The first step is done! You finally have a great idea for a startup. The next step is to take your idea and turn it into reality. You develop your product and complete your business model. As your business grows, it is time to take advantage of outside resources and keep some important things in mind.
A startup venture can be helped with outside resources in many ways. Sometimes, it provides the necessary capital outside from friends, family, and even crowdfunding. For example, UNLV’s Rebel Venture Fund (RVF) provides investments in early startup companies between $25,000 and $50,000. Not only do VCs and Angels invest money in companies, but they provide resources and expertise that will help your startup grow. In our case, the RVF gives portfolio companies access to a variety of campus resources as well as highly experienced board members. A venture capital firm supports your company in many ways, but what are the signs that you are ready to start one?
“The best entrepreneurs know this: every great business is built around a secret that’s hidden from the outside.” – Peter Thiel, author of Zero to One
When exploring a startup venture, it is important that you have a great business idea; one that can start off strong and exponentially grows your business. To do that, your startup needs to have competitors while also standing out from other startups.
Paypal, one of the best examples of a successful startup, initially created an online payment tool with many powerful competitors. Unlike its rivals, Paypal’s simple software and its secure system allowed it to beat its competitors. Another successful startup, Airbnb, allows people who do not want to pay high prices for a hotel room to rent rooms inside private homes which can be cheaper and more convenient. Both startups saw an opportunity where no one else saw anything and they took that great idea to a new level. Your great startup idea should be the next big thing!
“We must learn what customers really want, not what they say they want or what we think they should want.” – Eric Ries, author of The Lean Startup
Your competitive startup needs to show that there is a market for the product or service. The demand for the product goes back to the startup idea. At the start, Paypal’s target was Ebay, and it found out what Ebay customers really wanted. Uber started out when two entrepreneurs had a difficult time finding a taxi in Paris and wanted something more convenient. What did they both have in common? Both Paypal and Uber focused on a specific market and later did they begin taking on other markets. Today Paypal works with different companies and Uber is experimenting with self-driving cars; both at different places from where they initially started. A startup looking to work with a venture must show that they are targeting a specific market and that they are planning on conquering that market by meeting consumer demand.
“The importance of a comprehensive, thoughtful business plan cannot be over-emphasized.” –William B. Gartner, entrepreneurship professor at Clemson University
The business plan is the best sign that a startup is ready to explore a venture. It means that you have done your homework and are committed to growing this startup. A business plan tells everything about the startup from its location to concepts to its plans. The more detailed the plan is, the more likely the business will succeed because you understand your competitors, goals, and customers. The research involved in writing a business plan forces you to ask questions about your startup such as:
How large is the market size? How is my startup different from other competitors? What is the startup’s valuation? The business plan also shows how much time the entrepreneur has put into the startup, thus proving that you are serious about this expedition.
The worry for most entrepreneurs is: What if I don’t correctly predict the future? The chances of successfully creating a plan that outlines the future are low, but it is still important to have one since it shows that you have given your startup extensive thought.
After you answer these questions and more, you can focus on finding the strengths and weaknesses of your startup. Understanding your weaknesses and failures shows that you are willing to take responsibility and learn from others. Jack Ma, the founder of Alibaba, failed numerous times before opening his successful company. It is alright to fail if you learn from previous mistakes. Investors like to refer to the business plan as a map because it will show you the trenches and the clear roads to your destination; the only way you see them on the map is if you study the terrain closely. The more time you spend on carefully drawing the map, the more likely you will be to reach your destination safely.
“Coming together is a beginning. Keeping together is progress. Working together is success.” –Henry Ford
What makes a perfect startup team? The startup team needs to work well together and share a common vision for the company. One of the signs that you are ready to explore a startup venture is having an elite team around you that is not looking after its self-interests but at making the startup successful.
A startup will most likely encounter problems along the way, and it is important that the team communicate and adjust accordingly to each scenario. As Peter Thiel states, “a startup is a team of people on a mission,” and the team of people makes up a “mafia.” Your startup team should serve the mission it is trying to accomplish; the mission defined in your business plan. A good sign of a startup being ready to explore is having a passionate team with clearly defined tasks for each member.
Remember that other members should only be on your team if they are as devoted as you since there are other places out there that pay a good salary; no one should be working at your startup only for the money. Tony Hsieh, CEO of Zappos said, “Chase the vision, not the money; the money will end up following you.”
Exploring a venture is beneficial for the startup, but at the same time, there are steps to be taken to ensure that you are successful. Every extra step you take towards planning minimizes your frustration and wasted time. Your goal as the leader of the company is to complete the mission whatever that may be while minimizing risk. Success does not come without a price. It takes great time and dedication to ensure that you are ready for a startup venture, but once you are ready, it can be very rewarding.
About the Author
Leonardo Georgescu is a full-time undergraduate student pursuing a degree in Mechanical Engineering at UNLV. In his free time, Leonardo looks at various businesses and tries to learn from their mistakes. His strongest passion is helping a business grow to better serve the community. Leonardo hopes that one day he can use everything he has learned in the Rebel Venture Fund to build his own startup.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of RVF or UNLV. In addition, thoughts and opinions are subject to change and this article is intended to provide an opinion of the author at the time of writing this article. All data and information is for informational purposes only.