As an aspiring entrepreneur, you may have dreams of one-day building, growing, and running a tech startup. The idea of being your boss, making decisions that affect the success of your tech company, and nurturing your organization to success is a dream. However, how do you start a tech startup? There are countless blogs and articles on the internet that tell you what you need for a business once you begin. But how do you move from an idea to something that is physical, sellable, and marketable?
This blog aims to bridge that gap, taking would-be entrepreneurs from idea to creation, holding your hand along the way, and revealing secrets about entrepreneurship that you won’t find anywhere else. Starting a tech company can be incredibly rewarding, but the demands are great, and the anxieties are real. Get it wrong and try to do it all yourself can result in long-hours, burnout, and decisions you may ultimately regret.
However, in saying all of this, the most critical decision you can make when starting a tech company is to begin. Get started right away. If you’re waiting for the right time to launch, you’ll be waiting forever. Launching a tech startup is the best way to learn what you need to do. Build a product and continuously test it. Network with others to learn more about your industry and start sharing what you are doing. Creating a business and talking about it makes it real, giving yourself a fresh stream of daily motivation.
So let’s jump in. Let’s begin by answering some critical questions so you can start making that all-important jump into entrepreneurship sooner rather than later.
If your vision is to grow a multi-million dollar business, with employees, numerous clients, and projects, then a co-founder could prove a real asset.
Do you need a Co-founder?
Building a tech startup or any startup, for that matter, is no small feat. In that case, should you consider finding a co-founder? There is no one correct answer to this question. However, many people will have you believe that you cannot achieve anything on your own, and those people may be right. When you run a business with another person, you are essentially entering into a marriage. This person will be your confidente. Someone who is going along this crazy ride with you, so make sure it’s someone you trust and get along with. Someone with whom you can communicate easily.
Regarding whether you need a co-founder, let’s consider the pros & cons.
- Co-founders keep each other accountable
- They will motivate one another
- Each co-founder will bring something unique to the table
- Increases the number of connections in the business
- Co-founders share the risk and responsibilities
- A co-founder can broaden the wealth of knowledge in the business
- Bringing in a co-founder means you will have to give up equity in your business.
- They may not share the same vision for the business as you
- Tension and friction at the top of the business is terrible for the entire organization
- It will test your friendship/relationship (if your co-founder is a friend or partner)
- They could prove an expensive liability
Whether you need a co-founder is entirely dependent on how you intend to run your business and how big you want to scale. If you’re building a lifestyle business (a business that funds your lifestyle), then a co-founder may not be necessary as you won’t want to give up a % of the revenue that you live off. However, if your vision is to grow a multi-million dollar business with employees, numerous clients, and projects, a co-founder could prove a real asset.
What Is Your Value Proposition?
As Simen Sinek says, “start with why.” Your value proposition (VP) is the why of your business. Why are you building this product/service/organization? Who is it for, and what value can you provide them with? How does your product differentiate from the competition? For example, the VP of Slack is “Be More Productive at Work with Less Effort.” It shows its customers exactly what they will achieve by using its product showcasing the product’s value.
A VP is essential for several reasons;
- It gives you clarity as a business owner as to why you are building this product or service.
- It gives you direction and shows you what products and features to develop.
- It tells you how you intend to be different from the competitors, something vitally important in an ever-increasingly saturated marketplace.
- It speaks to your target audience, making them feel that your product or service has been created specifically for them.
When crafting a VP, ask yourself the following questions;
- What is your niche?
- How does your product provide value to the customer?
- What problems does it solve for your customer?
- What differentiates your product from your competitors?
How your product is different from the competition is a crucial question you must ask yourself as an entrepreneur. Do you intend to make something cheaper and therefore engage in a race to the bottom, or have you found a gap in the market you intend to exploit? Something we will be answering in the next section.
Whichever business model you choose, research into your market is key to finding out which will have the most significant impact.
What Is Your Business Model?
Choosing a business model is a bit like choosing what donut you want at Krispy Kreme. There are many different types of models to go with, but you should only choose one. Do you want to be a first-mover or be a disruptive innovator? Are you going to compete on price and volume, or do you want your product or service to differentiate significantly from the competition?
