Startup – Understanding and Planning | How to Plan Startup

Startup Knowledge

Startup Meaning and Understanding

Startup is a new born company founded by one or more entrepreneurs to develop a unique product or service and take it to market. By its nature, Startup tends to be a shoestring operation, with bootstrapping, initial funding from the founders or their relatives.

  • A startup is an entrepreneurial venture in look of enough financial backing to take off the ground and expansion.
  • Initial challenge for a startup is to prove the validity and viability of the business concept to initial lenders and investors.
  • Startups are always risky propositions but potential investors have multiple approaches to determining their real value.

In early stage of startup, Revenue is low and cost of operation remains high which lead to losses and falling or may be closure of business. In this initial time, Founder is required to maintain a balance in Cash Flow (Inflow and Outflow). They have an idea that they have to develop, test, and market. That takes considerable money, and startup owners have several potential sources to tap.

  • Traditional funding methods include small business loans from banks or financial institutions, incubators, often associated with business schools and other nonprofits, provide mentoring, office space, and seed funding to startups.
  • Venture capitalists and angel investors actively look for promising startups to bankroll in return for a share in the company once it gets off the ground.

How to Plan Startup

You need to have a clear understanding of how you plan to operate your business model. A proper business plan will increase your chances of securing funds. Companies that have a business plan also have higher growth rates. Following are the steps which need to be considered while step in into Startup: –

  1. Create a detailed business plan
    • Business Model / Concept
    • Demand and Supply Analysis
    • Product Potential
    • Targeting population
    • Forecasting Business Growth
    • Analysis of Business Breakeven Point
    • Future Cash Flows
    • Innovative and based on Technology or Traditional Business
    • Cost Benefit / Profitability Analysis
    • Economically and viability sustainable
    • Environment Friendly
  2. Make sure your company has a clear vision.
  3. Identify your target geographical market.
  4. Analyze your competition.
  5. Identify your goals and financial projections.
  6. Clearly define the power structure.
  7. Discuss your marketing plan.
  8. Clearly defined your founder team roles
  9. Make sure your projections are realistic.
  10. Keep it short and professional.

Investor’s Expectations

1.                  Passionate Founders with potential business model

2.                  Founders’ execution capability.

3.                  Significant Market Size

4.                  Product Differentiation/Competitive Advantage

5.                  Exit Strategy

 

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