups have a range of financing vehicles available to them, but all require preparation to gain access. Here are alternative sources of funding for startups that change by stages of growth.

Investor Funding

Many startups are begun with the anticipation that outside funding will be needed in order to be successful. During the funding process they will seek out the support of angel investors, venture capital firms as well as crowdfunding platforms. They will utilize two common tools: the investor pitch and the investor slide deck.

The pitch is typically given when approaching an investor face to face. It is concise information about the startup to gain the investor’s interest and hopefully receive an invitation to a fuller presentation. While the investor needs to hear the basic information about the venture, they are most interested to learn why it is a compelling investment opportunity.  They want to hear what the expected return on investment will be for the high-risk investment they will make.

The investor pitch deck is a slide presentation that is typically given in front a group of investors that expands on the prior pitch made. The presentations follow a somewhat standard format and when presented the investors typically give an allotted amount of time that may be strictly adhered to. If the entrepreneur is serious about outside funding, it is very important that they spend time perfecting their pitch and their presentation. Practice sessions and critiques are very helpful to this process.  

If the pitch is successful, a number of steps are taken by the investors to do a deep dive into the startup.  As it becomes likely an investment will be made, the investors will conduct “due diligence” on the startup which verifies the information that has been presented and flushes out answers to their concerns.

Friends and family may be involved at the very beginning, but once the capital needs rise angel investors are next in line.  They are high-net-worth individuals who will make investments in startups.  Angel groups are a gathering of individual angel investors who serve as a collaborative of knowledge and money.

When the startup’s performance has gelled and shows its great potential, large investments are then made by venture capital firms which handle a pool of money from investor clients. High growth companies may receive an investment led by a venture capital firm with a group of other firms participating to reach a sizeable investment amount. 

Both angel and venture capital investments are made in exchange for part ownership of the startup or early-stage company. 

Another funding pathway for startups is crowdfunding.  These online platforms, overseen by the SEC, give startups a place to pitch their funding needs to individual investors. This route enables companies to reach their funding goals through an aggregation of small investment amounts in exchange for a defined amount of equity. Notable crowdfunding platforms include Republic, StartEngine and numerous others.

When taking this route assess explore a number of crowdfunding platforms to learn their merits and fit for your startup. Bill Santana Li shares on a podcast how he raised $120 million via crowdfunding and the other creative financial ways he funded his startup and early stage company.

Resource Government Grants and Programs

Government grants are potentially a great source of funding.  Federal grants are associated with federal agencies who post their grant programs on Grants.gov.  SBIR and STTR grants for science and technology startups are very well known and are accessed via programs run throughout the country, primarily through universities and colleges. Check out top small business grant programs to determine eligibility.

Grants also exist for those in underserved groups that includes women and minorities. A great example of a highly successful entrepreneur who tapped into a range of grant programs is Carol Craig, CEO of Sidus Space. She shared how various grant programs helped her start her company that eventually went public on the NASDAQ.

Bootstrapping

Bootstrapping is the term used to describe a company that has grown without outside investment. A good bootstrapping entrepreneur will have a mindset of finding ways to achieve results by being very cost efficient about the money they spend.

Some techniques of bootstrapping include bartering, sharing rental space, negotiating better pricing and more. Successful bootstrapping may delay the need for external funding, whether from the bank or investors.

When starting a business the founder should reflect on how they spend their money and how comfortable they are about negotiating with others. While bootstrapping helps entrepreneurs move their businesses forward, many eventually need outside financial support.

While many think of bank loans or investors for funding, a less known form of financing is factoring that enables companies to receive advances against their accounts receivables.  Robyn Barrett, an entrepreneur and factoring executive and guest on the podcast Experienced Voices describes how a business can obtain factoring financing for their business.  

6. Marketing and Brand Building

Strong Branding

Having a memorable brand identity is an important part of a marketing plan. Develop one through a combination of logo, brand colors and a voice that resonates with target customers. Consistency in presentation is necessary for building brand recognition. Udaiyan Jatar, former Coca-Cola Brand Executive and guest on the podcast series Experienced Voices shares his decades of experience building successful brands.

A Presence in the Digital Economy

The emerging digital economy that is transforming how the world does business and socializes needs to be considered as part of the marketing plan.  Address the fundamentals of an online presence through a professional website and active social media profiles. Digital marketing strategy is also fundamental, with search engine optimization (SEO) and content marketing as a way to draw in in customers through a funnel approach.

Setting up an appropriate size budget is key to creating the most effective online presence.

7. Launching and Scaling Your Startup

Value of a Soft Launch

A soft launch is similar to an MVP in that it is a limited way to test your product or service to obtain user feedback that enables the company to make any necessary improvements before the full launch. On a limited budget the product or service is introduced to small target audience, gaining their insight before committing to a full and costly launch.

Plan out the Marketing Campaign

Having well thought out and planned marketing campaign is instrumental for a success business launch. Fundamental to this is the use of social media channels, email marketing, and influencer partnerships, to reach your target audience. Establish a budget and a timeline for the rollout.

Scaling Your Startup: Pursuing the Scalable Business Model

How big can your startup become? Tech startup models often plan for rapid growth—utilizing outside capital to fund the rapid expansion of operations in support of growing revenues. They project out the revenue growth of the company over a period of years and then evaluate current operations to determine how to handle the growing demand so the delivery of orders is met.

The first step when starting a business is to analyze the potential sources of revenue that may occur, then determine what changes need to be made to scale operations to meet growing order demands. Labor intensive businesses tend to scale slowly, while technology companies typically scale quickly.

Continuous Innovation

The digital economy and AI are putting great pressure on companies across industries to adapt to the changes that technologies bring.  Companies must remain vigilant to impact of the latest technologies and innovations to remain competitive and relevant.

In order to do this, the company culture needs to embrace innovation, technology and change. A great example of this is Dr. Peter Bonutti who has over 500+ patents and applications.

Scaling Team and Operations

As a startup grows, it is important to assess hiring and operational needs. Hire additional staff, implement efficient processes, and invest in technology to support increased demand. As a company’s revenue grows and operations expand, an operating plan should be developed each year that lays out the operational changes to be made to fulfill growing sales.

Conclusion

Starting a business is a journey filled with great rewards and great challenges. By understanding the pluses and minuses of starting a business, the aspiring entrepreneur has a more realistic view of their entrepreneurial journey.

This Guide is foundational for any aspiring entrepreneur by helping them identify the numerous factors which impact their decision in selecting the right business to start and the elements that will make it a growing and sustainable business.

Jeanne Gray is a serial entrepreneur, having built three companies in three different industries. She is the founder and publisher of American Entrepreneurship Today and host of the podcast series Experienced Voices™.  She has received multiple awards including US SBA Journalist of the Year and NJBIZ Woman under 50 and was honored with a White House press credential to cover the Global Entrepreneurship Summit held in Silicon Valley.

She advises startups and businesses in various stages of growth through AEPConsulting.biz.