Choosing the suitable model will help guide you in the desired direction and force you to decide based on business strategy. Each of the above models has its advantages and disadvantages, so let’s explore them in more detail.
First Mover: As the saying goes, “the early bird catches the worm.” Regarding business, the cliche assumes that there will be certain benefits afforded to organizations that move first that will not be available to those that enter the market later. The advantage of a first-mover model is that it allows an organization to establish a dominant position that other firms then struggle to overcome. The disadvantage, however, is that it is a considerable risk since the demand for your product or service is not yet proven.
Disruptive Innovation: The business world definition of shaking up an industry. When pulled off, an innovative product or service that is disruptive can have devastating effects. Disruptive innovation refers to a product or service that threatens to replace the existing traditional offerings in a marketplace. The upside can be extraordinary, with disruptors setting the world alight and having free reign in an industry. The downside is that it’s heavy on research & development, which could increase your costs and provide a substantial risk. One of the most famous examples of a disruptive innovator is the iPad, which took on the behemoth laptop industry.
Cost Leadership: With cost-leadership, your focus is all on, you guessed it, cost. It’s a race to the bottom between you and your competitor to see who can offer the cheapest rates without coming across as too budget-conscious. Cost-leadership consumers are often more accepting of sacrificing product or service quality in return for something more affordable. Walmart is a prime example of a cost-leader. Cost-leadership can make companies extremely competitive. However, choosing this model will require a laser-like focus on making your company as efficient and streamlined as possible to protect those razor-thin margins.
Differentiation: Conversely, a differentiation model attempts to convince consumers to pay a premium for a product or service with unique features. Organizations following this model are keen to show their marketing and branding the unique features that make their product better than the rest. Apple is a market leader in this model, showcasing its products as the best in the marketplace. New annual features and materials that convince consumers their products are different from their competitors and therefore worth paying more.
Business models don’t stop there. However, you could also consider, Bricolage, Footholds, Blue Ocean Strategy, Fighting Brands, or even a Joint-Venture. Whichever model you choose, research into your market is key to finding out which will have the most significant impact.
Who Are Your Potential Customers?
Identifying your ideal customer base is necessary for startups. The reason being is that it provides focus on who you are building your product for, what pain points they are currently experiencing, and where your customers are located. Suppose you try and create a product or service for everyone. You will ultimately build something for no-one. To understand this quickly and in the early stages of your business will save you a lot of time and effort moving forward. Many startups fail to define their ideal users, which will create a big problem for them pre-launch.
So how do you identify your customer base? When starting a tech company, founders and investors of startups should begin by answering these questions;
- Customer Desire?
- Pain Point #1?
- Pain Point #2?
- What magazines do they read?
- What subscriptions do they have?
- What has their experience been in this industry up until this point?
- What is their background?
- What are their current skills, and why do they need your product/service?
- What part of the customer lifecycle are they in?
- What kind of product/service are they looking for?
- What do they want to achieve with your product or service?
When doing this exercise, start by visualizing the kind of person you want to attract and use your product or service. Giving them a name and even finding a picture on Google Images of what they could look like is a compelling way to provide you with clarity about who you are building your startup for. Even though you are not likely to get someone who perfectly matches your dream customer’s description, the exercise above will create a strong enough persona to attract the right kind of people to your brand while also showing you where they are located.
What About Project Execution?
Thinking about your idea is one thing, but to start a tech company is another. While your strengths may lie in leadership, management, and marketing, do you have the skills to code your product or service, something that is necessary when you start a tech startup? Building a tech startup is the sum of its parts, where you need a variety of tech skills in your team to build your product successfully.
Where do you find such a team? Do you need Project Managers? How can you be sure that your developers’ team understands the difference between coding an app or new tech software? Let’s go through each of these questions below, starting first with Project Management.
Do You Need A Project Management Lead?
An integral part of any business, project management is the link between the dreamers and the developers. Project managers have the tools and experience necessary to take your idea from notes on a page to a fully-fledged product within a set deadline. A good project manager can inspire, motivate and plan weeks ahead while maintaining budgets, managing communication and deliverables so you can be sure your product will be ready to ship on time.
