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Start Starting a Startup

Seven Steps to Prepare to Launch

I. First Things First

Before you dive in to creating a startup company, you should determine what is really important. And one of your first priorities should probably be: setting priorities.

You don't want to register a trademark of a name you will change, hire an employee you'll need to fire soon, or rent an office space then decide it's more efficient to send the workers to work from home. So what do you do when a number of factors seem a bit like the chicken or the egg? You might think, "we need all of them to be in place before we can start, but we need to start before we can get any of them into place."

I would recommend you take some time to prioritize before you put any other big things in motion that will cause significant waste if you end up needing to change them soon. After your initial priorities, you can keep refining them as you go. And, it's probably going to be a little bit different for each company.

For an example of a way to prioritize, I started by creating a list of key activities (categories of tasks), then I listed corresponding values that are important to us.

  1. Key Activities:
    • If you have already been working some, and if you log your usage of time (which I also recommend), then you can glance back at the logs and pick out the key activities with relative ease, or,
    • Brainstorm, and just write out a list of all the categories of tasks you expect to need
    • (For example: accounting, market research, product development...)
  2. Core Values:
    • Look for patterns of what you are trying to accomplish with various activities on the list
    • Think of names for those groupings of "values" you want to seek
    • (For example: integrity, preparation, reputation...)
  3. Priorities:
    • You can start lining up activities with values
    • Finally, though all of them should be somewhat important, put some hard thought into which are more important than which others
For example:
  1. Integrity: accounting, tax planning, trademarks, banking
  2. Preparation: market research, planning, managing goals
  3. Reputation: branding/naming, online presence, social networking, advertising
  4. Profitability: product sales, trading stocks, liquidating assets, running syndicated ads
  5. Production: product development, ideas, online content
  6. Education: mentors, training
  7. Support: hardware, physical work-space
Hopefully this whole guide provides you with some good insights for priorities in general. And before you get too carried away doing anything, you should probably make sure you have a healthy dose of realistic expectations.

II. Take a Chill Pill

Starting a startup is taking a big risk: and the thing about big risks, is that you should prepare to fail...because you probably will.

If you have studied startups, you have probably heard that the majority fail, and that many fail big. You probably think you will be the one with the idea that is different, and better than the next guy's--doesn't everybody think that? But wait...how could that work?

Don't fool yourself. Many of us may tend to develop unrealistically high opinions of the superiority of ourselves and our own ideas. I don't mean to discourage you from trying; but, I want to warn you to go into it with your eyes wide open to reality. Be aware of what you are getting yourself into, and know the risks involved. If you prepare for the worst in the first place, but actually end up doing very well, more power to you.

The real truth is: there is no perfect opportunity, no magic product, and no secret silver bullet idea. Success takes a combination of a long time of hard work, and the chance of being in the right place at the right time. And, even achieving that combination, you might still fail. Success is often built on top of a long sequence of failures. If you will eventually be successful, you will probably fail many times in the process of getting there.

If you are still determined to start, then do try--but don't blindly assume everything will go perfectly. Plan what you will do if you succeed, and what you will do if you fail. When (not if) you fail, learn from it and try again. Don't be depressed, don't be surprised, and don't give up.

Be realistic about what you can afford to risk. For example, you probably shouldn't take out a second mortgage to fund your startup business. If you can save up a little extra cash first, and use some of your personal savings that you can reasonably afford to lose, that is probably best. Don't burn your bridges. Make sure you can keep putting food on your table.

For example, before I started, I obtained a few college degrees, and some significant number of years of experience as a full time employee in the industry. I tried to ensure that just in case I have to, I'll be able to go back out into the job market and reasonably easily have a traditional job opportunity waiting for me there.

One way to keep from getting blinded by your biases is to get out of your bubble and start bouncing your ideas off of another person.

III. Connect With People

Carrying out a successful venture like a startup is all about connecting with people. Probably, you should either be good at connecting with people, or you should connect with somebody who is good at connecting.

Ventures are all about the people: mentors, customers, workers, co-founders, and, hopefully, soon, other investors. Different people are better at different things; and, groups can often produce synergies by collaborating together. You can usually accomplish more through collaborating with various specialists, than you could by trying to do everything yourself. You might have an idea that you think is a great idea, but you might not realize that nobody else thinks it is a great idea, until you start trying to share it with other people.

And, you can't build a business just with ideas--you need products (or services). While you're sitting in your room furiously typing out wonderful content, those ideas are not very valuable until you can get them into the hands of another person, besides yourself, who values them. And then they are not a product until that person values them enough to give you some of their real money in exchange for them.

IV. Create a Customer

A startup company is a business, and the essence of a business is to serve one purpose: to create a customer.

If you create "products" you value enough to use yourself, that's great...but, unless you plan for your own money to be the only money your business will ever have, you should probably find a way for other peoples' money to become your own. And the (legitimate) way to do that, is by providing something other people actually value.
We need to prioritize getting out and talking to people in real life to find out what they value.
It is one thing to tell yourself it is a sure thing that other people would value an idea. Unfortunately, that optimistic confidence is not enough to ensure other people actually value those ideas. It is one thing if people complement something and promise they will buy it if you develop it, but it is another thing entirely if they actually do.

And, despite the belief that propaganda enables mind control, there is not really a foolproof way for us to make other people think what we want them to think. It is still going to be up to each person to decide for themselves. So, we need to find out how many people do think the way we want. In simpler terms, we need to start by finding out what other people really think.
Don't just think, I'm sure it's a great idea, and my grandmother agreed everybody else would love it and promised she'd be willing to buy it--so I'll just go out and develop it, and then take out a bunch of really powerful advertising to ensure we create a demand.
It is probably a good idea to start thinking about business ideas from a market first perspective instead of a product first perspective. It is much easier to be successful when you first know of a real market for a product. Then, you can develop a product for that market. If you think up a product and develop it first, it is much harder to then successfully market it.

