5 Things You Need To Start A Startup
We speak to two startup founders, an angel investor and a startup coach to find out what essentials you need if you want to start your own thing – and not one of them is experience.
As technology and economics collide to create a world that’s wildly different from the one we grew up in, the Millennial age bracket is increasingly turning to startups as a career option. In fact, according to the 2015/2016 Global Entrepreneurship Monitor report, two-thirds of the world’s population thinks that entrepreneurship is a good career choice. It makes sense – wouldn’t you prefer starting the next Uber as opposed to being an Uber driver?
So if you’re in the 66 percent and thinking of starting your own startup journey, one of the best things you can do is a boatload of research. We’ve spoken to some startup experts to uncover the five things you need before you can begin.
#1 A creative, strategic vision
Wanna change the world? The startup model of business – where you start with a minimum viable product and then iterate and scale exponentially – may be the best way to do it. But first, you’ve got to envision what that different world looks like.
Alex Houseman is the CEO and founder of a fast growing dairy-free ice cream company called Over the Moo. His advice for startup founders is to have in place a 20-year vision for what the world will become.
“What role does your startup have in creating that future?” Alex asks. “You have to have a really strong concept that’s truly unique and different. If you were to go out trying to sell fax machines, you’re setting yourself up to go out of business. So are you the fax machine of 10 or 20 years from now, or the email of 10 or 20 years ago?”
And to achieve that vision? Ash Fontana, a high profile venture capitalist at Zetta Partners (the only investment fund focusing on intelligent enterprise software) and co-founder of AngelList (an online platform that matches startups with investors and employees) explains that, “Bringing new technology into the world requires you to be creative about technology, management, sales and more. But remember: creativity often happens when you just push further than anyone else; it’s not necessarily a magical ability.”
#2 Focus and stamina, and awareness of your blind spots
It’s easy to watch The Social Network and think all it takes to get a startup going is a few all-nighters and an inspired idea. Nope. Sydney entrepreneur Danielle Lewis recently co-founded Scrunch, a platform that matches brands with influencers. Danielle started with very little experience – she describes herself as ‘green’ regarding tech creation, capital raising and team building.
Experience isn’t one of the factors that drive her success, instead, she says, “The only thing I think you need is hard work and persistence – character traits I think a lot of people don’t understand. They see people who work in startups doing crazy hours and never giving up, despite no obvious success. It takes a lot of hard work and a long time to succeed, so you’ve got to be able to have the stamina to keep going.”
Ash describes the key to startup success even more simply: “Focus on one problem for a very long time.”
However, it’s also important to be aware that you might be limiting your focus to the things you enjoy doing or are good at – sometimes to the detriment of other aspects of your business.
Michelle Duval is an Australian business and startup coach (she’s also started her own startup helping startup founders – meta) who’s seen the hazards of misallocated focus. “People are ignorant of their blind spots – that is, areas that are outside of their natural awareness. As a result, founders can overplay their strengths and, like a river travelling down a hill, create their own pathway. But it doesn’t always lead to success.”
Focus needs to be driven by something. It might be a desire to solve a problem, to make your mark on the world, or just to make heaps of money so you can one day claw your way into the housing market as well as going out for brunch.
“Think about people who volunteer at a wildlife NGO,” explains Alex. “You have to be so passionate that you’ll work for free. That ties in with a certain amount of maturity – understanding what drives your passions, backwards and upside down.”
“You know you’re ready to start a startup when you have a burning, passionate idea for something,” adds Michelle. “It’s critical to have a passion. Those who don’t have a passion or purposeful intent won’t have the stamina and perseverance to go the distance.”
Startups can be extremely rewarding – both for your own sense of success and for your bank balance. But before you’re in fancy meetings with investors begging to get in on the action, the work is probably going to get to you, big time. Because of this, getting the right kind of support is essential.
“You’re going through such unique problems that many of your friends struggle to empathise with,” says Alex. His solution was to join the Entrepreneur’s Organisation – a kind of secret organisation that you can only join via introduction. “It’s kind of like therapy,” he jokes. (I think.)
Danielle and her co-founder brought people into her organisation to gain more support. “I was quite lucky and met an amazing couple very early on in the journey who became our mentors and early investors. Alongside this, I sought out the experience and guidance that I needed at networking events, through investors and even through the customer relationships I built.”
It seems that Danielle was smart to have a co-founder, as “studies have shown that businesses with co-founders have faster traction than sole founders,” says Michelle.
They say that money can’t buy you happiness, but they clearly never worked till 4am on a business proposal for an 8am investment meeting. So if you want to make a go of it as a startup founder, you’ll need to get your finances straight.
Considering the early days of his startup, Alex says he wishes “someone had forced me to look at my numbers a bit better. I made a few cash mistakes in the early days and I’m still paying for them. Having a really stringent cash management system is something I wish I’d implemented earlier. Having enough runway at the start is something I’d really recommend.”
You might fund yourself through savings, outside investment, revenue, or loans. Michelle has seen a number of startups fail because of a lack of clarity around their business model and finances. “You need to be clear on what will drive your economic engine.”
From Ash’s experience, “Some startups need a lot of capital before they can fund their operations with revenue, because the technology needs time to develop before it will be accepted by the market. Others are able to find a market today and earn enough money to fund their operations.”
Sorting out your finances also applies to something as simple as which account you want to use. Julie Rynski, General Manager Small Business Banking at Westpac says that many new business owners are reluctant to invest in a business account – requiring fees and formalities – to manage their finances. As a result, “founders lose visibility of their business transactions, which can be confusing and can lead to poor business practice that can create problems.”
This is especially relevant when it comes to paying yourself. “You need to pay yourself ASAP,” says Alex. “I’m 20 months in and I’ve only just started paying myself a salary. The longer you hold off you add stress and anxiety that feeds into the business. I found it harder to keep my nerve because of that additional stress.”
“Conveniently, time-poor owners can now open a business account from their mobile phone or tablet, as all of their identification is verified online, so it’s easier than ever to set up and manage your finances,” Julie added.
Just do it already
Not everyone is cut out to be a startup founder; you need to be able to deal with uncertainty, stress, and a lot of effort for potentially little reward. But the idea remains an enticing one.
Asked why he invests in startups, Ash says it’s because “Technology provides leverage to us all so that we can do more, do better and do good. Working to make sure that money goes into the right type of technology ventures accelerates that process.”
Final words of advice from Danielle? “Just do it.”
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Vivienne is a travelling freelance writer/editor, feminist, Harry Potter nerd and co-founder of Taylor Hermione & Co, a not-for-profit organisation that promotes safe relationships, consent and gender issues to teenagers in Australia. Find her on Twitter @VivEgan41 and Instagram @vivalogue.