Categories: Startup

3 Stages For Creating A Startup

STAGE 1: VALIDATING A STARTUP IDEA

1. Build a website and not a business plan

Honestly, instead of writing out a 20-page business plan for your startup. Try making a website instead. There is probably no better way to put your thoughts together. What I love about websites is that instead of the theoretical B-plan, you immediately need to become a salesman. You need to sell your vision to a customer in layman’s terms. So cut the jargon you use in your ‘operation plan’ section and try selling your ‘idea’ by conceptualizing it first.

2. Talk to everybody you know about your idea

We sometimes tend to guard our ideas. Don’t. Talk to people. Hear feedback. It helps build your vision. It will open your eyes to things you were not aware of. Just walk up to people and ask them for feedback. Always helps.

3. Talk to potential customers. Understand them.

Customers are people whose problems you are solving. Talk to them. Understand them. Just approach them for a focus group. It always helps.

4. Do NOT talk to investors.

Sorry to break the truth -but no one will fund an ‘idea’. Well unless you happen to be Steve Jobs or Jack Dorsey. Or your dad just happens to be a rich industrialist. So if the above doesn’t ring a bell -wait in line with the rest of us mortals, guys!

STAGE 2: TRANSITION IDEA TO BUSINESS

1. Find an anchor client or your first set of users

Notice that I didn’t say build your product here. Don’t. Now after you’ve finished talking to your potential customers, go back to the drawing board and figure out how to solve their problem. Now, pick a piece of paper and draw out an ideal solution. Use Photoshop and build out some mock-ups, or better still a prototype that takes a day. Now go back to them, and ask them what they think.

Would your product solve their problem? Depending on what kind of business you building ..if you are building a user-intensive business (for example: PayPal needed users to use their product and grow to love it before they charged for premium features) – ask them if will they use your product.

How often? How fast? What features are most important to them? What don’t they care about? If you are building something that people would pay for right from the start: Ask them to pay for building your product. Keep doing this till you find someone who would pay for your product (even if they don’t pay a lot….get them to be invested in you! ) Now, once you know who you are building your product for. Build it!

2. Build. Deploy. Rebuild.

Test your product. Get your initial users and customers to give you feedback. Crowd-source feedback. Rebuild your product. Test more. Reading the Lean Startup is highly recommended.

3. Develop your scaling strategy

Now that you’re in a decent place with some good results from your pilot…. Figure out how you’re going to scale. Get some more customers. As you sell to more people, you’ll be able to develop your vision for your company.

4. Talk to investors. Just don’t ask them for money.

Always talk to investors – tell them what you’re doing. Tell them what you’re building. Keep them updated on your progress.

It’s always alright to say “We’re not raising money right now, but we will be sometime soon. We’d love your feedback on what we’re building.”

STAGE 3: START SCALING

1. Search for the right hires

You and your co-founders have done a great job if you have reached this stage. Now, who is going to join you in changing the world?

An important thing that investors look for is.. Do you have it in you to attract awesome talent to your company?

2. Figure out where you want to be in 2 years time

2 years later, I want to have 100 clients, 4 crores in revenue, the market leader in xxx. Etc. Break this into quarterly goals.

To get to these quarterly goals, how many people will you need to hire each quarter? (This is mostly going to be wrong, and everyone knows that. But, it’s always good to have a plan!)

3. Figure out how much money you need.

Yes. This is where your B-school financial Excel sheets help. If you never went to business school, just sit down and think rationally about what you might need to get where you want to get in 2 years’ time.

4. Talk to investors and ask them for money

Tell investors exactly why their money is important. If you need funds for a clinical trial, for instance, say so, and specify how much you will need.

Good luck with your Billion Dollar dream as I get back to working on mine!

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