From the first spark of an idea to the first pitch to the release of a successful product: launching a startup is exciting but challenging, all at the same time. When you start, you can go for it and jump in at the deep end but having a strategy is the better option. We’ll show you which steps to take when you launch your startup and how to hit the ground running.
Definition: What is a Startup?
Flat hierarchies, great atmosphere, table football right in the office: There are many clichés that people think of when they hear “startup”. Whether they are true or not – the common definitions describe startups differently than the popular imagination does: young companies which put innovative ideas on the market.
They use a scalable business model with a high potential for growth. These are the most important characteristics that distinguish startups from classic company formations. Usually, they only have limited starting capital and personnel. Company age also plays a role: startups usually are no older than 5, sometimes also 10 years.
8 Steps for Building a Startup
Step 1: Launching With the Right Mindset
Success starts in your head – if you want to launch a startup, you need the right mindset. This involves the skill to handle uncertainties and to take certain risks.
New competition, financial difficulties, technical problems – founders must be flexible enough to adapt and muster the stamina to overcome difficult situations. The lean-startup method has established itself as the ultimate startup approach: As a first step, startups put a first version of its product on the market, a so-called Minimum Viable Product (MVP), as fast and as affordable as possible. Using customer feedback, they can optimize the product in a next step. This process is repatead until the product is ready for the market. The advantage of this process: Founders reduce the risk to lose time and money to a product that neither satisfies the target group’s needs nor solves a real problem on the market.
Step 2: Launching With the Right Business Idea
The next step also happens in the mind: Every startup starts with a great idea. Often, such ideas don’t come out of the blue but are the result of a structured process. The first and most important question: Which problem do you want to solve?
As long as there is no need for your idea it won’t have any success, no matter how creative and ingenious it is. Launching a startup does consequently not always mean re-inventing the wheel: Founders can use existing ideas to either improve upon them or re-use them in a new way. To recognize such potential, you should always keep your eyes open: trends in society, market surveys, or problems your friends encounter. There are many sources for gaining useful ideas. Have the courage to talk to people and find existing problems which you can solve outside your head.
Step 3: Launching With the Perfect Team
Every great idea needs someone that believes in it and makes it a reality. This is where a team of founders comes into play: Together, you develop a business idea, ideally with complementary skills. Because competencies play an important role when working together.
The principle is diversity instead of monotony. The essential factor is having different kinds of strengths combined in a team, both hard skills (e.g., commercial training or experience with sales and distribution) and softs kills (e.g., organizational talent or analytic thinking). It’s important that all founders share the same passion, because it’s important that a team can still work together effictively in difficult situations. Many investors consequently consider a great team to be more important than the business idea itself. So, launching a startup requires considering carefully who you want to work with.
Step 4: A Business Plan as Theoretical Foundation
Committing the idea to paper: The business plan helps founders to convey their vision and give it a structure. Chances, risks, measures, strategies, entrepreneurial goals – if you launch a startup, the business plan helps you retain an overview over every aspect.
The business plan ist most important during the financing stage: Investors are going to use your plan to gauge whether your business modele is convincing enough and whether they’re going to invest their money into your startup. Initially, a pitch deck or a business model canvas might be enough, but a detailled business plan is still valued very highly.
Step 5: Product Development
The product is the heart and soul of every startup since it essentially decides whether customers are going to invest money in your idea or not. Product development is about developing a product or service that has a concrete market value.
The prerequisite for developing a good product is an extensive analysis of the target group. Product development does not only involve technical development – design, packaging, pricing, distribution are all processes that are part of product development. These processes should be flexible; especially if you are launching your startup in an innovative environment, you should be able to react quickly to changing conditions on the market.
The means to do so are provided by the lean-startup method. Instead of painstakingly developing the perfect product, you first test a simple prototype (MVP) of the finished product on the market. Instead of developing a complex app, for example, you can build a first version through no-code-applications. The advantages are clear: minimal costs and less expenditure of time and personnel during product development.
