Perhaps each of us at least once in our lives has come up with something and heard in response "Oh, this is a cool idea for a startup": whether it is an innovative toilet paper holder that allows you to tear off exactly as many pieces as necessary, or a complex financial product. But here it is important to understand what the word "startup" means in general and how it is really possible to bring your thoughts to life so that they bring not only benefits to society, but also income to the founding father.

What is "Startup"?

A startup is a commercial project that is launched in order to improve something in an already established industry or create something completely new that did not exist before. To make it clearer, I will give an example - the idea and development of alternating current by Nikola Tesla in our time could be called a successful startup, in which no one believed, but which we still use.

This is a kind of test business model, which can later grow into a large and profitable company. Many of the widely used services we know came from someone's little idea. I am sure you have heard yourself, if not the stories of their creation, then at least what they are doing now. For example, Uber, Airbnb, Wildberries, Xiaomi, Pinterest, TikTok and other businesses that have multibillion-dollar profits today have grown from startups.

Some startups appear by themselves, and some develop as umbrella projects of already well-known companies. The latter have a slightly higher survival rate due to more extensive resources: in terms of finances, team, and name. But novice ideas also have their advantages: you can get grants for their implementation, but there are no competitors who are breathing down your neck at all. However, it should be remembered that any startup is an innovative model that needs to be honed.

What is the difference between a startup and a business?

  1. The first and most obvious thing is novelty. In startups, there is no established organizational form, you come up with everything yourself: how the product will work, what it will be aimed at, who will be involved in it. There are no instructions for work, as, for example, when you open your own coffee shop or marketplace. Therefore, if you need more understandable forms, it is better to turn to already implemented business models, add something of your own and get a finished product that will work for you.
  2. The first point leads to the following. For any business that is already more adapted, you need a good investment. Let's take the same example with a coffee shop: you need to rent a room, buy equipment and consumables, hire employees, and invest in marketing. And all at once at the start! A startup needs minimal costs for the development of its own product, and further development can be continued through investment. If your idea is really worthwhile, then people will be very willing to invest in it.
  3. Startups do not have time to swing and look for themselves, they need to find their strategy as soon as possible, which will work to recoup all costs and bring profit to investors. Therefore, most often, startups have a faster take-off than the usual business. But there is one nuance – some ideas get lost in the flow of refinements and fall into the meat grinder called "Market".

"Death Valley" of startups

Many new startups appear on the market every year. According to statistics, about 90% of them are closed. By the way, it is the first few years of startups in the business environment that are called the "Valley of Death". I agree, it's quite creepy, but in general it has a connection with reality. This concept comes from the name of a US national park in which nothing grows and does not survive. The same is true here: at first, absolutely all startups spend more than they earn, and there is still a lot of time before the first large investments appear. And whether the project will survive these difficult moments or not is up to you.

Why does this happen? Often people just want to do "their brainchild". At the same time, they do not think about interaction with the market, which ultimately leads to a sad outcome. Firstly, there is no prescribed business development strategy and financial model: what are you going to do in general and how to go to it, where to get money for it. Secondly, there is no market research with prospects for several years ahead, there is no analysis of consumer demand and the competitive environment. Thirdly, often the developers themselves do not understand how to sell their product, since before starting, you need to come up with positioning and work out the pros and cons of the project.

What should any startup do at the start?

A common mistake of startups: the idea appeared only on "paper", has not yet been tested by either the market or sales, but the search for an investor begins. It doesn't work like that!

Of course, a cool idea is already half the battle, but at the very beginning, even before launching a startup, you need to follow the business concept of the four P's so as not to crash into the harsh realities of the market:

  • product — you need to know what exactly you are selling, strengths and weaknesses;
  • Place: The main localization of the product, where you'll be selling and which regions will be affected.
  • price is the optimal cost of the product with all costs and margin;
  • promotion – how you will position and promote your product.

After that, you need to check the idea for viability: we make a working prototype of the product and present it to a narrow circle of customers to identify all the mistakes of the creators. Taking into account the feedback, we refine the product to perfection and begin to promote, attract an audience and additional investments.

You can find additional funds for development not only from private investors, but also from accelerators that will help in the initial launch of your product.

Subsequently, the very fact that your project has become a member of a large accelerator has a good effect on the further search for partners and helps to earn a reputation.

In conclusion, I want to say that any idea deserves to become a business model. The main thing is to approach market research and product development wisely. What do you think?