There are aspects of starting a business that you will need to be aware of along your journey, and which are not necessarily sequential in nature.
Networking with relevant individuals (including your peers, prominent experts, and potentially, funders) and entities (including support organizations such as business associations, incubators, and accelerators) is vital throughout your business development journey. It helps you validate your ideas, assess the competition, and ensure that you exhaust all opportunities, including those related to fundraising. Startups, especially tech-oriented ones, operate in a rapidly changing market—networking will help you remain relevant and up-to-date. Networking will also help you, in case you are a sole founder in the initial stages of your startup, discover potential co-founders or talent to support you in running and expanding your startup.
The Founding Team
During the initial stages of the startup, you and your founding partners will need to be involved in all aspects of the business, including design, budgeting, marketing, fundraising, negotiating contracts, etc. Having a strong co-founding team from the outset will help you significantly along the way. Due to a probable lack of funding during the initial stages of your startup, you cannot outsource or hire new employees to fulfill many of the aforementioned functions, and you and your partners will be forced to multitask. While such aspects of running a business can be extremely demanding, they are part of a natural process, allowing you and your partners to save costs and money, while also immersing you fully in all aspects of your startup.
Registering a business under the right formation is crucial for its success. The type of company you register as can affect how much funding it can raise, its ownership structure, the taxes it pays, the minimum capital it’s required to deposit, and its liability in case of bankruptcy. It’s crucial for you as a founder to understand the advantages and disadvantages of each type of company formation before formalizing and registering.
While you may begin to build around your idea based on the perceived needs of the market, you should be open to the possibility (and probability) that your idea and product may change. That means that you will need to pivot at a certain stage in the future, and sometimes sooner than you think. Many of the largest startups in recent memory, including YouTube, Slack, Airbnb, and others, started out with an idea and had to pivot to something completely different down the line. In the case of Slack, the platform initially started out as a gaming company, before pivoting into an online platform for team collaboration; in 2019 it was valued at USD 23 billion.
An approach to managing finances and operations all entrepreneurs should be aware of is bootstrapping— the reliance on your and your partners’ limited and existing resources, including savings and assets. As a founder you will have to exert every ounce of your ingenuity, grit, and foresight to save as much money as possible, not give up too much equity and/or take on too much debt, while at the same time growing your startup. While bootstrapping is a fundamental requirement of most startups’ success, it is not a permanent approach, and as an entrepreneur you should have an idea when it should be drawn to a close.