Step 6: Choosing a Legal Form for Your Startup
When choosing a suitable legal form, you have to wrestle with various options. The German Company Law knows several types of legal entities that are usually only roughly comparable to entities on other countries. When forming a startup in Germany, there are, for example, the Personengesellschaft (~partnership) or Kapitalgesellschaft (~limited company) to consider, or the GmbH (~limited liability company) and GbR (~partnership under civil law). These are questions you have to deal with intensely, because whatever legal form you choose will have long-term impact: Not only does the legal form govern liability and taxation but also influences the basic cost and expenditure of your company formation.
Example: Investors usually only take shares from limited companies. Consequently, the Unternehmergesellschaft or the GmbH is the first choice for many founders. For some customers or business partners, a certain type of legal form might appear more serious than others. Therefore, the right legal form has a huge influence on the success of your business and should ideally be chosen only after intense legal guidance.
Step 7: Launching With the First Financing
Whoever wants to bring a business idea to life, needs money– some sooner, other later. Founders have many options to acquire funding for their startup. From classic bank loans to government grants to business angels and venture capital – there are many ways to apply for outside capital. Current alternatives like crowdfunding have also become serious options to consider for financing your startup. Even using your own funds, bootstrapping, is a way to make your idea into reality.
But most importantly: When choosing an option, you always have to consider the specific situation your startup is in. Rigorous financial planning is consequently the most central factor for choosing the right financing option.
Step 8: Launching With a Strong Network
Free of charge, yet invaluable: the right kind of connection can lead your startup to the next level. This does not only involve customers or business partners but also mentors or other startups working in the same industry.
The advantage: Through exchanging experiences with others, you gain important knowhow and new ideas that you can integrate in your startup. Social media aren’t the only way to establish contact: In education formats like our Founders Foundation Lab, many different founder teams exchange ideas and work together on their respective ideas. Large conferences are also a great network booster: At the Hinterland of Things Conference, 1.500 participants from the German startup scene meet every year. A great network can be built through many different methods.
The Specifics of Launching a B2B Tech Startup
In general, the steps mentioned above apply to all founders who want to launch a startup career. If you want to build a startup in the B2B tech sector, you should take into account some of the sector’s specific features. The first distinction is obvious: since your idea targets companies, you tend to have a smaller market.
For B2B tech startups, it is of utmost importance to find the right niche. Your product will generally meet a lower demand, but the profit margin is much higher. You shouldn’t forget, however, that your customers are more discerning and will need more convincing.
Different from the B2C sector, a company’s purchase decision is made on multiple levels. Trust and long-term business relations play an important role, even when you are marketing your idea. While B2C startups address their customers with emotional messages, B2B startups use more fact-based arguments and work on establishing long-term cooperation. Lastly, you should also pay attention to specific legal details when you want to launch a B2B tech startup.
For example, the consumer’s right to cancellation is replaced by individual contracts in the B2B sector. So, the sector which you want to target with your startup has a huge influence on your business model.
What Makes a Successful Startup?
There is no one true formula for startup success. As a founder, you always need some luck and the right timing. Also, there are always factors that are outside your control. However, there are several traits that all successful startups share:
- Innovation: whether it’s a groundbreaking product, a completely new manufacturing process, or an improved kind of service – innovation takes different forms and can give startups a decisive competitive edge. Also, no startup can truly call itself a startup without some innovation.
- Problem-Solution Fit: A lack of demand is one of the most common reasons why young businesses fail. You need to find a workable theoretical solution for an existing problem on the market.
- Product-Markt Fit: Put your theoretical solution on the market and get your product to the target group.
- Agility: Successful startups recognize change early and always adapt to evolving conditions. That way, they can retain their competitive edge and better control financial risks. The ultimate way to built an agile startup is using the lean-startup method.
- Network: A strong network is like a success booster for a startup. You might know your way around a certain field but every knowhow has its limits. The right kind of connections can open new doors for you and help you catapult your startup to the next level.
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