One of the best things about running CutShort is that we get to see so many early stage startups. The innovative ideas and energy in the founders is very refreshing.
But sometimes we run into the founders that seem to have taken the plunge a bit too early. Starting up is a huge challenge anyway and by jumping in without the adequate homework, these founders end up making the entire journey much more difficult.
Don’t make this costly mistake. Here are 4 things you should do before you put in your papers to start your own business.
Research & validate your idea really well
Most business ideas start off as personal itches the founders want to solve. While that’s perfectly fine, it also means these ideas are ridden with several conscious/subconscious assumptions. You need to clearly write down these assumptions and test them systematically with your potential users.
Believe me, 90% of startup failures happen due to the personal bias of the founders who are too eager to move forward without objective research.
Two books I highly recommend: The Mom Test and the Lean Startup.
Build a working prototype
While people are getting smarter, too many first time founders still jump to the development phase immediately after initial research. They start hiring in house developers (a big mistake!) OR contract out the work to development agencies.
This is so bad that it’s almost criminal. Without making a prototype that is used by real users, you hardly have any idea about what your users really want. You will be surprised at the stark difference between what the users say and what they actually do. Starting product development straightaway will mean getting distracted and spending money and time on something that you’ll likely throw out in next 6 months.
Instead, build a working prototype that evokes real user feedback. Do things that don’t scale. Try to charge your customers for your scrappy MVP. If they are saying nice things – but avoiding to pay, it’s not a good sign. Without a working prototype,
A note about working prototypes – keep it crude – no flashy UI, no fancy animations. This helps in focusing the user feedback on the problem/solution fit, instead of the aesthetics of your solution. It’s hard for me to believe it now, but this is how ugly our first working product looked like:
Build your core team
If you’re not a techie – get one. If you’re too much a techie, get a cofounder who can articulate well and understands business.
Call it unfair, but today it’s hard to build any real startup without a really smart “hands on” tech team on board. While building your team, don’t just look at your friends or fall for the big brand names such as Google or IITs. Instead, look for cofounders who are passionate, have actually built something are hungry to build a solid startup with you.
Assess your real funding needs
Depending on your idea, you may need funding or you may not. Run your numbers and add an honest reality check. Talk to people already running their startups to get this idea.
A caution here – don’t just assume you need to raise funds just because everyone is doing it. Using lean startup methodology, you can take many ideas to product-market fit stage without spending a bomb. For instance, we decided not to raise funding early on and managed to bootstrap to our first profit.
Hope this helps. All the best for your venture!