For entrepreneurs: How to start a successful startup

Für Entrepreneure: So gründen Sie ein erfolgreiches Startup

July 3, 2017|Tom Schweitzer

Startups are companies founded on innovative business ideas with high growth potential. Driven by the dream of developing the next Twitter, Skype, or Instagram, numerous new startups spring up every year. However, the majority of these ventures fail, and many don't even survive their first year. Yet, many of these mistakes are easily avoidable.

From idea to business plan – what you should think about beforehand

To avoid a similar fate when starting your own business, you should carefully consider your business model and the framework conditions beforehand. A well-developed business plan provides both you and potential investors with an overview of the opportunities and risks of starting a business. When developing your product, you should analyze the market situation to assess the potential demand for your product. The Blue Ocean Strategy is a proven method for finding the right niche for your product.

If possible, you shouldn't found a startup alone, but rather as part of a team with at least one partner. Ideally, your skills should complement each other. For example, as a computer scientist, you should ideally look for a partner with business expertise, or vice versa. You should also ensure that your employees form a cohesive team with interdisciplinary expertise.

Furthermore, consider the scalability of your business model. Will it still work just as well with ten, 100, or a million customers, or will problems arise at some point? This question can become important later if you want to expand your startup internationally. Additionally, you should clarify the financing of your startup as early as possible.

This is how you create the financial foundation for your startup's success.

Every startup has to think about financing sooner or later. According to the "Startup Monitor," half of all German startups required €50,000 or more in capital at the time of their founding. However, only 19% of these startups cited banks as a key financing partner. The most common financing methods are as follows:

Venture capital: Investors acquire company shares and thus a say in future decisions. Venture capitalists also contribute their experience and business expertise to the company. Because the investment involves risks, many investors demand rapid growth from the company.
Bootstrapping: Bootstrapping refers to a method of financing without external capital. The startup is therefore financed from its own cash flow. While this method creates financial independence, it also requires efficient management of typically limited resources.
Business angels: These are wealthy entrepreneurs who expect a high return on their investment in promising startups. They also typically possess a large network of contacts, business expertise, and often personal experience with their own startups, which they bring to bear on day-to-day operations.
Crowdfunding: An increasingly popular method for financing startups is crowdfunding. The basic idea is financing through the largest possible number of individuals. On a dedicated online platform, you have the opportunity to present the idea behind your startup and specify your funding needs. If the predetermined sum is reached through individual donations, you receive the capital, and the donors receive pre-defined rewards in tangible or intangible form.

To make a good impression on potential investors, you should be able to present a carefully developed business model, for example, in the form of a Business Model Canvas . Always be sure to honestly outline the opportunities and risks to potential investors and remain realistic in your forecasts.

Steady growth leads to success

Long-term research by CB Insights has shown that one of the most common reasons for startup failure is so-called premature scaling. Premature scaling involves artificially boosting growth without sufficient demand or a finished product.

The result is that some areas of the startup develop faster than others, creating inconsistencies that lead to inefficiency. Therefore, resist the temptation to artificially accelerate your company's growth. In the long run, your startup will benefit from organic growth.

Remain flexible during product development and adapt your ideas to customer needs, even if it means discarding cherished ideas. A suitable method that has proven successful in the past is called Lean Startup .

The Build-Measure-Learn principle involves testing a business idea under market conditions and adapting it based on customer feedback. This approach can be planned and implemented using a Product Canvas, for example.

Failure as an opportunity – Why you shouldn't bury your head in the sand after setbacks

If your startup fails despite good preparation, this isn't necessarily a reason not to try again with a new idea. Especially in the USA, failure is seen as an opportunity to do better next time, while in Germany, failure is perceived much more negatively.

Past experience has shown that startups that adapt flexibly to changing market conditions and rely on mentors and networking are more successful than those that don't. Therefore, don't shy away from exchanging ideas with other founders. After all, why repeat mistakes others have already made?