The startup industry is growing at a high score with millions of tech startups launching daily. Each tech startup founder is a unique agent of change who tends to impact the world, take their startup to an initial public offering (IPO), and become the next Steve Jobs, Bill Gates, or Mark Zuckerberg. And that’s a great aspiration. However, numbers say that 90% of startups fail in the first year.
How can you avoid failure and make your tech startup stand out in the competitive market?
You should simply hit the ground running from day one. To achieve this, lay a solid foundation backed with data and research, effective strategies and resources, and a high level of adaptability.
What Is a Tech Startup and How Does It Differ From a Traditional Business?
A tech startup is a young company with a unique business idea aimed to have an impact by bringing new technology-based products and services to the market. Think about Amazon, Zoom, Uber, or other big tech companies. All these giants were once small startups providing the right solutions to certain problems.
The main difference between a tech startup and a traditional business is that traditional businesses aim to improve products and services in the market whereas startups tend to create new technological solutions to the existing problems. Traditional businesses focus on proven business models and consistent growth, while tech startups often experiment with business models being focused on quick growth.
To put it simply, traditional businesses duplicate what others do in the market, while tech startups create something completely new from scratch.
How to Lay the Foundation for Your Tech Startup
To create a successful startup, you must develop a strong foundation with thorough planning, analysis, and strategic decision-making. Here are the main steps to lay the foundation for your tech startup.
Define your startup idea and vision
The first and most exciting step is setting up the idea and vision for your future tech startup. You need to detect the main problem and the way your tech startup can offer a solution. After setting up your idea and the solution you provide, define the vision for your startup. It should guide your startup and help you attract more customers and investors.
Perform a competitive analysis
Founding a tech startup is a thrilling experience. However, it goes beyond having a great business idea.
After setting up your business idea and its main vision, detect your main competitors using an accurate competitive analysis. Carefully research other companies offering the same solutions to your target audience to reveal what makes them in demand, how they operate, and their weaknesses.
The key is to find the gaps in the market that your product can fill in to beat the competition.
Develop a strong business plan
Outline your business goals, strategies, and financial objections in a carefully crafted business plan. A business plan is a key criterion to help you find investors for your startup. It includes:
Executive summary.
Description of the business ( with a focus on the business model).
Market analysis.
Overview of products/services provided.
Operational structure and management.
Financial plan.
Marketing plan.
A solid business plan provides half of your startup success. Be careful when crafting it.
Choose the right legal structure
Choosing the right legal structure is essential for tech startups to get more investments and scale. Before choosing a legal structure, you need to understand the pros and cons of each structure.
Limited Liability Company (LLC) is the top choice to provide flexibility at the early stages of your tech startup. It is the most commonly used legal structure in tech startups.
Solo Proprietorship is also ideal for startups in the first year. It is easy to set up and provides flexibility when starting small.
C corporation (C-corp) is appealing to investors and offers the highest liability protections. However, this is a complex structure with strict regulations and taxation.
Partnership is perfect for startups with 2 or more co-founders. This structure offers shared responsibilities and profits.
Key Steps to Start Your Tech Startup With
After setting up your idea, vision, legal structure, and business plan, you can focus on securing funding, establishing your core team, crafting your business culture, developing your product or service, and protecting your intellectual property. Below are these practical steps in more detail.
Secure funding for your startup
Various ways of securing startup funding exist, including a bank loan, personal savings, crowdfunding, and pitching for investment.
Pitching to investors is a common way of saving funding for a tech startup. However, talking your business idea to investors is a tough task, especially for new startups.
To properly pitch your business idea, you must:
Understand who you are pitching to. Research the investor’s experience and track record.
Create a concise pitch deck with your clear business idea, your business model, the problem you solve, your market size, and the financial estimations.
Have a unique value proposition that differentiates you from your competitors.
Display your roadmap. All investors are interested in the way they will cash out in the end.
Set up your early team
Your early team members are those who can make or break your business. Make sure to bring to the board professionals who are passionate about your startup and share its values and vision.
At the early stage of your tech startup, you must hire people who can wear multiple hats. You can’t afford to hire narrow specialists for every aspect of the business. To find your early team members, use personal referrals or platforms like LinkedIn.
