Startup

How to develop a successful start-up idea?

Have you ever thought about starting your own Tech Start-Up, but you can’t seem to find the perfect idea? Awesome! This concept of perfect ideas DOES NOT exist. Hi, I am Daniel and I failed to create a “successful start-up idea”. Are you laughing, right? Well, it’s funny, but I hope I caught your attention. Do you want to know why I failed? Ok, let’s discover this a bit later.

According to US Economic, last year was a great year for startups, and 2019 is going even better, due to continued growth in wellness and high-tech.

Also, the abundance of opportunities has led to increased competition. Nowadays, entrepreneurs are facing higher challenges. Good news though, startup failure rates are decreasing lately, and given the potential rewards, a record number of entrepreneurs and their investors are prepared to take higher risks. I found out some incredible statistics about start-ups. Let’s check them out:

A. Old statistics said that About 90% of new startups fail. New ones are optimistic, only 70% of the new startups are failing.

B.   More than 69% of American entrepreneurs start their businesses at home. 

Lately, I found this trend in Romania as well. There are small businesses developing at home. There are appearing all kinds of businesses like dropshipping, online sellers, online counselors. Everything is online nowadays, and you don’t need a place. Business startup statistics show that making your home a base of operations for a new company is nothing unusual – especially considering how positively that decision can impact your monthly costs. While 55% of new businesses start in the garage, 59% of established small businesses are still run from their founders’ homes.

C. Only 50% of businesses with employees survive five years. 

Data from the Bureau of Labor Statistics indicates that the first years can be unstable and volatile for new businesses that employ people. A third of all of the young companies fail within two years and about half within five when the attrition rate falls. Small business statistics like these prove that good business strategies and quality management are key to pushing through that initial volatile period.

D. San Francisco and Silicon Valley are the epicenters of entrepreneurship, home to 13.5% of all global startup deals. 

Startup funding statistics reveal that of the top 20 cities in the world for startup deals, half are in the United States. New York is the second-largest deal site with 6.5%, while Los Angeles and Boston each host about 4% of the world’s startup deals. Bangkok has seen the biggest jump in venture capital investment, with an increase of more than 600% from 2010 to 2017.

E. 53% of American startups have at least one woman in an executive position. 

Let’s be fair guys. Research on small business statistics from 2019 shows a 10% jump in women’s representation in the e-suite compared to 2018 – suggesting that gender parity is something U.S. startups are serious about. The report shows an 8% increase in the number of startups with women on the board of directors, too, rising from 29% to 37%.

F.  About 60% of American entrepreneurs believe that artificial intelligence is the most promising technology for investments. 

The same research shows that interest in AI is expected to keep steady well into the next decade. American entrepreneurs expect that autonomous transportation will see a sharp increase in investment in the third decade of the 21st century, with cleantech also emerging in the top five most promising industries.

G. Advanced manufacturing and robotics tech startups are enjoying growth rates of 189.4%.

Data from 2018’s Gruenderwoche Global Startup Ecosystem Report reveals that blockchain and agriculture-technology startups are growing quickly from relatively small bases. But it is artificial intelligence startups that are driving huge growth. Tech startup statistics make it clear that investors are bullish on future technology.

H. 77% of startups rely on personal savings for their initial funds.

Entrepreneurs continue to rely on their own personal funds when starting businesses. In fact, the percentage of self-funded startups has increased by 4% since Gallup last investigated the matter in 2004. Banks remain the second most widely used source, providing cash and credit for 41% of the entrepreneur’s startup needs.

Still curious why I failed? I failed because my business idea was not based on a Framework. I failed because I have not contacted Oradea Tech Hub for Business Consulting Services. They have the right place & people to help you start your business.

At that point in my life, I thought I can move the mountains. When I started my second business, I was so focused on what I was doing that I barely even knew who my competitors were. Due to the way I promote my business, after six months I was so frustrated because I was working hard trying to grow the business, but I didn’t feel like I was making any progress. Instead, the business decreased in profit and I ended up losing money and the business.

After I lost the money and the business, I reflected on what I was doing wrong. I started researching my competition and I realized that their services were much better and cheaper and the way I promoted myself was completely wrong and unreliable. Nowadays, running a business is extremely competitive and if you didn’t plan your business idea well, you won’t get success. If you want to develop a successful start-up idea, you MUST find a problem first. Your idea must solve a real need or something that’s broke around you.

How to find the problem? Take NOTICE of what is happening in the market industry. Take time to observe things around you. See if there is a real problem that you can fix and find the right solution for your possible clients.

Building a start-up is not easy. You need to enjoy your work and feel passionate about the problem you are fixing so you can sell your idea to others. You have to build a passion for your idea in other people.

Also, some of the greatest startups come from problems people didn’t even know they had. It’s called innovation. Many entrepreneurs fail to come up with a great idea because they don’t even really consider what is possible. You have to push the limits of something you love. That is what a great start-up does.

An easy way to find your place in the market is to get an answer to these questions:

  1. What are the needs of the industry and its consumers?
  2. Are there any unresolved problems faced by the industry?
  3. Is your startup idea going to bring resolutions and improvements to the situation?

