What are the most important points to consider when starting your technology business?
Firstly, and most importantly, it is not about the technology. It is all about providing a solution for your potential customers. So, know your customer, and validate the idea with customers by creating a prototype to test with real people. The “Lean” methodology espoused by Eric Ries in his book “The Lean Startup” provides detailed processes on how to take the product to market in the most cost effective manner.
However, the most important consideration when starting out on the entrepreneurial journey is to “Start with the end in mind”
The Exit Strategy is probably not top of mind at this stage of the company’s lifecycle, but it should form one of the key contemplations for the leadership team. A key component of an exit strategy is to have a business plan in place.
The Business Plan
All great businesses may start with an idea, but the first step toward turning an idea into reality is creating a well-thought-out business plan. Behind every great business is a well-crafted business plan. Actually sitting down and creating one, however, can be a challenge for any entrepreneur. Not only do you have to take your great ideas and articulate them on paper, you'll also have to set specific goals and come up with effective business strategies, despite all the uncertainties. While there are many resources on the Web (as an example go to http://www.startupdonut.co.uk/startup/business-planning/writing-a-business-plan) freely available to the entrepreneur to draw up a business plan, here are ten, perhaps, out of the ordinary angles to consider.
1. A review of the competition
If companies focus only on themselves in their business plan, they are making a big mistake. Businesses should use their business plan partly to address the competition. It is important to know your competition and how your business differs. You do not want to be placed into a substitution category. Clearly outlining your competitors’ strengths and weaknesses in your business plan will help your business position itself over the competition.
Companies that want to be innovative must make it a priority from the start. To accomplish this, companies should highlight the importance of innovation in a business plan. Innovation must be a critical component of every business plan. By making innovation part of the plan, the process becomes intentional, not reactive or accidental, and sets the stage for a culture of creativity and innovation for the long run.
3. A contingency plan
Since it is highly unlikely that you will start a business without ultimately having to make significant changes, business plans should allow for change. In a digital era where businesses iterate much faster, it's vital to include a contingency in your business plan for knowing when you need to shift. An example of a contingency might be: 'If we do not have 1,000 paying customers within six months of operations, we need to shift product focus.' A metric such as this is especially vital if your business operates on the Web or builds software. A business plan is great, but there's no point in sticking with a failing plan for too long.
4. Preparation for success
On the other hand, businesses also should use their business plan to prepare for unexpected success. When creating a business plan, be sure to set up contingencies for a normal scenario and an insanely successful scenario. Be prepared to think big and to plan for success and growth, compared to being surprised and having to rework the plan retrospectively.
5. Commitment to follow
Business plans are not much good unless companies and employees follow them. For that reason, companies and employees should be committed to follow the points included in a business plan. The business plan should include a signed commitment by the leadership team. This ensures that the leaders understand and will support the business plan. Consensus decision-making is key to moving a company forward. Many organizations fail to achieve their goals because of lack of understanding and buy-in to the plan.
6. A way to implement the plan
A business plan is only as good as the ability to implement it so all business plans should include a guide to implementing the plan's ideas. This will also serve as a sense-check for the leadership team from the beginning so as to prevent wildly optimistic production and revenue forecasts. One of the key challenges for businesses is actually implementing the plan. This is because often by the time the planning process is over the team is exhausted and burned out and they have a tendency to just go back to doing things the way they've always done them.
For companies to succeed, they must effectively reach their target demographic. However, a business plan also should look to target customers by factors such as lifestyle, needs and desires. These days it's not enough just to include demographic information (age, gender, income, etc.) about your potential customers in your business plan. Psychographics, or customer values, lifestyles, habits and interests, give you a deeper insight into your customers' needs, wants and frustrations which then helps you create products and services that really meet those needs and solves their problems. And the better you do that, the more money you make. This is all about that key ingredient for success, “Know your Customer”.
8. A social media strategy
As social media continues to grow in popularity, business plans need to highlight how to turn the use of social media into a strategic advantage. One thing that every business should include in their business plan is how they intend to leverage social media and social networking as a means to drive business to their website or storefront business. These efforts may also tap into a company's advertising, search engine optimisation and customer service efforts. No business plan should be without a section dedicated to the use of Facebook, Twitter, LinkedIn, Pinterest or Google+ as part of their marketing efforts and channel for supporting and engaging customers. This should not be a “nice to have” warm and fuzzy cool thing to do; it needs to be a carefully thought out plan on how to use social media to your advantage.
9. A way to keep employees engaged
A business plan should be sure to focus on how the company will keep their employees engaged. Never forget a systematic way to keep all employees engaged in the business and focused on their responsibilities. The plan must include ways to show employees their well-being aligns with that of the company; establish metrics for everyone's performance; and spell out the rewards for meeting the metrics.
10. Exit plan
Providing an exit strategy with your business plan can be a great help later on in the life of a business. Most people start a business without thinking about what they want to get out of it. Every business plan needs an exit plan. The main goal behind starting a business, aside from providing value to customers, is to build an asset to sell. When and for how much? This needs to be understood before ever starting a company. The exit plan could also form an important consideration for potential funders, as it will indicate that the entrepreneur has the intention to build an asset of future value compared to building funky technology for the sake of being clever or cool, or just for the sake of it.