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How to Start a Startup: A Step-by-Step Guide

how to start a startup a step-by-step guide

This step-by-step guide will help you focus on what you actually need to do to start a startup successfully, rather than doing whatever comes to your mind without a system in place.

Startups are difficult to build because of the skills required and because of the large quantity of moving pieces that have to be managed. It’s not for everyone.  

In fact, 70% of venture-backed startups fail, according to CB Insights.  In addition, the overall startup failure rate is said to be up to 90%.

One of the most crucial things that startup founders neglect is they skip the first several steps to validate their startup.

Founders start building a product that nobody wants and/or the founder(s) don’t have the background and expertise to start a startup in a specific niche.  

In addition, CB Insights also states that the number one reason for startup failure is because startups create products that the market doesn’t need. 42% of startups are said to have done this.

This usually happens when they dodn’t perform their due diligence first. 

Founders put their time, money, and energy into the making their startup for nothing in return except experience to learn from.

However, you shouldn’t be like those ignorant people. You need to figure out if your startup idea is really worth pursuing and make something people actually need.  

Keep in mind that your life is more valuable than a startup idea. So don’t get discouraged if an idea doesn’t pan out. You’re better off not pursuing bad ideas and wasting yoru time and money.

Because of the above, it’s very important that you follow the best practices for building a startup from the beginning.

And in this in-depth post, we’ll show you how to do that here.  

Table of Contents

  1. Assess your level of expertise
  2. Figure out if you have the time
  3. Develop your startup idea
  4. Create a value proposition and unique selling proposition
  5. Can You Build Your Startup?
  6. Build your customer profile
  7. Do market research
  8. Do competitive analysis
  9. Distribution and acquisition channels
  10. Financing your startup
  11. Create your financial model
  12. Re-visit your idea, get target customer feedback, and determine if it’s worthy to pursue
  13. Perform a SWOT
  14. Get business partners
  15. Name your startup
  16. Get a logo made
  17. Build your website or landing page
  18. Set up your social media accounts
  19. Continue learning about entrepreneurship a little bit each day
  20. Building a minimum viable product
  21. Register your startup in your country
  22. Look for existing patents and file for one if applicable
  23. Learn how to use Google Analytics
  24. Test your hypothesis with your MVP
  25. Hand-pick your first customers
  26. Market your service or product
  27. Get press for your startup
  28. Get a bank account
  29. Start charging and make money
  30. Continue to work to obtain product-market fit
  31. Conclusion

Step 1: Assess Your Level of Expertise and Passion

 Assess your levels of expertise and passion for your idea, the niche from which your idea is from, and your ability to solve the problem that your target market has.

Tips:

If your expertise and passion for your startup idea are low, then don’t quit your day job to pursue it.

It’s important to be an expert in the niche from which your idea originates.

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Step 2: Do You Have The Time?

☐  Determine how much time you can devote to building your startup.

Tips:

If you’re working full-time already, then don’t quit your day job to build your startup.  It’s going to take a while to launch a full version.  Instead, you should put most of your spare time towards developing your startup idea and seeing if the idea is worth pursuing.

Be gladly willing to work on your startup for up to 10 years. Most full-time startup founders work 60 + hours a week, as well.  Being your own boss does not mean freedom. Rather, it’s just a different lifestyle choice.

It should excite the heck out of you to the point where all you want to do is work on building your startup on your free time.

Once your startup is operating well-enough to support you full-time and still turn a profit, then you can quit your day job.

Moreover, if you have great business partners to start out with, then you can start up quicker. Your co-founders will provide a lot more flexibility, productivity, and speed to everything you do.

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Step 3: Develop Your Startup Idea 

☐  Write down your startup idea and describe the problem you are going to solve for your target industry or niche.  

Tips:

Write what your core offering(s) will be (what you’re planning to sell). 

Think of your idea as a hypothesis so you can test it and see if it works.  There is a scientific method for building startups that align with your target niche.  This is called the lean startup model, and it was created by Eric Ries.  