The second step to develop a successful idea is to keep it stupid simple. Have you heard about the KISS principle? It was Albert Einstein who said; “If you can’t explain it, you don’t understand it well enough.” Though it is often exaggerated as: “If you can’t explain it to a six-year-old, you don’t understand it well enough.” What Einstein was saying was to keep your ideas simple so you and your future customers can understand and relate to it.
*Note: Be aware that your idea must be understandable and easy to sell and also scalable. Choose wisely because you want to be successful and success comes along with having satisfied customers. If you are going to pursue a potential startup idea, you need to have a passion for it, as it is something you are going to deal with every day for many years.

Now, if reality does not support your idea, it’s not worth it. Your idea needs to exist within a clearly definable field (i.e. market, industry, domain, etc.) You need to have a coherent and fascinating idea that is actionable and feasible. Regardless of how much passion you have for your idea or how well it fits within a certain market or how fascinating it is, your idea needs to be able to make money to sustain itself.

Once you’ve conceived several ideas (at least two), look over what you have and spend some quiet time thoroughly reflecting on each. You may find that you naturally gravitate towards one idea over the others.

If this is your first time creating and developing startup ideas, there is a very good chance that the idea you settle on is too niche, too narrow to appeal to a large audience. While it is imperative to have a clear and specific target user base, be sure that your future company has the potential to expand and attract a large number of users.

*Take note of his seven rules for startup ideas.

  1. Simple ideas win and complex ones die.
  2. Your idea should have one and only one revenue stream.
  3. Clearly identify your ideal customer.
  4. Build something that you can explain in 10 words or less.
  5. Small markets are not worth your time.
  6. Be the expert in your industry.
  7. Be original.

The third step in developing your idea is to EVALUATE YOURSELF. I’m going to be very short here because it’s a tough decision between your rational, feelings and your energy.

It’s the time when you need to really discern if you are passionate about your idea and if you are willing to put all your effort into it. It will require patience and perseverance.

The fourth step is to RESEARCH. Now it’s time to “spy” your competitors. Research and analyze your competition and see why they have success or why they don’t. Get inspired, do things differently.

Here are 4 reasons why you need to study what your competitors are doing:

  1. You can learn from the Success and Failures of Your Competitors

While you study your competitors, you get to see their successes and failures which can be used as an example for you. You can avoid the same mistakes that led a competitor to failure and you should learn from the practices that have contributed to a competitor’s success. For example, if you are opening up a new bakery, you should make a list of the reasons why some competitors failed while others succeeded. Based on that information you can take up the best customer service practices from successful competitors and should try to avoid mistakes that became the cause of your competitors’ failure.

  1. Studying your competitors gives you a better understanding of Customer Expectations

Studying what competitors are doing will give you an accurate insight into your customers’ expectations. Your competitors are likely to sell the same product at a lower price or offering better service without charging the customers any extra amount. So while you keep track of such things, you can lower your product price or focus on improving your service. Knowing what your competitors are offering would help you better understand customer expectations and therefore you can modify the experience accordingly.

  1. Competitor Research Gives You a Better Insight about Your Weaknesses

The greatest advantage of studying your competitors is that you get a better insight about your defects. Your competitor might be selling an improved version of the same product or they might be better with building customer relationships. Analyzing them, helps you identify loopholes in your product/service which you can work on. For example, if you are running a juice brand like CocaCola and research reveals that your competitors are offering more variety which is why customers prefer them, you need to start introducing new products. Collecting customer feedback on how to improve your products is essential.

  1. It reveals Opportunities in the Marketplace

Looking at each of your competitors, you should be able to determine what segment of the marketplace they are targeting and what type of customers or clients they are looking to attract. By a reasonable deduction, you can find new opportunities and untapped markets for your product or service.

Focusing your skills, talents, and abilities on a specific area of the marketplace that’s not being served by your competitors is a formula for success. However, in some cases, there may be specific reasons why certain demographics aren’t being serviced. There may not be a market there, so always test and use your best judgment based on credible facts and data.

The fifth step is developing your successful start-up idea is to BRAINSTORM. Don’t be too smart. Ask for opinions, discuss with your friends, conduct surveys and see how people will react to your idea. Starting a business is not an easy task.

You will increase your chances of success considerably by asking for advice from someone with business experience. These business leaders provide management advice and may suggest sources of financing.

The last step in this framework is to DO AN EXPERIMENT.  In short, it’s a process that begins with an observation of a situation, a problem or opportunity.  This leads to the gathering of information followed by a thoughtful prediction that might explain the matter.  The process continues with an experiment to test the prediction, followed by the collection, analysis, and interpretation of data.

Another alternative is to conduct a focus group session. This is where you invite people from your targeted demographics to participate in a group discussion on your product or service idea. A focus group can help you find out consumer’s real-time first impression of the product or services

This is a simple 6-step framework to develop your start-up idea. It’s so easy: Notice, Keep it simple, Evaluate, Research, Brainstorm, and finally Do an experiment.

In the upcoming articles, we are going to see how to do each step of the framework.  It’s going to be fun and reading it’s and it’s going to enrich you with great insights, hoping that will spark in you a great startup idea, so join us. @OradeaTechHub is here to help you make the first steps and get the counseling you need in building a successful startup for free. We can also help you with an office in our coworking space among other creative people, placed in Oradea Fortress.

Looking forward to your questions in the comments section below.

About Dani Pop

Hi, I am Daniel, Marketing Consultant @OradeaTechHub. I am experienced in Content and Social Media Marketing. I’m truly passionate about my work and always eager to connect with other people.

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