The life of the entrepreneur is defined by big goals. There is little as rewarding as pursuing a big goal. Challenges don’t make this less exciting, they heighten the sense of jeopardy and adventure. The defining fact of entrepreneurship is that execution is everything for a startup launch. Everyone has good ideas. Getting stuff done, achieving goals, is much harder. Turning an idea into a profitable and growing business is the most challenging aspect of entrepreneurship. In this article, we will discuss the key things that you need to do to get your startup off the ground.
Survival is the first goal and that is a hurdle that most businesses do not attain. Only 78.5% of small businesses survive past their first year. Furthermore, research has established that:
- Less than 50% of businesses survive to their fifth year.
- Only 40% of new businesses ever become profitable.
- 82% of failed businesses fail due to cash flow problems.
So how do you survive and after that, become profitable?
Develop a Business Plan
The first thing to do is to plan. Failing to plan is planning to fail. You need a business plan. The simple act of writing a business plan dramatically increases your odds of success. Research shows that there are many real-world benefits of creating a business plan. For instance:
Of the entrepreneurs who developed a startup launch business plan:
- 36% secured a loan.
- 36% won investment into their business.
- 64% were able to grow their startups.
Of the entrepreneurs who did not have a business plan:
- 18% secured a loan.
- 18% won investment into their business.
- 43% were able to grow their startups.
Firstly, your odds of securing funding are greatly affected by the type of business structure that you choose. Generally, you are less likely to secure funding if your business is a sole proprietorship. You need to start an LLC, or incorporate your business, or open a partnership. Sources of funding are more likely to back your venture if your business is an LLC, corporation or partnership.
Exactly how much you need depends on the industry. You’’ know how much capital you need once you have completed your business plan.
Build the Right Team
Even the greatest entrepreneurs need great teams. You cannot build a great business with a bad team. In advising entrepreneurs, Marc Andressen highlights the importance of having a great team. According to Andressen, the product is only 10% of what a great company is about! Great companies are about people and product-market fit.
Find the Right Product-Market Fit
If your business is in a great market, and your product meets the demands of that market, your business can survive almost anything. Product-market fit has been called, “the only thing that matters”. Every business needs innovative products, great people and big markets. Those are crucial to startup launch success, but only one can’t be changed: markets. If there is no market for your product, it doesn’t matter how great your product is. You can always change your team, but you can’t change your market. Markets are the thing that you can’t change, and the thing which, when you have it, can overcome bad teams. Understand product-market fit and your path to success will be that much easier.