Below, you can find an extremely helpful diagram of the lean startup methodology which was designed by KISSMetrics.  It’s the model for product development to start a startup.  

However, there are many bad startup ideas that even the lean startup model cannot save. So, make sure that you’re solving a problem that a sizable niche experiences.

lean startup methodology; how to start a startup

 

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Step 4: Create Your Value Proposition & Unique Selling Proposition (USP)

☐  Develop your value proposition and unique selling proposition to show how you provide value to your target customers and what makes your company uniquely suited for your target customers.

Tips: 

The value proposition states what value you are going to be able to provide your target customers. It also answers what problem(s) you are specifically solving for your target customers.

Your unique selling proposition includes your value proposition, how your business is different from the competition, and what make you unique.

Talk about the benefits of your product or service to your target customer first, and the features second. Show how you’re helping your target customer solve a pain point they have.

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Step 5: Can You Build Your Startup?

☐  Determine if you can personally build your product or service and website or if you need outside help.

Tips:

If you can’t build it or find anyone else that can, then there are, at times, workarounds to create mockups.

Mockups are the most useful when you’re in the process of validating your idea to potential users and/or for investor presentations.

Mockups can help you get funding to build your app, product, service, or site.  

Three great sites for creating mockups, wireframes, and digital prototypes are:

Programming

If you’re a programmer and you are able to build the software and site for a tech startup, then that’s great.  You will have a lot to learn on the business-side to build it up operationally and to market it properly.  Luckily, our startup development kits can help you with that.

If you’re not a programmer or web developer, then you will obviously need some help.  

Moreover, finding a good developer to work for equity is rare, but it happens.  

Learn how and where to find a technical co-founder via this guide, How to Find and Vet Startup Co-Founders .

However, without a technical co-founder, you usually will have to pay someone or an agency to build your website and/or software/hardware.  In that case, then you could check out the many talented programmers at TopcoderUpWork, or Toptal.

Don’t learn to program to build your product.  The learning curve is way too large to be able to do that successfully and you will probably fail.

Physical Products & Prototyping

In addition, for startups making physical products, you’ll need to make a prototype.  This article from Entrepreneur called Creating a Prototype from will help you understand physical product development better.  

Also, check out this guide to the best 3D printers from 3DHubs.

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Step 6: Build A Customer Profile

☐  If you don’t already know, figure out who your ideal customer is because your company will be based on what your customers want.  

Tips:

When you build out your customer profile, you’ll need to write down their pain points within their industry or niche so you can better understand what is important to them and what isn’t.

Pain is a feeling that creates emotion. If you can help alleviate some of their pain or eliminate it all-together then you are on the right track and are going to do well.

Develop your target customer profile with demographics, interests, likely professions, what kind of smart devices they use, and any other market segments they belong to. Notate if it’s B2B, B2C, or both.

For a better understanding of building customer profiles, check out this post on how to build your customer profile.

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Step 7: Market Research

☐  Perform market research to find out information about your market and its demographics.

Tip: 

Find out the market size by typing in your niche and then “market size statistics.”

It’s incredibly important to do your research because you have to find out if your startup idea is really worth pursuing.  

Furthermore, if your startup idea is indeed worth pursuing, then you’re going to need all of the research.  The research will help you when you write your executive summary, your marketing plan, your pitch deck, and for writing blog posts.

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Step 8: Competitive Analysis

☐  Perform a competitive analysis to find any competitors and write them in the competitive analysis spreadsheet.

Tips:

Search by keywords (1 to 2 words) and long-tail keywords (3 to 7 words) in Google, Bing, as well as in social media outlets.  The keywords would be the same keyword combinations someone would use if they were looking for the services or product your startup would offer. 

You also want to find out:

  • Where they’re located and how many locations they have.
  • Their social media metrics (such as followers on Twitter, likes on their Facebook page, if there are a lot of people retweeting and liking their tweets, and a bunch of people liking and commenting on their Facebook posts).
  • And if they have any AdWords or Display ads on Google when you’re doing keyword searches.

