Start a Business from Scratch? It’s Not Easy! Starting a business from scratch can be a very challenging process. The steps to take may seem endless and many times it can feel that the odds are against you. But here are some tips that may help you start a business.
-Make sure that your startup idea is solid. One of the key issues to consider when starting a business is making sure that your idea is feasible. Conduct research about your prospective customers. Understand your potential customers: you can do this by looking carefully at the target market that you will be serving. This will allow you to determine how you are going to reach out to your target audience and make sure that they will be interested in patronizing your products and services.
-Protect your intellectual property. A common issue among startups is that they try to protect their intellectual property through the creation of a corporation. Many entrepreneurs do not protect their ideas properly because they are unfamiliar with what intellectual property laws are. Having a qualified attorney help you establish protective rights for your intellectual property can be very important in ensuring that your company will be sufficiently protected in the eyes of venture capitalists and angel investors.
-VCs are not good angel investors. There are experienced venture capitalists out there, but as a startup you may not have the connections that these investors have. The result can be disastrous because the VCs look at your company as a risk and a potential catastrophe. On the other hand, VCs do not want to invest their money in new startups that are not a sure success. Therefore, make sure that you work with a seasoned professional who can effectively pitch your idea to VCs.
– VCs do not like working with startups that do not have strong marketing, management, sales, distribution, technology and accounting backgrounds. In the past, there were many entrepreneurial startups that did not have strong backgrounds in one or more of these areas. However, the startup industry has changed so much that VCs are realizing that a certain type of startup has to have significant traction in all of these areas if it is going to survive. Therefore, VCs are beginning to favor these types of companies. Conversely, some entrepreneurs will have strong marketing, management, sales, distribution and technology backgrounds. However, this usually does not mean that their companies will have significant traction.
When looking to secure seed or Series A financing from venture capitalists, the best way to go about it is to have an executive team that is all invested in the startup. If there are no significant partners that are investing in your company, the venture capitalist will likely pass on pursuing your business because they do not feel that it has the potential to be successful. The key to securing seed or series A financing is for the co-founders to have a strong commitment to the company. If one or more of the founding co-founders have significant ties to the company, then the venture capitalist may be willing to pursue the startup.