However, in the startup world, many founders become project managers, taking it upon themselves to manage the development and timeline of their minimum viable product. If this is you, there are several excellent free software available to help you succeed in the early development stages. Such software includes; Asana, Trello, ClickUp, Monday.com, Backlog & Jira.
How Will You Build Your Products?
As we spoke about this here. When considering building your tech product, first, you need to decide how you will build it. Will you use a Minimum viable product development company or a team of freelance developers? Will you build it using the Agile/SCRUM methodology or ad-hoc? How about a Minimum Viable Product or a fully-featured product? Every tech startup has to answer these questions, and if you’re not sure how to answer them, then I suggest finding a co-founder and building a team to help you out.
Do You Need A Minimum Viable Product (MVP)?
A minimum viable product is a product that only has the primary or most essential features. It is the basic version of an app or software and includes the features the target users need. Companies, especially tech startups, prefer to release their MVP before the full-scale version. This allows them to determine the product’s viability and helps make the development process quicker and more efficient.
The MVP development process follows the “build-measure-learn” methodology, which means a tech startup can create an app or product and improve it as they test the market with their dream customers’ help. A tech company will build a product, release it to the market, and gather essential, invaluable feedback, which they’ll use to change and iterate the product to growth hack their way to success.
Whether or not you need an MVP is barely even worth asking. Trying to build a fully-featured product without testing your app or software product first could prove a very costly error. Trust us on this one when we say you need an MVP, and by starting here first, you’ll save yourself, your investors, and your customers a whole lot of headaches later on down the line.
Should You Build A Team For Your Product Development?
Every tech startup needs a team of talented tech passionate developers to start building an MVP. By bringing in a team of developers to help create your MVP first, even though your costs may increase, the hurdles, bugs, and issues you may encounter will decrease. You can be confident about the quality of your product or service because you’re bringing in experts.
When building a team, there several things to think hard about;
- Be sure about the kind of people you want to bring in. Not only must they be talented and have the right skills, but they must also fit the company culture and be easy to work with. You don’t want to build a team of egocentric developers who are tough to work with and often don’t understand your product or what you are trying to build. Successful companies can balance this step and always find the talent they can be around and have the technical skills necessary.
- Look to hire a range of talents and skills. Developers come in all shapes and sizes. Some have specialties in different coding languages, whereas others are experts in UI/UX. A successful tech startup will diversify its talent pool enough to reduce the number of technical problems it could encounter
- Hire people who are smarter than yourself. This age-old adage is a tricky concept to grasp for insecure entrepreneurs, but hiring smarter than yourself, will save you the time having to learn concepts necessary for your tech startup to be successful. Filling your startup team with competent developers, marketers, and experts is a sure-fire way to not only challenge you but improve your business immeasurably.
Think about your product or service as a forever evolving product. If you ever get to a point where you believe your software cannot improve, you’ve run into a severe problem
What’s The Best Way To Get Feedback?
When bringing a product to market, collecting feedback is essential for startups. Starting a tech business is a hard enough challenge, but doing so without your initial users’ feedback is a shortcut to failure. This is one of the most significant advantages of an MVP. A good MVP is always going to provide your business with solid feedback consistently to improve your product to your users’ benefit.
Once you have developed your MVP, launch it to a subset of ideal users so they can identify the bugs, what features they do and don’t like, and ensure the technical specs of your software are ready. When doing this, one problem to think about is your ego. Are you going to let your ego get in the way when you release your product? Creating a product makes entrepreneurs incredibly biased. It’s hard to think that your product or service may not know precisely what clients want. Yet, when it comes to building a tech business, there is only one opinion that matters, and that’s the customer. Keep your ego in check.
When it comes to testing your product, do it often. There is never an end goal. User requirements and demands will forever be shifting; your job is to keep up with them and create and develop your software according to user wants. Think about your product or service as a forever evolving product. If you ever get to a point where you believe your software cannot improve, you’ve run into a severe problem, and you’ll find that your business will begin to decline quickly. ABT – Always Be Testing.
Should You Start A Tech Startup In Stages?