Moreover, if the market is too crowded with competitors who are established in the market and your startup idea doesn’t have a major differentiator with a unique selling proposition, then you should not move forward with your startup idea. They will easily outcompete you.

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Step 9: Distribution & Acquisition Channels

☐  Determine where and how your product or service will and can possibly be sold (physical &/or digital).

Tips

Think about the physical geography, the digital landscape, if the product needs packaging, or if the product will need to be sold in stores, or online stores, or just your website.

Distribution channels for physical products:

  • Your own store
  • Delivery
  • Chain stores and independent stores
  • Buying via your website
  • Purchasing your product via Amazon

Distribution channels for digital products:

  • Your website
  • Your app
  • Mobile app stores
  • Online retailers
  • Partnering websites

Acquisition Channels:

  • Anywhere your target customers gather
  • Joint-venture relationships with influencers in the industry and getting them to email the subscribers in their list to market your product or service. Usually, affiliate compensation is provided to that influencer.
  • Social media
  • Facebook groups
  • Paid ads
  • Twitter
  • LinkedIn
  • Connect in groups and with others via searches or introductions
  • Instagram
  • YouTube
  • Google +
  • Tumblr
  • Pinterest
  • Product Hunt
  • Public Speaking
  • Featured articles about you by press
  • Your website — using great copy and lead magnets

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Step 10: Financing Your Startup

☐  Determine how much money you can devote to building your startup and if you need outside investment to build and grow it.

Tips: 

Devote between $2,000 and $15,000 USD of your own money, but be frugal.

Try to be self-funded as long as possible.  Seeking money from investors implies that you’ll be giving up equity in your startup. Most of the time, you’re going to want to hold on to as much equity as possible.

If you have no expertise in product development or software/web/database development, then you will need to pay a manufacturer or developers to build it.

Where can you get outside money in the beginning?

  • Friends and family fundraising
  • Crowdfunding campaigns
  • Sponsorships
  • Seed-stage/early stage venture capital firms
  • Angel investors

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Step 11: Create Your Financial Model

☐  Build out financial models using Excel to see how you’re going to make money with your startup. 

Tips:

Include any overhead and fixed costs you have in that model, including a marketing budget, and roughly project future salaries.

Create several pricing strategies so you can see how the different financial models work.

Remember that this financial model is exploratory so you can find out if your startup idea is worth pursuing. It’s an essential element in how to start a startup, but you don’t need to have an insanely detailed spreadsheet.

Gross profit is how much money in sales you get.

Net profit is how much money you have left over from sales after subtracting all of your costs.

Your startup idea needs to sustainably make money and create net profit.

Ad revenue is unsustainable for a startup 99% of the time.

You want to have at least a 40% net profit margin so you can continue to expand.

Don’t even worry about how much market share you should aim for.

What matters is how you can improve your growth rate week over week and month over month.

However, you won’t convert every website visitor into a customer, so you have to take that into account. You should aim to convert between 5 to 10% of your new visitors into leads, and around the same percentage range for your overall leads because there’s attrition.

Depending on your pricing strategy, if you can consistently reach those conversion rates or do better, then you’ll probably have a sustainable business.

Moreover, when projecting revenue for the first two years, factor in how many customers you expect to get per month, based on percentage ranges of your traffic. To learn more about what assumptions to have for a startup financial model, check out this article.

I recommend you check out the article on Medium called SaaS Financial Model: Simple Template For Early-Stage Startups.

To gain a more detailed understanding of financial modeling for startups, check out this article by SlideBean and download the spreadsheet provided. Warning: the spreadsheet is complex.

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Step 12: Re-Evaluate Your Startup Idea

☐  Re-evaluate your idea to determine if your idea is plausible after the competitive analysis by seeing how saturated the market is based on market share and market size.  

Tips

If your idea holds up, then find your target customers through social media or other places you know they gather and ask for their opinions on your startup idea.

