startup_launch_business

Founders with amazing ideas paired with amazing vision can make a real impact.

But getting that seed of an idea off the ground requires a tremendous amount of planning and working capital — capital to market your concept, pay legal fees, finance production, and manufacturing, fund developers, hire employees and get your product or solution out there in front of interested customers.

But where to begin?

You’ll first need to determine the business and capital structure of your startup, given this is something that will help in attracting interest from investors. To do so, establish key players in your management team. Define how they’ll be incentivised, i.e. with a portion of ownership in the company and/or cash compensation, and how business ownership will be allocated.

Then decide whether you’ll need to safeguard personal assets under an established corporation or legal business structure. Additional considerations might be needed if you plan to go public in the near future, such as the number of shareholders and stock option plans.

The next thing you’ll want to do is crunch numbers, asking yourself: “How will we carry our business forward?” To get where you need to go, you’ll need working capital. And to acquire working capital, some startups opt to bootstrap their organization by tapping into their savings or their network of friends and family.

Bootstrapping, though, doesn’t always offer the most realistic path to success nor does it deliver the level of backing most start-ups need to bring a new brand into profitability. It might also strain or even break some of your most important relationships. Those who are serious about success will still need serious investors as backing.

Also Read: 10 tips that will help launch your startup fast

To garner investor backing, you’ll need market research. This provides the groundwork and statistics to prove that an investment in your business is a good one and that it’s backed by an idea with the likelihood of becoming successful. Ask yourself if your idea is reputable and if or how those investors will be repaid.

Is your concept unique and, if so, what’s the actual market potential? Who will buy your product or solution, and how many customers could you ultimately reach? Also, demonstrate that you have founders with the expertise to support this objective. Outline your business and your business model, showing investors how profitable you could make them.

Finally, to become this profitable, how much funding would be required? This is perhaps one of the most challenging questions to answer because there are no real figures on which to base business projections. But as you develop them, be realistic about forecasts around cost and return.

As opposed to hoping you’ll woo investors by painting a rosy picture, try cutting sales projections in half and doubling expenses. Underestimating capital requirements just to attract funding could potentially put you in the red down the road. You’re always better off inviting more than you need to avoid going back to investors later.

Through planning and research take time, it can help you in building the strongest foundation for success going forward. Answer questions proactively and support plans with research and proof to demonstrate your startup’s ultimate potential for success.

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Image credit: Makoto Tsuka on Unsplash

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