There are few dreams more powerful than that of starting your own business. The thought of bringing your ideas to life, working to prove to the world that they have value, and maybe even achieving that coveted unicorn status are all big draws towards startup life. However, many would-be entrepreneurs don’t know exactly where to begin.
Launching a startup is challenging, so we’ve boiled the process down to a 5-step plan that will help you chart your path, using our imaginary startup: 9Lives, an app that connects cats to vets.
Step 1: Define your niche
One of the biggest mistakes any startup founder makes is going too broad. Whether that’s by building a technology that solves everything or targeting an incredibly broad user group, this approach is a non-starter as startups have very limited capital.
Instead, it makes far more sense to target a more specific set of users and truly understand their pain points. It will allow you to develop a solution that provides outsized value to those users. As your business grows, you can then use that experience to help solve the challenges of other users.
In the case of 9lives, I have identified that it’s challenging to find the right vet for my cat, and I want to help other cat owners connect with the perfect veterinarian for their specific cat’s needs.
Step 2: Get a great team
While it is possible to go it alone, the most successful startups are supported by a strong team. In the beginning, you mostly need one or two people to help cover your weaknesses and enhance your strengths.
In the case of 9lives, I know that I understand the user’s needs, but I need to bring on a great app developer as CTO, and convince some vets to come on board as advisers to make sure that the solution meets their needs as well.
Step 3: Define your proof of concept (PoC)
So we’ve found a niche and have a solid team. The next step is to plan out our Proof of Concept. This stage is critical as your PoC is probably your most crucial pitching tool, but you will typically need to self-fund it, or at least part of it.
The point of a PoC is to build a product with the minimum amount of features required to make it functional. It enables you to test your target market without the need to deal with a bloated dev budget.
In 9Lives case, we will prioritize the following features:
- User accounts
- Calendar management for vets/users
- In-app payments
- Cat “user profile”
- Vet “user profile”
- We also would like to add other features, but that will come once we know there is a demand for our service.
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Step 4: Understand your financials
Here is where a lot of novice startup founders begin to struggle. Financial projections, particularly once you start asking people for money, are most crucial piece of data your business has.
They will help you keep burn rates under control, convince others that your business is viable, and finally, help you build plans capable of surviving contact with the real world. It means you need a deep understanding of your potential income and outgoings.
In the example of an app like 9lives, the key is to understand your main revenue driver. There are two main sources of revenue that you can use:
Charging users fees: A basic fee for connecting the user with the vet
Charging vets for listing: A fee for listing on the platform and getting access to its user base.
Once you understand this, you will know where the majority of your costs are likely to be, which brings us to one of our most important steps:
Step 5: Use scalable technologies
The most significant risk factor for any business is scalability. There’s no point in building a great product if you can’t actually make it grow when you obtain financing or experience a sudden influx of users.
Fortunately, this particular challenge has an easy solution: Cloud Services. Rather than 9lives needing to operate expensive data centers, they can instead pay a service provider with more experience to maintain that infrastructure and enjoy the benefits of reduced costs.
The most comprehensive cloud-based solution on the market today is provided by Amazon Web Services (AWS). This particular cloud platform is a perfect fit for startups, as AWS has a number of offerings specifically tailored to the unique needs of startup companies.
However, it can be daunting to set up and configure all these services without professional help, and that’s where Cloudvisor comes in. Our team focuses on helping startups get the most out of AWS into their business model from day one. We can also guide startups through the application process to obtain AWS credits which will help them reduce initial costs and get started sooner.