How to Launch a Startup
Creating a startup can be scary and quite daunting, and you may not know where to begin. Have no fear—we’ve broken it down for you below with ten straightforward steps:
1. Conduct Market Research
The biggest challenge you face as an entrepreneur is turning your idea into a successful business model. Before you do anything, be sure to do market research. Market research is beneficial for several reasons including giving you an indication of whether your business model will be successful as you analyze your potential customer base, your business’ reach, and your competitive advantage. Conducting market research often involves answering a variety of questions, including:
- Is the market in which my startup will fall saturated?
- Will the market want what my business offers?
- What is my target audience and can I easily reach them?
- What are other businesses in the market doing?
In today’s world, market research for your business can typically be conducted online fairly easily. Some helpful resources include digital trade magazines or trade websites, the U.S. census and data sites, websites of competitors, and even potential competitors or consumers in the case of business to business products and services.
2. Prepare a Business Model, Plan, and Strategy
Your business plan is essentially a roadmap for how your startup will be structured and how it will operate and grow. Without a solid business plan and strategy at the onset, investors will have a hard time seeing why they should spend their money on your company. An effective business plan helps potential investors envision a return on their investment.
3. Select Executive Team Members
Choosing co-founders is one of the most important stages in the early life of your startup. When making this type of selection, you should consider individuals with different operational skills and strengths than you, similar lifestyle and/or work habits to you, and the same vision you have for the busines. You should also ensure that you trust whoever you choose to add to your team, and that they are someone you have a history working with.
In addition to selecting the right executive team, agreements between co-founders are essential to protecting each individual’s interests and the interests of the company at large. These agreements provide for what happens if co-founders are failing to do their fair share, if a co-founder wants to leave or sell their part of the company, and more. Without executing this agreement early on, you run the risk of problems arising between co-founders that can lead to issues affecting the company.
4. Formally Create your Business
To protect your personal assets, you will certainly want to establish a legal entity for your company. Considerations related to selecting a legal entity include state-by-state issues, taxation preferences, management structure, and financial capabilities.
Many startups fail after forming the wrong legal entity, which can be a significant waste of money and time. Structuring your business is one of the most important steps in launching a startup business. The correct legal structure is the best way to avoid issues later in the life of your business. An attorney can help you form the right structure for your business, execute the proper documentation, and draft the appropriate agreements you need to launch your startup successfully, including bylaws and an operating agreement or articles of incorporation.
5. Fund the Business
This step is largely influenced by your business plan and how much money your executive team brings to the table. If the money provided by your team is not enough to cover the amount you will need to start your business, it is time to start thinking about how you are going to get that money. Other than self-funding, you can use a variety of methods to help fund your business. Whether you decide to pursue crowdfunding, a small business loan or other loan, a small business investment program, or investment from a venture capitalist or other investor, be sure to consider each option to determine what is best for your business.
Keep in mind that finding the right investment for your company can take time. It is also important to do your research about potential investors and build strong relationships with those who could be investing in your business. Conducting multiple rounds of fundraising is fairly common, particularly because investors may be unreliable and pull out their commitments. Ensure you have the time and energy to devote to getting proper funding for your startup.
6. Protect your Intellectual Property
Hiring an intellectual property attorney can be invaluable to the success of your startup launch. A lawyer can not only help protect your business’ intellectual property but can also help identify what needs protecting in the first place. Sometimes a business or technology idea can be protected in addition to what is traditionally considered protectable, like your business name or logo (provided they are unique enough for protection). You may also be able to protect other aspects of your business, including pieces of code, inventions, or even business techniques or formulas that provide a specific competitive advantage for your company.
Further, you will want to ensure that your business automatically owns any intellectual property produced for your business—and this can only be done by executing appropriate intellectual property agreements. In the same vein, you should also consider having any participants or employees of the company sign a non-disclosure agreement, especially if your startup’s success hinges on protecting certain ideas or business practices.
7. Develop your Brand
Although developing the brand for your business can look different and vary in importance based on the type of business you are launching, it is an important step nonetheless. Investing in quality marketing doesn’t have to be expensive—especially in today’s digital world.
8. Establish your Team
Your co-founders are not the only important individuals on your team. Everyone you hire is a team member who contributes in some way to the success of your startup. As such, it is important that you spend time and energy hiring the right people to serve as employees or independent contractors within the operation of your business. The best way to ensure this is to focus on your company’s vision and mission during the recruiting process. Those who are genuinely interested and excited about your business will do better work for you in the long run.
9. Build your Business Operations
In addition to formation contracts and intellectual property-related agreements, there are several documents that a new business should execute. As a startup, your contract arsenal may include employee agreements, employee offer letters, nondisclosure agreements, investment agreements, service agreements or product sales agreements, distribution agreements, or even software licenses. Your company’s specific needs will generally depend on the structure of your business, what product or service you offer, and how your business operates.
10. Conduct Due Diligence
Each of the above steps are essential in your ability to effectively launch your startup. No matter what approach you choose, you will need to invest in effective legal counsel early on to save money in the long run and ensure that your company has the best possible chance of achieving success with minimal hiccups.
Disclaimer: This blog is not intended to be a substitute for legal advice or instruction. Every legal question calls for a different legal answer, and the above might not apply to your situation. Contact IPS Legal Group, P.A. today to discuss your unique business needs.