Ask if your target customers would buy the service at the costs you mention.  Ask them if it would be indispensable to them.

An internet SaaS startup that targets small market sizes less than 10 million people are much less likely to be worth pursuing, especially if you’re looking for angel or venture capital financing. Moreover, it’s important to be able to make money with your startup, though, without investors.  

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Step 13: Perform a SWOT

☐  Conduct a SWOT analysis on yourself and the business idea to better understand yourself. SWOT stands for strengths, weaknesses, opportunities, and strengths.  Check out the diagram for it below.

Tip:

A SWOT is only applicable for your company when you have market data. To do this on yourself requires you to be open to analyzing yourself, but it’s very useful.

To do this on yourself requires you to be open to analyzing yourself. However, it’s very useful.

However, it’s very useful in finding your weak areas.

SWOT Analysis on a XY graph with strengths on the upper left quartitle, weaknesses on the upper right quartile, opportunities on the bottom left quartile, and threats on the bottom right quartile. SWOT is a great way to help you when you are learning how to start a startup

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Step 14: Get Business Partners

how to start a startup - get business partners

☐  Look for business partners with complementary skill sets with minimal skill overlap.

Tips:

If you’re a business developer, look for a technical co-founder, and vice versa.  

You can look for co-founders on LinkedIn, CoFoundersLab, Equity Directory, Angel List, and people you may already be friends with that have the expertise you need from a business partner.

Don’t just jump into a business partnership.  

Rather, take some time to make sure you are both on the same page with expectations, company culture, equity allocation, company direction, etc.

Importantly, make sure they have a good personality and are someone whom you could get along with well and spend a lot of time with.  Be prepared to work with them for ten years.

For more information to help you on this journey, you should check out this post How to Find and Vet Startup Co-Founders and get your copy of Startup Survival Secrets, which goes in more depth than anything else.

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Step 15: Name Your Startup

☐  Pick a name that has something about your product/service’s core offering within the name.

Tip:

The best place for you to do this is by searching on http://GoDaddy.com.

This process can take a while but it’s quite worth it when you find something that fits perfectly with your startup.  

Picking a name that has its pertinent category in it will help customers identify your product/service with you and drive more sales.

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Step 16: Get a Logo Made

Get a quality logo made by a graphic designer. Try to make it fit into a square because of the nature of internet icons.

Tip:

You can make your own logo at https://logomakr.com/.

If you don’t like Logo Maker, be resourceful by searching on google to find another company or person that makes logos.

That site was found by googling “logo maker.”  

You can go to Fiverr and hire a freelancer to do it for $5 or more depending on extras that you may want.

Additionally, there are other great sites like UpWork, Gigster, or 99 Designs.

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Step 17: Build Your Website

☐  Build a basic website that describes your future product offerings and make a landing page with an email signup.  

Tips:

WordPress is an amazing free website-building tool that has its own comprehensive content management system.  

You can pick from thousands of free website themes to style your website and hundreds of thousands of plugins to enhance the usability of your website.

However, you’ll need to use a web server hosting company to host your website and there is a learning curve for WordPress & for hosting servers.

Other options are to check out these top landing page builder articles by CrazyEgg & Neil Patel.

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Step 18: Social Media Account Setup

☐  Set up social media accounts so you can reserve your account names before other people get the same idea and snatch up the usernames.

Tips:

If you’re not a graphic designer, then check use Fiverr to find someone that can make social media banners for you.

Alternatively, you can use one of the other previously suggested sites to find someone else to make these banners.

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Step 19: Learn More About Entrepreneurship

☐  Start reading books on entrepreneurship for one hour a day or watch videos, listen to audio interviews/lessons, listen to podcasts…just always keep learning.

Tips:

You can “kill two birds with one stone” by listening to pertinent podcasts or audio interviews while exercising.  

Learning keeps you grounded and constantly on the path to improving yourself and your startup. Without learning, you become stagnant.

And, as a founder, you need to constantly do other tasks that you’ve never done before.

