Here’s the recipe: From a bag full of ideas, select a fresh & ripe one, add to it a tablespoon of zeal, a jug full of patience, a teaspoon of money, a cup of grated team members, a pinch of effort & hard work for each of the team members you added. Mix all the ingredients well. Before serving, for garnish sprinkle some knowledge, confidence, and dedication on top. Bake for 365 days at 15+ hrs a day to get the perfect crust & do not overcook. Your startup is ready to serve! Be careful the dish is best served hot!
There are no basic things which can be standardized for all start-ups to follow. What may be necessary for your business idea may not be needed at all for some other start-up in the same industry segment with a different idea. For instance, if your idea needs an app then your basic things needed will be completely different compared to a start-up which needs a production unit to start with.
All you need is the “idea” and you can start. The process of implementation will be based on your choice of industry segment, your target audience (customers), expected scale of operations, nature of business and domain expertise. Your business approach needs to be derived from these points. After all of the above is scrutinized you can go ahead and register your startup company as a proprietorship, partnership, Pvt Ltd or ltd and start working for your dream!
We’ve broken these down into six major areas and created a scorecard to encourage assessment of an idea against each of these six major criteria:
Fundamentally you need to start by identifying a prospective customer and an unmet need or desire that the market has not sufficiently addressed. What can you provide that is so meaningful that someone will gladly pay you for it? Ideally, the customer you identify will represent a market that matches your own needs and ability.
If you’re well funded then likely you’re looking for a large scalable problem to solve. If you’re a solo bootstrapping entrepreneur, a less scalable niche opportunity is more likely to bring you success as you can service that niche with a lifestyle business, and not worry so much about getting pushed aside by well-heeled competition. Think both in terms of satisfying a need and whether this is the right market for you to address.
The product you’re creating needs to directly answer the unmet needs or desires of your customers. Stay laser-focused on solving that problem and don’t ambiguate the solution with a lot of additional features or messaging that confuse or dilute the value of what you’re providing. As you begin to design your product, stay vigilant against anything that could represent a barrier to adoption such high switch costs, a steep learning curve or a lack of integration with workflows the customer may already be using. The costs (monetary, learning curve, disruption) all need to be low enough that there is still a net value to taking up your solution, compared to the nearest alternative (value = benefit-cost).
Every market has a lifecycle, and every opportunity thus has a limited window of time before it expires. At the beginning of a new innovation, markets are easy to enter, and a technical solution is the primary challenge. Anyone who can solve the problem can find opportunity. Conversely, there is also a risk in being too early to a market, since chasing unproven markets can lead to dead ends, or worse, a viable opportunity that will not bare fruit for years to come. That’s a much longer ramp than most startups can finance. The typical startup is best served with a “fast follower” strategy, where you identify a new interest by a set of customers that is already occurring. You’re still early enough in the game that the need or desire for the solution is not yet satisfied.
It is the imbalance of excess competition compared to new customers entering a market that make a mature market turn unfavorable for new entrants. This is the dynamic usually seen in the latter half of an innovation’s lifecycle, and why we prefer to focus on newer market opportunities. What we’re looking for is the indication of market inefficiency–that a market has not yet sufficiently met the (potential) need or desire for a solution. Fertile ground includes new or fragmented markets, or old, stagnant markets that are ripe for disruption. In such a market, you’ll have the opportunity to develop a differentiated positioning strategy.
How much up-front investment of capital (sunk cost) will this product require to develop? Do you anticipate large gaps in time between accounts payable and accounts receivable (working capital float)? Both of these scenarios represent financial risk that you need to weigh against the potential benefit you’re anticipating. Every business requires money to get started, but the goal should be to minimize the risk and cost where possible and to weigh those burdens against the potential for returns.
Think of this in terms of building an efficient investment machine. Our goal is to achieve maximum output (profit) with the minimum possible inputs (risk and cost).
If this is competitive warfare, how confident are you that your team can win the battle? Assuming you have limited resources, you should opt out of any battles you are not confident you can win, and preserve the resources for later opportunities. Someone on your core team needs to intimately understand the nuances of the customer you are addressing if you are to solve their need or desire. You’ll also want a technical expert on your team who can devise a well-crafted product that answers the need. Consider also whether you have access to favorable sourcing and distribution relationships you’ll need to remain competitive.