90% of companies close in the first year after opening. Another 3-5% - in the second. Moreover, the business plan was perfect and things went well from the very beginning. But suddenly a successful start failed ... It is good if there are no loans and other debts left, but only unjustified hopes. Is it possible to start a business using a brilliant business idea and not fail? Is it possible to start a business really without investments? How to develop startups in Russia? The most useful tips, proven and justified, you will find in our article.
What is a startup
Before discussing effective approaches to the development of a startup, you need to understand what it is. Some people think that a startup is just a beginner’s business. Another mistake: some people think that a startup is government support for an idea, a cash subsidy for prospective entrepreneurs.
Startup is not only a starting business. And not a government subsidy. This is a company that can grow larger, has the ability to scale and is able to attract investors.
A local store is also a business. It can be profitable, but it is a business for life. Not a startup. Although there are exceptions when stores became a network.
Opinions are found that startups and businesses have different goals and objectives. The idea of a startup is to test a hypothesis. The idea of a business is to scale a proven idea.
What is a startup? To summarize, we can formulate a definition: a startup is the first step towards a business that is stable and capable of growth.
Misconceptions and Mistakes
If you don’t know where to start a startup, start by studying the mistakes of others. Of course, each business may have its own set, but here are the most common ones:
- a startup is based on an idea ahead of sales;
- a lot of money was spent on the situation in the office, on the rental of premises, the purchase of office equipment and so on - this is money invested without calculation;
- a friend becomes a partner - the likelihood of business disagreements is too high; advised to look for partners, and not make them friends.
What to focus on
The initial stage of a startup is to sell an idea. It is necessary to determine the hypothesis. For example: "I want to sell chairs." The next stage is testing, that is, directly selling chairs. If there are problems with the product - promote the product more actively, if with the flow of customers - do marketing. The formulated problem is already largely the answer to the question of how to cope with it.
It is also important not to miss the time of scaling. A clear understanding of the client segment will help diagnose this step.
It is common for a novice businessman to fail on the same sale of chairs. And instead of analyzing mistakes and starting all over again, the entrepreneur chooses another product. They advise the opposite: return to the hypothesis and sell chairs again, correcting the shortcomings of past experience.
Moreover, at the first stage, concluded transactions will be more important than profit.
If everything goes well, you need to plan for growth. And here it is necessary to calculate two numbers: how much the client costs and how much he will bring to the company. For example, you invest 1,000 rubles in a product, a client gives you 5,000 rubles.
It is important to analyze the number of people who “paid” you again. If people come again for your product, everything is in order with it. If this does not happen, look for problems in the product and do not blame the failure for ineffective advertising. This excludes, of course, expensive or exclusive items. It is unlikely that someone will buy two expensive TVs with an interval of a month. But they can advise friends.
A business plan in a startup will not hurt, but often the business moves without observing its points. It’s more productive and more useful to solve current problems. Phased and gradual.
Focus on responsibility. Accurately distribute the functionality between your employees: who is responsible for applications, who is for promotion, who is for payment. At the initial stage, data slicing is best done a couple of times a day. So you can easily understand where the error is, and you can prevent failure.
For the formulation of the hypothesis and the startup itself, it is advised to choose a business or product that you like. There will always be competition, but inspiration from your favorite activity will be an advantage and will help to generate income.
Where to find money for a startup
The easiest answer is with investors. But they need to be attracted and convinced of the uniqueness and profitability of your idea. In the investment "trend":
- projects in the financial sector;
- production projects;
- IT projects - 70% of all demand.
Investors need startups with the ability to capitalize funds and with the prospect of raising their own prices. Startups attractive to investors should have an effective development strategy, the obviousness of which is beyond doubt.
For the investor, the profit should be ten times. Otherwise, he will not invest his money.
Business angels
Formalized investors need well-thought-out business plans with the full justification of spending every penny and expectations of what was conceived. This is important for incubators, venture capital and government funds.
However, business angels are often found in the business sphere.
An angel investor is an investor who gives money without asking unnecessary questions and without looking into a business plan. But this is not naivety. Just the investor understands the prospects of the idea, believes in the quality of the idea and in the quality of its implementation. Most often, such investors have a flair for good projects and are ready to invest, relying only on him.
How to attract an investor
If you need money for a startup, start looking for an investor. This is a process consisting of items requiring a phased implementation.
Step-by-step instruction:
- The idea is a hypothesis.
- Creating a test sample and testing.
- Creating a presentation for the investor.
Your presentation to the investor should contain a statement of the problem that your idea solves. Describe why and how this problem should be solved, to whom and how it is beneficial. Give an assessment of the market.
Describe the production, calculate the cost and distribution, tell us how you intend to sell the goods. In the financing model, provide calculations for profit, costs and expenses. There should be no doubt about the profitability of the investor, and he should see a forecast for the development of the company in the future.
End the presentation with a story about your team, prove that your people can realize their ideas. This is an important condition for a positive response - to allocate money for a startup.
A classic presentation for an investor is usually 10-12 slides.
Startup money not needed
A startup from scratch is a real startup. This is the opposite point of view on financial support for starting a business, which negates the search for an investor. You need to learn how to work with a certain amount of money, so that, having received a large amount, do not let it go thoughtlessly.Need experience. An investor should be approached with a proposal to support a developing project, and not the first step. The willingness of an investor to invest in a business starting up can turn into a collapse for an entrepreneur.
Proponents of this position also believe that the company is developing in extreme conditions. Thus, efficiency grows and the business squeezes all the resources. Projects initially need people, not investments.
How to start a startup without attachments
It is believed that if people talk about the desire to do business, but everything rests against them in the absence of start-up capital, this is an excuse. The expectation of capital and the means themselves are a classic excuse for the brain. There is a long-established startup scheme, which proves that a business can be with zero investment, but based on marketing knowledge, the ability to create customer flows and find a customer.
The agent-trader-producer scheme works as follows:
- Agent - You are looking for orders on sites or “cold” calls. You can not have a product, but have applications. With the flow of applications, the agent becomes necessary for those who do not have enough applications.
- Manufacturer - the agent offers its application flows on terms of cooperation on a commission.
- Money comes from standing orders. From the merchant - the transition to production.
Startup money out of pocket
Money needs to be allocated when the startup takes place. If so, how to find the initial capital? Infobusinessmen offer several options:
- use credit cards or borrow from relatives;
- earn for hire;
- use the scheme: advance payment - order of goods - transfer of goods to the customer.
A complex but effective way to start a startup with minimal capital is to rent a room or property. If you think about ways to use them effectively, you can make a profit.
Not all business ideas require investments, it is important to reinvest the profit from a startup in the next stage.
Credits for startups in Russia are issued at high interest rates. Usually this option is not recommended, but if you can’t use your savings, then it makes sense to consider it. In Western startup practice, collateral, real estate sales, and business loans are very popular.
Startup suitcase
If the proposed options are not suitable, and you don’t want to wait for the start-up money from the state, then ordinary users can collect money to launch your start-up. This is called crowdfunding when entrepreneurs present their hypotheses ideas, business plans or a detailed presentation of their startup on the Internet site. If users like the project, they can invest, for example, from 1,000 rubles to the full cost of the idea. Collecting money for a startup will no longer be a problem.
Initially, such a scheme was worked out by American entrepreneurs, but for several years analogues of such sites have been working in Russia.