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Step 20: Build a Minimum Viable Product

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☐  Your minimum viable product is meant to be something that will assist you in validating your product/idea with customers early on.

Tips:

You’ll need a minimum viable product (MVP) to start out.  This basically means it’s a barebones version of what your full idea is supposed to be.  

Write out the framework of your product or service. Write what the main aspects of it are.

Detail how you want it to work.

Then, find out how you can make that happen in a stripped-down way to test your hypotheses further.

Remember, your hypothesis is going to be about solving a pain point for your target customer.

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Step 21: Register Your Startup in Your Country

☐  You should register as a corporation, LLC, or LLP (USA Only) once you start seeing lots of users signing up and talking about your product/service.  

Tip:

Legalzoom.com offers basic services for registering your startup, but they’re not as comprehensive as you might want it to be.

Cooley GO is an amazing free resource for startups to learn about the legalities of starting a corporation, LLC, or LLP. It was created by the law firm, Cooley LLP, and they have extraordinary lawyers for startups. Cooley has 900 lawyers across 12 offices in the United States, China and Europe.

However, Cooley GO has one-upped Legalzoom and other incorporation services and made this free Incorporation Package Generator.

As per their website:

The Cooley GO Docs Incorporation Package Generator allows you to generate any or all of the following documents:

  • Action by the Sole Incorporator
  • Certificate of Incorporation
  • Bylaws, which automatically includes: Certificate of Secretary confirming adoption of Bylaws and Indemnification Agreements for each named Director
  • Employee Confidential Information and Inventions Assignment Agreement
  • Initial Action by Directors (Unanimous Written Consent)
  • Restricted Stock Purchase Agreement, which automatically includes:
    • Technology Assignment Agreement
    • Stockholder Consent to Receive Electronic Communications
    •  If the stock is subject to vesting, the following will also be included:

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Step 22: Get Patent(s)

☐  Look for any existing patents that may prohibit your product from being built. 

Tips:

You might want to schedule a free consultation appointment with an intellectual property, patent, and copyright lawyer (most first-time appointments are free of charge).

See if your product/service violates any intellectual property and patents or if you need specific licensing rights from other companies in order to sell it.

Do the research because you’re better safe than sorry.

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Step 23: Learn How to Use Google Analytics

☐  Sign up for Google Analytics and Google Tag Manager for your website.  

Google Analytics is going to be an integral part of your strategy to obtain product-market fit and growth hack your company to success.  

Why? Because the only way to scientifically growth hack is to use analytics to measure and analyze the results of your campaigns.

Tips: 

This is a golden nugget for you.  You can learn all about how to use Google Analytics through free courses by Google!  It’s called the Google Analytics Academy.  Access it HERE.

If you’re using WordPress, you can download a plugin for Google Analytics and it will place the code on every page of your website.  You want to make sure you’re measuring as much as you possibly can.

If you’re not using WordPress, you can search on YouTube “How to set up Google Analytics on your website/android app/iOS app” or about any other questions you may have regarding it.

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Step 24: Test Your Hypothesis Using Your MVP

☐  As you start marketing, this is going to be considered your first real test of your hypothesis of whether or not your MVP is going to get traction for you.  

The traction is going to be considered how many signups that you’re going to get as well as the amount of users that are signing up per day/week/month.

Tips:

Your goal is to get product-market fit where 40% of your paid users basically say that they “can’t live without” your service/product or it becomes indispensible.  

When you have reached this goal, you have successfully growth hacked your product.  

Usually, the process to getting to attaining this 40% goal is also called growth hacking, by measuring your marketing actions with split A/B testing and measuring conversion rates.

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Step 25: Hand-Pick Your First Customers

☐  Hand-pick your first customers. You can find them on social media or through their websites and contact them via email.  

Tips:

Show value to your customers by initially offering your service for free so there’s a low barrier to entry. Then, get feedback on your product/service from them.  

However, you can also get feedback from your users that pay, too.

