Launching a startup is exhilarating – it requires energy, bravery, and a keen investment of time and money. It’s not an easy road to travel, but if you’re passionate about the industry you’re entering, you could achieve incredible success. Unfortunately, somewhere between 30% and 80% of all startups fail – the discrepancy in numbers due to the broad definition of “fail” – and it’s not always because the business idea is bad.
Businesses frequently fail because execution is poor – the entrepreneur isn’t able to think like a businessperson while functioning with the creativity of an artist. If you plan to launch a startup, here are six tips to help you get it successfully off the ground.
1. Make Smart Money Decisions
You’re going to have to spend money to launch your startup, but you need to think critically about when and how you spend it. Avoid pouring money into the “flash” – the high-end office space, iPads and MacBook Pros for every employee, billboards and TV ads – until you’re seeing returns. Instead, invest your money in the meat of your business – pay for research and development and the best possible employees. If you’re all flash and no substance, you’ll never last.
2. Pursue Grassroots Marketing
Build your social following, marketing yourself through Facebook, Twitter, Instagram, and YouTube, but don’t stop there. Launch a crowdfunding campaign to reach a broader audience while educating the public about your product or business. Even if you don’t need money from crowdfunding, it’s a great way to gain buy-in and buzz from potential customers as they financially and emotionally invest in your company.
3. Create a Business Plan
Every startup needs a business plan. Business plans help you develop goals, define priorities, and map your road to success. For help, check out LawDepot where you can create a free business plan template to get started.
4. Hire Only When Necessary
Just because a new project pops up doesn’t mean you need to hire an employee. Only hire when you have an absolute need, opting for freelancers or contractors whenever possible. By keeping your staff small and flexible in the beginning, you’ll be able to invest more money in the right employees when hiring is necessary.
5. Ask Friends & Family for Guidance
No matter the scope of your business, your friends and family can help. Even if they don’t have experience with launching a startup, they are consumers, which means they can provide you with objective feedback about your name, product, and marketing efforts.
6. Expand With Caution
Once your startup is off the ground and seeing success, look objectively at growth plans. It may be tempting to grow fast, but many businesses fail when they expand too rapidly and aren’t ready to meet customer needs. Enlist a business manager to help you develop a growth plan you can reasonably sustain.
To launch a startup, you must be comfortable with risk and uncertainty. You must be prepared to work long hours for little, or no, pay. Educate yourself on the life of a startup entrepreneur to make sure you’re really cut out for the journey. It requires guts, and the risk isn’t for everyone, but the rewards are often worth it in the end.
Money Crashers is a personal finance resource that shares tips related to budgeting, smart spending, investing, and wealth management.
Have you launched a startup? Are you thinking about launching a startup? What are your biggest concerns?