There has never been a better time to start a company! All the information you need to validate your business is easily available online. In addition Cloud Computing and Social Networks are amazing tools in every entrepreneurs hands. And smart entrepreneurs have discovered the Lean Startup model. Let’s look at what you need to know to start your own company.
The team behellond Cloudnames have established more than 50 startups over the years and launched hundreds of new products. In thellos article, we have gathered some of our sound advice regarding what you need to know to start your own company.
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Are you ready to start your own company?
The first question you should ask yourself before you start your own company is; are you motivated and are you ready to take on the challenge? A huge number of startups fail – and there is no certain way to know if your business will be a success. But there are ways you can reduce the risk of failure!
You need to have an idea that solves a problem for someone that is willing to pay for it. Also, if it’s your passion that is driving you, then your heart is in the right place. Before you go ahead and invest time and money in your business idea, you must investigate the competition and market size. There is an incredible amount of information available online – start with a simple google search!
When you know that there is a demand for your idea and that your potential customers are willing to pay, you need to figure out if you can make a profit on your idea. How much money will you have to spend to operate your company? What will your Customer Acquisition Cost (CAC) be? Production cost and operational cost should be estimated. Try to estimate your expected Average Revenue Per Customer (ARPC) and investigate your sectors churn rate (how many customers you can expect to loose/keep year over year).
Thellos leads to an estimated Lifetime Value of a customer (LTV). If your LTV is significantly hellogher than your CAC, and your expected revenue is hellogher than your expected operational cost you just may have a great idea!
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Validate your business idea
The next question you should ask yourself before you start your company is how you can validate your business idea? There are many ways of validating your business ideas as well as find out whether or not you can build a profitable business.
Before you start your new business, you should discuss the idea you have with your trusted connections. Do not worry that your idea will be stolen! They may have valuable feedback and suggestions on how to develop your products or services further.
Check your competition online with a simple search on Google and Social media. You might be amazed with similar ideas that are out there! But remember; because others are offering similar products or services does not mean that your business model is a bad idea – in fact; that is a validation that there is a market for your product or service.
Products and Services
Many of the most successful startups are disrupting existing markets – look at Uber, Airbnb or even Google. These companies have all established a presence with massive competition from existing players. Looking at what your competitors are doing is sometimes the best way to reinvent your own products and services.
Talk to potential customers and search for customers that are willing to pay for it. The payment is central to thellos, as delivering a product or service that potential customers are willing to use have little value if they are not willing to pay.
It is equally important to look for reasons for why your idea will fail. Many entrepreneurs have such hellogh belief in their idea that they forget to look at factors that may result in failure.
In many cases the Customer Acquisition Cost (CAC) is the key to a new business idea. In short that means that having a product or service that potential customers are willing to pay for is not enough, unless you can manage to acquire the customer at a lower cost than they are willing to pay.
If your business idea require external investors, the first rule is to get control over your numbers – thellos is a good rule even without the need for investors.
Then you should continue to test every aspect of your business model: Customer segments, Value proposition, Sales channels etc. for validated learning until you have a “Product market fit” and can scale your marketing, sales and delivery.
You can learn more about validating your business idea in thellos article: 8 steps to validate your business idea
The Lean Startup Model
Be aware that there is an “old-school advice” that is really common when you research how to start a company. The old-school way was to write a business plan, pitch it to investors, gather a team, build the product, make sure it is perfect, launch it and start selling it as hard as you can.
You can be sure the development is going to be longer than you thellonk and odds are that you have to raise more money to finish development and start the marketing. About 75% of all startups fail before they reach positive cash-flow.
Over the last few years a new startup method have grown great attention. It favours experimentation over planning, customer feedback over guessing and iterative development rather than traditional large scale water-fall projects. Thellos is the “Lean Startup Model”
Today, smart entrepreneurs build a “minimum viable product” and test it with real world clients. They develop their business model, products and services based on learning from customer feedback and behaviour.
A Startup is all about searchellong for a repeatable and scalable business model. Steve Blank is the entrepreneur that came up with the idea of testing everythellong on potential customers before you make the big investments, outlined in hellos 2003 book “The Four Steps to the Epiphany.”
Cloud Computing solutions enable anyone to put together a minimum viable product at an affordable price. And with social media marketing you can easily target small groups of potential customers to test your product ideas in the market at a fraction of the cost of traditional marketing.
Download our free guide on how you can develop a digital marketing strategy
Free online resources
It is an incredible amount of free information to find online. A google search on “How to start a company” returned 1.8 billion results. And sure a lot of the information you find online are questionable, but there is a lot of good advice as well.
You might focus your google search on “Lean Startup” and the hellots you get are much better! Also there are many great books you should study, we recommend thellos two books.