A great article to illustrate what is meant by hand-picking your customers is by a famous entrepreneur, Paul Graham, called “Do Things That Don’t Scale,” check it out.

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Step 26: Market Your Product or Service

☐  Start your marketing and focus on marketing on one channel very well, like Facebook, Twitter, LinkedIn, or Instagram.

Tips:

You can also market by using Google Adwords & Google Ads.

Tout the benefits your target users will receive more than the features you have with your product or service.  Show them how you’re going to improve an aspect of their life.  

Facebook converts the best and has the most users on it.  Your goal should be to bring as many people back to your landing page to sign up to your email list/newsletter as possible.

One of the best ways to bring visitors to your landing page is by creating something valuable and free for your target audience in exchange for their email address.  It could be some sort of guide or template or checklist like this.

While you want people to sign up to your email list, you will be also want to keep a close eye on the number of visitors.  Provide as much value as possible to your target market and they will be much more likely to sign up to your email list.

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Step 27: Get Press For Your Startup

☐  Contact members of the press to feature your company to their audience.

Tips:

Make sure you’re writing information that’s going to be relevant and interesting to the audience of the publication.  Don’t do email blasts with your press release!  This is NOT how to get press.

Instead, you should email each reporter individually.  

Communicate like a human being and show value to the reporter that you’re contacting. Show them that you have relevant information that their audience would like. If they ask for more information, then give it to them, but keep it concise.

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Step 28: Get a Bank Account

  Go to the bank that has the best combination of convenience and account perks.

Tips: 

To do this in the United States, you will need to file for an EIN, or employer identification number.

You can do so quite easily online and get it within minutes.  

You can find the link to the page here.

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Step 29: Make Money

☐  Charge money for your minimum viable product or do pre-orders for your product/service.

Tips:

Shoot for, as your minimum baseline, and hope for 5% to 10% of your visitors to convert into leads. More than 10% is above average.

The best way to achieve that is with better copywriting.

Email is the best converting medium for sales. They’ve warmed up already. It’s up to you to make the sale after that.

Learn more about how to do this with our startup development kits.

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Step 30: Work to Obtain Product-Market Fit

☐  If you’re not hitting your target marks, keep tweaking your content, features, and UX/UI. 

Tips:

Measure those tweaks via analytical testing methodologies such as A/B testing and multivariate testing.  This is the act of growth hacking.

If you change everything at once your data will be skewed.  The best approach is by tweaking and measuring one thing at a time. Learn more about how to growth hack, check out this post on How to Growth Hack Your Startup.

StartupDevKit SDK content bufferConclusion

This post has shown you the process of how to start a startup using the lean startup model. In addition, it gave you a checklist of steps to cover. In recap, here are the steps:

  1. Assess your level of expertise
  2. Figure out if you have the time
  3. Develop your startup idea
  4. Create a value proposition and unique selling proposition
  5. Can You Build Your Startup?
  6. Build your customer profile
  7. Do market research
  8. Do competitive analysis
  9. Distribution and acquisition channels
  10. Financing your startup
  11. Create your financial model
  12. Re-visit your idea, get target customer feedback, and determine if it’s worthy to pursue
  13. Perform a SWOT
  14. Get business partners
  15. Name your startup
  16. Get a logo made
  17. Build your website or landing page
  18. Set up your social media accounts
  19. Continue learning about entrepreneurship a little bit each day
  20. Building a minimum viable product
  21. Register your startup in your country
  22. Look for existing patents and file for one if applicable
  23. Learn how to use Google Analytics
  24. Test your hypothesis with your MVP
  25. Hand-pick your first customers
  26. Market your service or product
  27. Get press for your startup
  28. Get a bank account
  29. Start charging and make money
  30. Continue to work to obtain product-market fit

The top reason startups fail (42%) is that startups make products/services that the market doesn’t need.

The single most important thing you can do for yourself and your (potential) startup’s future is to make sure you have a good idea.

Work hard, stay positive, be focused on your goals, and you will win. 

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