Launching a Startup? 7 Keys to Making It Past the First Year

By Vadim Vladimirskiy

There’s nothing more exciting than launching a startup: the adrenalin rush of signing your first customer; the satisfaction of being your own boss, pursuing your own vision of success; and the feeling of fellowship, working with colleagues toward a common goal.

But before you sign your first office lease, take a minute to ponder this business advice. It will help you start out with a clear sense of strategy and directional focus so you can reach your goals with less budget and time waste.

7 things to know when launching a startup

1. Start with realism

Did you know 20% of businesses will fail within the first two years of being open? Making it to year three relies on starting with a well-thought-out business model that supports your company’s viability as you grow.

When you first start out, questions you need to honestly answer include:

• Is there a market need?
• Is the need/pain big enough that customers will be willing to pay to solve it?
• Is the market sufficiently large enough to allow your company to thrive?
• Does your product solve the need well?

If you can answer yes to these questions, product adoption and revenue will follow. Customers will readily spend dollars to obtain a solution or assistance to a problem that affects their operation’s efficiency and/or ability to compete in their market segment.

2. Think about scale from the beginning

In the market you’re serving, identify a problem you want to solve, and aim for the biggest possible problem for the largest possible audience. If you consider scale at the start, you’ll have room to grow.

Clearly, aiming high requires more funding and staff, but a SaaS (software-as-a-service) solution, for example, that can help millions of remote workers, will get you to year three easier than a niche solution applicable to only a micro-segment of a market.

3. Use informed, creative thinking

If you have a product or service idea that you think has staying power, read and absorb as much information as you can on the subject matter. Take the time to do this research. It does not have to be structured learning, but the more you know, the better your thinking process will be.

Once you’ve done your homework, step away from it for a few days. Your brain will subconsciously continue to process the information, and after a few days a novel solution will often pop up. Being mindful and relaxed will lead to the creative thinking you need to refine your concept.

4. Figure out your startup style

Startups tend to be either product-driven or market-driven. Product-driven companies invest in an amazing product and then look for a market that can benefit from this new product in the best possible way; market-driven companies identify a market need and create products that solve this need.

There are two types of market-driven companies: those that search for a market need and create a product to meet that need, and those that experience the pain/need by actually being "the customer."

Startups can be successful with either approach. However, the likelihood of achieving "product-market fit" increases when the entrepreneur has been the customer. In these situations, the founder understands the existing market, the current players, and has personally experienced the challenges that the new venture aims to solve. This knowledge and first-hand experience increases the chances of achieving product-market fit quicker than in other scenarios.

More articles from AllBusiness.com:

• 11 Steps to Validating Your Startup Idea
• Strategic Management for Your Small Business
• Does Your Business Have a Strategic Plan?
• 15 Expert Tips for Startups Seeking Angel or Seed Financing
• Does Your New Business Idea Solve a Real Customer Problem?

5. Disrupt with accuracy

Optimism is important, but can be dangerous when coupled with confirmation bias, as it can cause founders to quickly dismiss other solutions on the market. Founders need to research existing market players with humility and ask themselves: "If my idea is so great, why has no one thought of it before?"

Gathering information on the internet about competitors in a specific market is very easy, but does require a structured effort and humility. Additionally, ask your strategic allies to be frank with you about your product and market vision. If after scrutiny your concept still appears to be viable, you can feel more confident your creative idea will make it to market.

6. Set the bar high

Whether product or market-driven, entrepreneurs are responsible for developing and nurturing a positive culture in their startup. A report by MIT Sloan Management warns against "broken culture syndrome," a disconnect between how leadership and employees perceive a company’s culture and what it feels like to work at the company. Entrepreneurs need to spend some time thinking about how they want to lead and what type of culture they want to instill.

Being on the same page and setting the bar high from the beginning are important steps in achieving results because people often manage their activities relative to what’s expected of them. If the expectation is more than modest success, this cultural vision must be shared and communicated by all stakeholders. It informs individual motivation, hiring goals, and forward-looking business strategy.

7. Hire early and strategically

The first round of hiring depends on the founder's own skillset. For example, in a tech startup, if the founder is not a developer, then hiring people who can create the product would be the first step.

In the early days of launching a startup, while trying to establish product-market fit, the more the founder can be involved in product development and selling, the better. This approach will help shape business strategy and increase the likelihood that the company will be on target.

Administrative functions should be offloaded from founders as soon as possible so they can focus on strategic business initiatives.

Ready to launch your startup?

There will be startup successes this year. If you’re hoping to be one of them, take the time to think through your market strategy, and most importantly, set the right expectations regarding culture and goals before you start hiring.

If you talk to any successful startup founder, they will tell you that clarity of vision and hiring the right people is key to making it past that first year.

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