Build a strong company culture
Think of your company culture right from the very beginning. A successful tech startup should have a positive and strong company culture to attract a better talent pool.
Aim for open communication, helping all team members share ideas and feedback. Build trust and cooperation between team members.
Improve your product or service every day
Rome was not built in a day. So does every successful tech startup you know. Start by presenting your Minimum Viable Product (MVP) as the simplest version of your product or service. This way you can launch quickly and improve it after.
Listen to what your customers say about your product. Use their feedback to improve your product, and its user experience, and add more features based on their needs.
Protect your intellectual property
Think of protecting your intellectual property from day one. Register your trademarks, copyrights, and domains. This way you will safeguard your tech startup’s innovations and avoid legal disputes and revenue loss in the future.
How Business Automation Can Help Your Startup Grow
As a rule, startups start with limited funding and finances. This is where business automation can help grow and scale. Additionally, work automation can help to increase productivity, saving time on repetitive tasks.
Automate repetitive business tasks
First things first, you need to find out the most repetitive business tasks for your startup. Estimate how much time they take from you and search for automation tools to help you save more time on such tasks.
You can use work automation tools to collect important data, make reports, automate customer support chats, email communication, and more. It will help you not only save time but also avoid human errors.
Automate HR and payroll processes
HR and payroll processes are too long and tiringand time-consuming, especially for newly established startups. Automation can help your startup simplify all the HR processes from hiring, and onboarding to monitoring and managing work schedules. You can also use HR and payroll automation tools to easily automate the payroll process to carry out calculations and payments quickly and without errors.
Develop a Marketing Strategy
To make your tech startup grow, you should have a large customer base which is achievable with the help of an effective marketing strategy. According to CB Insights, the lack of product-market fit is the reason for failure for 34% of startups, whereas for 22% it’s the lack of a marketing strategy.
Here is how to develop a marketing strategy to help your startup scale:
Identify your target audience
The target audience is those who mostly need your products or services. Many new tech startups start by trying to sell their solutions to everyone, however, this is their greatest mistake.
How to find your target audience?
Research the age, gender, geolocation, education level, and other important demographic information about your potential customers.
Analyze the interests and lifestyle choices of your potential customers along with the pain points they have.
Explore their purchase behavior to find out their buying patterns and loyalty levels.
Build online presence
Founding a tech startup without an online presence is like not having a startup at all.
To reserve a strong online presence for your tech startup, you must:
Craft a business website. It is your visit card in the digital world. To save costs on website development and empower your team with valuable information, take advantage of Ironhack’s Web Development Bootcamp.
Optimize your website for SEO. It will increase your startup’s online visibility and help attract more web traffic and leads.
Use content marketing. A well-performed content marketing, including blogs, videos, and other informative content can take your brand to a new level turning it into an industry expert.
Promote your tech startup on social media. Choose the social media channels where your target audience is actively present.
By using the mentioned and other digital marketing strategies, you can make your tech startup stand out in the market and scale quickly.
If your budget allows, hiring a professional digital marketing agency can be a smart move to ensure your startup's marketing efforts are executed with expertise and precision. When considering hiring a digital marketing agency, it’s important to evaluate key factors like their experience, understanding of your industry, and the specific services they offer to meet your business needs. This can make a significant difference in achieving your growth goals efficiently.
Conclusion
Founding a tech startup requires a strong will, enthusiasm, patience, and knowledge in many spheres including data analytics, web development, marketing design, and more.
Whether you are thinking of turning your awesome business idea into a tech startup or scaling your startup, check out the Ironhack Bootcamps. These courses will help you build an innovative startup with a strong foundation in technology, data analysis, and marketing.
Author Bio
Mike Hakob is a seasoned digital marketing maven with over 15 years of mastery, and the visionary Co-Founder of FormStory. As the driving force behind Andava Digital, he has dedicated his expertise to empowering small to medium-sized businesses, crafting tailor-made websites, and pioneering innovative marketing strategies. With a Management of Information Systems graduate degree, Mike seamlessly blends with technology and marketing, consistently setting new industry benchmarks and championing transformative digital narratives.