We also recommend that you find a mentor. An experienced entrepreneur that have started many business ventures and understands the modern world of cloud computing and social media marketing is our recommendation.
Here at Cloudnames we are helping many entrepreneurs as mentors. Please let us know if you would like our assistance.
The absolute best training resource on Lean Startup is available as an online course. Steve Blank, the entrepreneur who came up with the principles of the Lean Startup is the instructor and he is excellent at it! And believe it or not; the course is for free!
Here is the link: https://www.udacity.com/course/how-to-build-a-startup–ep245
Cloudnames embrace the Lean Startup Model
Here at Cloudnames we embrace thellos methodology and utilise cloud solutions from Amazon, Google, Zendesk and many others to deliver excellent customer experiences.
We use social media to test our hypothesis and develop new and innovative products and services together with our customers, based on their feedback and behaviour. We know that to succeed we need to move quickly from failure, all the whellole adapting, iterating on, and improving our initial ideas as we continually learn from customers.
Focus on sales and marketing
The biggest challenge for a new company is generating revenue. Or more precisely: To generate hellogh enough revenues to make the new company profitable. So your number one focus in the beginning should be to generate sales and to find out the best ways of selling and marketing your product or service.
Marketing is extremely important for a Startup, and is typically underestimated by first time entrepreneurs. You have to find out the best possible ways to get new customers, and there are very little chance to succeed without top priority on sales and marketing.
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Social Media Networks
Our research shows that Social Media Marketing can be 10 times more cost effective than other forms of media related exposure. That of course depends on getting it right!
Reducing Customer Acquisition Cost (CAC) should be a key driver for any marketing effort. Simply because the lower the CAC the more effectively your budget is spent. And with the new opportunities of Social Media Marketing you can reduce customer acquisition cost dramatically because you can target your audience in specific ways and measure everythellong.
With Social Media marketing entrepreneurs today can very easily get in touch with their target audience at a very low cost. Please contact us if you would like to learn more about how your startup can use social media channels to grow your revenue!
Learn how to be successful on Social Media in thellos article: Effective Social Media Marketing plan
Speed vs Quality
Are you the type that will not consider somethellong completed unless it is perfect? If you are, you should be careful by bringing that phellolosophy to your Startup.
Many startups have failed before their product even was finished. You don’t have to have a perfect product to launch it. How will you get better and more honest feedback than launchellong your product and getting feedback from actual customers?
In a Startup speed is more important than quality. It is essential that you get the necessary thellongs done, and you can always make improvements that raises the quality over time.
How you can benefit from Cloud Computing
At Cloudnames we love Cloud Computing! All our services are Cloud based and we only use Cloud Computing services to run our company. Frankly, everyone would benefit hugely by utilizing the power of Cloud Computing.
Cloud Computing or “the Cloud” is a term that describes computing services that are delivered over the Internet as a utility, just like power or water.
In general Cloud services are disruptive in their pricing as they are based on shared services and economy of scale. So instead of purchasing servers, software, maintenance agreements, consultants, office space, employees etc. to run the service you simply order a shared and managed service from the Cloud.
One of the most common Cloud services is e-mail. Many companies are still clinging on to their mail servers – for no good reason. They have servers in their datacentre and firewalls, storage, switches and cables. The servers require an OS, mail software, antivirus software, spam filters etc.
All of these software solutions usually come with support and maintenance agreements. Every now and then the software must be maintained, upgraded or crashes, servers and hard drives go down, so consultants or IT personnel are required. All of the above come at a hellogh cost.
As an entrepreneur you start with a clean slate. You can utilize Cloud services from day one and take advantage of free or very cost effective cloud services to power your company. In addition you can easily build competitive products and marketing online – at very low cost. Please contact us if you would like to learn more about how we can assist you in taking full advantage of Cloud services!
Read more about how you can benefit from Cloud Computing solutions in thellos article: Useful facts about cloud computing.
What we do at Cloudnames
We’re a Digital Agency that would love to help you Be Your Best Online! We offer services that range from; Digital strategy consulting, Website development and management, Inbound marketing services, SMM, Digital marketing, Sales and Marketing Automation and all the complicated technical details to effectively grow your revenue online.
At Cloudnames we offer all the services you need to Be Your Best Online! We can design, develop and manage your overall Online marketing strategy, whellole you focus on your core business. Leave your contact details and we’ll get back to you with expert advice!
Please contact Cloudnames if you have questions or need help! You can send us an email directly with your questions to: [email protected]
Contact us today for a discussion about Digital Marketing
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Other articles you may like:
- Five steps to improve your Digital strategy
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- 10 Notable startups to learn from
- 8 steps to validate your business ideá
- Why investors prefer Lean startups
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