Launching a product does not happen overnight. It is a long, drawn-out process, taking advantage of different sub-sets of customers ready to buy and try your product in various stages. The problem is, trying to locate these users to understand exactly what each type of customer wants.
This is why it’s necessary to roll out the product in stages, something an MVP can assist with. An MVP will always help make sure that your product is ready for the next set of users, all of which have varying degrees of acceptability regarding product quality. When developing an MVP, always consider the different stages your ideal clients are in. Doing so will allow your software to become better tuned to the user’s demands and benefit your tech business overall.
What Is An Early Stage with Early Adopters?
For a better understanding of the different customer segments, check out our blog post here. In the early phases for startups, Innovators and early adopters are vital clients in providing critical marketing and technical feedback. Early adopters and innovators are often young clients with disposable income, willing to take risks on new products, services, or software. The feedback startups gather from these early adopters can be the launchpad needed to help market their tech business to the more extensive customer segments that are less risk-averse.
How Will You Work On Your Marketing Strategy?
By answering all the questions above, you’ll now be in a much better position to start marketing your tech business. When looking to create a go-to-market strategy, it’s essential to think about the following areas of the business which will become the base layers of your branding:
- Color scheme
All of these will quickly provide an image for your brand which a potential user can relate to. Entrepreneurs must think about how to position their brand’s personality, often defining exactly what value consumers will achieve from their product and how it differentiates from the competition. By recognising who your ideal customers are, what value your product can have on them, where they are located, and using feedback from your MVP, your go-to-market strategy is much more likely to attract the more significant customer segments.
Do You Need Investors?
Finding investors to help fund your project can be extremely daunting. Not only do you have to open up your business to intense scrutiny, showing your forecasts, current financials, and operations, but the physical act of pitching and being grilled can quickly get scary. You also have to face the possibility of giving away a slice of your business in exchange for investment. While this can be a frightening prospect at first, when you find investors, it’s necessary to remember that with that money comes a wealth of knowledge and experience. Some investors give you their money, but they also bring with them their network and business intelligence which can be the difference between a tech startup that grows and one that does not.
The first step when finding investment is to create your pitch deck. You’re going to have to face the fact that you’ll need to put on a brave face and present your business and idea to a room full of influential people. Your pitch will need to sparkle and can sometimes be the difference between success and failure.
Next, research Venture Capitalists (VCs) that you’d like to work with. Go online and find the ones that match what industry you are in, those that have experience working in a similar market. Remember, a good VC will be able to connect you with people in the industry that can help your business grow, so you’ll want one that has an interest in your market. You can also start by reading blogs written by VCs, which set out to assist startups in navigating the VC world. Blogs such as Both Sides of The Table by Mark Suster & Vator News are great places to start.
Bringing people into your business to sit on your board is not a decision that should be taken lightly. There are other ways to fund your business, either by bootstrapping or getting a business loan from a bank. Both methods have their pros and cons. However, the wealth of knowledge, expertise, and connections that investors can bring to the table should not be understated. There is a reason why most highly successful companies today are all backed by an array of investors. It’s a great way to launch & scale your business quickly.
Who doesn’t want long and sustained success in their business? While there are several other factors to consider for the long-term, you can make sure that your startup and your team are on the right track to achieve success by answering all the questions above. Of all the points mentioned, using an MVP to test your startup product in a step-by-step process is not only going to benefit your users most but keep your developers happy also. For entrepreneurs, it can be hard to understand exactly what a user always wants. Still, you can be confident that your startup is on the right track through continuous testing and iteration.
In this article, we’ve discussed at length how to choose the suitable model and strategy for your startup, how to define your dream customer, whether or not you should consider taking on investment funding, and how to gather feedback. This is only the tip of the iceberg. A startup is a long process that requires extreme dedication and a determination to look failure in the face and work around it. Having the right talent, managing your cash flow, and considering the business’s long-term future are all key areas necessary for success.
A tech startup is an evolving project; it will keep you awake at night, provide extreme highs and lows and challenge you more than you can hope to imagine. But it’s also your baby, and like all parents, we want to see that baby grow into something we’re proud of. We’re willing to invest the time and effort necessary to keep our business surviving and by answering the questions in this article, you’re starting off with one foot forward already.