How To Create a Successful Tech Startup
In the world of startups on average 10% fail in the first year. There are no guarantees that all tech startups will be successful or the next unicorn, but there is a formula or more like a combination of strategies, principles and attributes that can be used to improve the chances of building a successful tech startup.
Here is a list of the key things a tech startup should have and do:
• Vision and Passion
Behind every tech startup, there is a visionary who’s passionate about solving a challenge or addressing a need in the market. The passion will ultimately fuel the determination, commitment and resilience needed, as founders will face many challenges in the startup journey.
• Research the Market and Determine product-market fit
Just because you have the vision and passion does not mean that the product will work, so before diving straight into development, it is crucial to thoroughly research your target market. Research your potential customers’ pain points, requirements and preferences and compare them to your product idea. Use a combination of desk and field research such as surveys, market and competitor analysis and interviews to determine the feasibility of your idea. A solid product-market fit and a good value proposition will provide a strong foundation for your tech startup.
• Build an MVP and get feedback
Rather than start with developing the complete product, build a prototype or MVPs (minimum viable product). It is the bare minimum version of the product with only the essential features. Use it as a proof of concept and to further test and validate the idea with the intended audience.
Once feedback has been collected, you can use it to fine-tune the product and make the necessary iterations before it moves to the next stage of development or worst-case scenario go back to the drawing board (at least you know early). During the feedback process, you may even get ideas for additional functionality to add to the product roadmap.
• Focus on Product Development
After the MVP stage, where the SaaS product has been iterated based on feedback, invest time and effort in creating a product that stands out – focus on quality, usability and innovation. Adopt an agile approach, where the team would work on the product in small but consumable increments or sprints. This allows more opportunities for testing and feedback, and changes can be done quickly compared to the waterfall software development method.
• Financial Management
Like all businesses financial management is crucial but effective financial management is even more critical for your startup’s survival – as often, a little will need to go a long way. Keep a close eye on your budget, cash flow, and expenses. When it comes to seeking funding, it’s all about timing – do it when necessary, but do so strategically, and ensure that your business model is sustainable.
• Networking and partnerships
As they say, ‘people buy from people’, build a network, join startup venture builders, incubators or accelerators and seek to grow your network and learn from it. The connections you make may not be your end customers, but by building a network where you can seek mentorship or advice from industry experts and experienced entrepreneurs can only be advantageous. Plus, partnerships and collaborations can open doors to new opportunities.
• Work on a Business Plan
Similar to a product roadmap where you map out the stages of the product, create a business plan to set out the stages of starting and managing it. In the startup world, yes, things are fast-moving and may change, but having a plan and set objectives in place will give focus, giving a strategic direction so it helps prevent decision-making on impulse. A business plan will also help attract investors and team members because it will serve as a communication tool for setting out the vision, plan and projections.
• Build a Collaborative Founding Team
No tech startup can succeed on the shoulders of one person alone, so time should be taken to build a strong founding team. Initially, just a minimal number of people to get the tech startup idea off the ground and validated. Each member should be able to contribute in one way or another towards the goal. Whether you are forming a founding team or looking to grow the team at the later stages of the startup process, always surround yourself with a diverse and talented team that shares your vision and complements your skills. Hiring people with the right expertise in areas like engineering, design, marketing, and sales can be the difference between success and failure.
The Role of MVP in the Tech Startups Creation Process
Most great startup ideas are the result of a founder being unable to find a good solution to their pain. If you’re developing a product based on your own pain, you might be the most qualified person to list its core features. But assuming that others share this pain and are looking for a solution, you can bring on early adopters to help refine the value proposition.
Nailing down the features, collecting feedback and validating the concept is critical to ensuring your product roadmap is pointed in the right direction.
Since 42% of failed startups close down because of poor product-market fit, making informed choices at this stage is critical to survival.
You can use a simple framework like this to define user goals and see how different pain points map to core product features:
- What is the overall idea?
- Who are the customers?
- Who are the end users?
- Why would they want it?
- Why are we building it?
You have to be very selective when building an MVP.
Focus on providing the minimum set of features users need to achieve a goal or realize value; your project management app needs attachment uploading more than it needs support for custom emoji.
3 mistakes to avoid when building an MVP
1. Overcooking your MVP
The idea behind starting small is to start quikly.
Your MVP doesn’t need to serve multiple audiences and use cases; it just needs to be validated by one niche. Get a small, highly-targeted segment of your market to buy into the idea and you get the cash needed to expand an MVP and take it to a wider market.
2. Choosing the wrong market segment
Knowing who to sell to is just as important to building an MVP with market fit. Getting an engaged community of early adopters to provide feedback doesn’t happen if you’re going after the wrong segment, and without those early adopters you won’t get the time and insight needed to iterate and grow.
3. Refusing to pivot if the MVP won’t stick
Even though you’ve done your research on the audience and feature set needed to compete in the market, it might be that your MVP is simply being marketed to the wrong customers or missing features that persuade customers to buy.
Pre-sell the MVP
One way to combat the problem of running out of cash is to bring paying customers on board as fast as possible.
This gives customers a financial stake in the success of the product — they’ll be willing to help “co-develop” the product in return for getting the features that they ask for (and will want to pay for) built.
Sales = validation!
One of the biggest inflection points for any company is finding out people will actually pay for what you have, or plan to build.
Here are the different types of MVP pre-selling strategies you can use to quickly validate a product concept:
- Single-feature MVP. Focus on nailing one user goal, to validate the need for the feature and build early adoption.
- Piecemeal MVP. Keep costs low by combining existing products and services to come up with a unique offering. For example, your product could be the result of some Zapier zaps or a code-free prototype built with Bubble.
- Concierge MVP. Do some or all of the software’s work manually and work closely with customers to understand how best to improve. With that information, automate the manual work with technology.
- Wizard of Oz MVP. An MVP that seems like a software service, but its results come from manual work. This is a way to validate the results your app will provide and whether customers will pay for them.
- Crowdfunded MVP. A lot of successful startups came from a video of a one-off prototype uploaded to Kickstarter — with crowdfunding, you can generate buzz and get feedback on a product before you’ve put it into production. This keeps costs down while giving you money to survive on.
- Smoke test MVP. Validate demand for your idea by sending paid traffic to a pre-release signup page. The number of signups will help you gauge the level of interest.