And, we might know that there is something that people need. But, there is a difference between what they need and what they want. We need to understand that people might not be aware of their needs yet. So they still won't be willing to buy until there is something they not only need, but also want.

So, when building a startup, we should prioritize creating a customer first. If you don't have anything else in place yet, as long as you have at least one legitimate paying customer, you can eventually add everything else around that. But, no matter what else you build around your venture, it will be impossible to be successful until you can create a customer.

For something to become a successful product, there must be enough people who value it, and they must value it enough. The only sure way to find out if that is the case, is to test it.

V. Test, Test, Test

If your great idea can't withstand the scrutiny of a preliminary test, what makes you think it can withstand the onslaught of a merciless market?

You have to put first things first. You have to be realistic about your expectations. You have to get out of your own head and start talking to other people about what they think. And, you must find a customer who is willing to buy. When you have a business idea you think is valuable, you should test it first. We might do well to think of each venture, and each part of it, as being more of an experiment than a predetermined system.

Entrepreneurship is the science that provides us with the laboratory of a startup. A startup may be the only laboratory where it is legal for the subjects of the experiments to be customers, and the discoveries to be what customers value. If each iteration of a product (or service) is an experiment, then marketing must be research, a product idea must be a hypothesis, and profit must be the instrument for measuring results. You can never successfully start a startup by merely sitting and thinking about it or going around and talking about it. You must put into practice a process of bringing together qualified "scientists" to form intelligent hypotheses and hunt down customers on which to test those ideas.

Each experiment doesn't need to resemble your eventual vision for the ideal product, and each hypothesis certainly won't be affirmed--perhaps the vast majority will "fail." But the hypotheses must be intelligent, the experiments must be effective, the measurements must be reasonably accurate, and you must always learn something. You develop adequate synergy as you continue to obtain results from earlier experiments (both successes and failures) and feed the information from those results into the development of better experiments to continue learning more.

We need to stop sitting around and dreaming about things and start getting out there and trying things and seeing what happens. All we need is to start small and build from there. 

VI. Rinse and Repeat

Successful startups are an iterative process: do something quick, learn something from that, then apply what you've learned and do the next thing better.

Iterations include MVPs (Minimum Viable Products) and pivots. An MVP is the very first iteration of a product, and may be an oversimplified format or partial solution. A pivot signifies a drastic change in the form of a product (or sometimes, the whole startup) due to the discovery of significant new information. As each product can be developed in an iterative way, in the case of a startup, that is the way to develop the whole company.

MVP: Why develop a survey to ask people whether they would buy a certain product, when you could instead build a simplified version of that product and offer to sell them that? It can give you a jump-start to remember that customers buy what they think they value, not what you think you produce.

Before you produce anything, you might ask yourself: what is the quickest thing we could produce that would offer a similar value to, or part of the value of, this product idea? What is the quickest way we could create something that would be just valuable enough that we could start getting it into the hands of customers?

One example of a way you could develop an over-simplified format MVP is, if you have an idea for a high tech product, to ask yourself: "What if there were no such thing as technology? Is there any way I could provide a similar value with paper and ink or cardboard?" Remember that this is an experiment. We are trying to find whatever we can do that might somewhat work. This might be a ridiculous example--but, if your ideal goal in a hundred dollar digital product by e-commerce, before that's setup, can you go walk through your local park and try to sell an early version your product, on disc, for 25 cents to each passerby?

Before creating a totally automated self-contained solution, an example of a partial solution might be: to write a detailed description of such a solution, and see if you can sell people that written description (book, whitepaper, blog post). Don't be afraid of somebody stealing your idea--you'll still be the most qualified and most likely to be successful to implement the later versions.

Pivoting: The sooner you get a something out there, whatever it is, the earlier you can start getting solid market feedback. The more quickly you can start getting solid market feedback, the sooner you will find out if you need to pivot. If you will end up pivoting, it is best to do so as early as possible in the development process. Pivoting earlier minimizes waste. Pivoting is one of the core competencies of a startup--because making a drastic change while minimizing waste, is all but impossible for a larger established company.

VII. When You Start, Prepare to Finish

It's probably a good idea to have expected end results in mind from the very beginning; that way you can do everything in the process more effectively, with the end goals in mind.

As part of your business plan, I recommend you write a harvest plan. You could describe your ideal goal for how you would like to exit the startup. Would you plan to continue owning the company throughout your life and leave it to your heirs when you die? Would you prefer to sell the company to a larger company for a large amount of cash? Would you like the company to become publicly traded on the stock market through an IPO (Initial Public Offering)?

You might also want to write a contingency plan. If things go south, how would you clean up, for example, where applicable: hand-off your control to partners, hand-off important ongoing customer/support relationships to providers of alternative solutions, help your workers find new jobs, fulfill important commitments, responsibly hand-off control of open source software products to the community, notify people, close accounts, liquidate assets.

If you prepare for the worst, and the best happens, you will be pleasantly surprised. If you don't prepare, you have a lot to lose if things go worse than you expected. In writing a worst-case scenario contingency plan, you may be surprisingly encouraged to rediscover what you had been taking for granted. As you consider all the things you would have to do something with, it reminds you of all the things you have. And, as you consider all the people you would need to tell if it doesn't work out, that list of people can remind you of all the people who care about your and your startup's success.

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Isaac Serafino is a Software Architect in Omaha, Nebraska. He has a strong experience developing technology solutions. He has long had the dream to lead his own startup business.
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