Startup Planning: 5 Things You Fundamentally Need to Start A New Business

Startup planning refers to all the essential things you need to consider when starting up a new business.

As an entrepreneur, there are so many things you need to consider when starting up a new business. But of all these things, the 5 essential factors you need to focus on during your startup planning that will guarantee a successful launch of your new business are;

• Team
• Product
• Market
• Business Model
• Capital

Let’s take a closer look at each of them.

Startup Planning: 5 Things You Fundamentally Need to Start A New Business

• Team

To build a great company, you definitely need a great team. Successful startups are not created by an individual. They are created by a team.

The first essential element of your startup planning is people. Your startup idea is not going to automatically create itself; you need people to make it happen.

I’m sure this is an obvious factor to you. Where most entrepreneurs miss out is determining what kind of a startup/founding team they need to put together.

A good startup team, according to entrepreneur magazine, should comprise the following people;

1. The visionary and dreamer. Typically the core founder with the vision that leads the rest of the team.
2. The customer champion. Someone who steps into the user experience role making sure the product is giving buyers exactly what they need and want.
3. The innovation architect. This programming-savvy member is supposed to tie together the right technologies to build the product and keep the company on top of industry trends.
4. The rainmaker. This is the financial and business wizard assessing the viability and profitability of the company and keeping a close eye on the burn rate.

• Product

The product/service you want to offer to your target customers is the second essential element of your startup planning. What are you going to sell?

Your startup is only as good as the problems it is being created to solve in people’s lives. Your product/service is the solution your startup created to the problems in the lives of your target customers.

There are certain criterion this product/service needs to meet to qualify as a viable product/service;

1. Uniqueness: the product/service your startup has created must be significantly differently than all the existing options currently in the market. Why? Because no one needs another “me-too” brand. To get the market’s attention, you gotta stand out from the crowd!
2. Usefulness: the product/service your startup wants to offer her target customers must be capable of meeting their needs and solving their problems. In other words, it must be useful to the buyers. Why? Because people don’t buy products/services, they buy utility – the solutions in your products/services.

• Market

The market you want to serve is the third essential element of your startup planning. Who are your target customers?

A very clear understanding of the people who have the problems your product/service can solve is crucial to your startup success.

If your product/service is great BUT there’s no market for it, you’ve failed.

So to ensure there’s a ready market for your product/service, you need to clarify the following;

1. Market Size: what’s the total addressable market? That is; what’s the total number of potential buyers/customers/users for your proposed product/service?

2. Growth rate: how fast or slow is this market growing? Is there an opportunity for expansion?

3. Demography: these are the average or typical characteristics of your target market. These characteristics might include age, annual income, educational attainment, type of occupation, region of the country they live in, or number of individuals living in their household. Demographics help you understand who buys your product or service.

4. Psychography: these characteristics go beyond the external to focus on your target customers’ psychology, lifestyles, and behaviors. Psychographics can include such factors as where your target customers like to travel on vacation, the kinds of hobbies and interests they have, the values or opinions they hold, and how they behave. Psychographics helps you understand why they buy.

• Business Model

Your business model is the fourth essential element of your startup planning. A business model describes the rationale of how an organization creates, delivers, and captures value.

The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems. Without one, your startup cannot succeed!

A good business model design according to the greatest book ever written on the subject, ‘business model generation’ should cover the following 9 building blocks which form the four main areas of a business: customers, offer, infrastructure, and financial viability.

1: The Customers:

• For whom are we creating value?
• Who are our most important customers?

2: Value Proposition:

• What value do we deliver to the customer?
• Which one of our customer’s problems are we helping to solve?
• Which customer needs are we satisfying?
• What bundles of products and services are we offering to each Customer Segment?

3: Channels:

• Through which Channels do our Customer Segments want to be reached?
• How are we reaching them now?
• How are our Channels integrated?
• Which ones work best?
• Which ones are most cost-efficient?
• How are we integrating them with customer routines?

4: Customer Relationships:

• What type of relationship does each of our Customer Segments expect us to establish and maintain with them?
• Which ones have we established?
• How costly are they?
• How are they integrated with the rest of our business model?

5: Revenue Streams:

• For what value are our customers really willing to pay?
• For what do they currently pay?
• How are they currently paying?
• How would they prefer to pay?
• How much does each Revenue Stream contribute to overall revenues?

6: Key Resources:

• What Key Resources do our Value Propositions require?
• What Key Resources do our Distribution Channels require?
• What Key Resources do our Customer Relationships require?
• What Key Resources do our Revenue Streams require?

7: Key Activities:

• What Key Activities do our Value Propositions require?
• What Key Activities do our Distribution Channels require?
• What Key Activities do our Customer Relationships require?
• What Key Activities do our Revenue Streams require?

8: Key Partnerships:

• Who are our Key Partners? Who are our key suppliers?
• Which Key Resources are we acquiring from partners?
• Which Key Activities do partners perform?

9: Cost Structure:

• What are the most important costs inherent in our business model?
• Which Key Resources are most expensive?
• Which Key Activities are most expensive?

• Capital

This is the fifth essential element of your startup planning. How much do you need to startup your new business? Do you have this money? If not, where will you get it?

There’s no denying it, every business needs money to run. So the availability of it or lack of it can mean success or failure for your startup.

But before you run off to raise money for your business, here are 9 brutal facts you need to understand about business funding.

And lastly, not every entrepreneur is qualified to raise money for their startup, especially from financial institutions like banks. So to assess yourself before heading out to banks, the following factors must be met;

The 7Cs of Credit

1. Capacity

• Do you have experience running a business?
• Have you had this business for more than one year?
• Do you know this industry well?
• Do you have a good team working for you?
• Is the business operating well?

2. Cash Flow

• Is your business profitable?
• Do you have a bookkeeping system that will allow you to demonstrate this to the bank?
• Can you produce financial statements from this data?
• Is your cash flow sufficient to make the loan payments?

3. Capital

Do you have sufficient reserves, or other people who could invest in the business, should unexpected problems or hard times arise?

4. Collateral

• Do you have collateral (business and/or personal) which you can offer?
• Is the property you own yours, or do you share it with your husband or family?

5. Character

• Can you show the bank that I am honest, and keep your promises?
• If I’ve had a loan or supplier credit before, did you always pay on time?
• Have you always paid your personal bills on time?
• Can you prove this to the bank?
• Do you have good references?

6. Conditions

• Is the industry that you are in a good one?
• Do you have a unique product or service which makes you different from your competitors?
• Is there growing demand for my products? Does a loan make sense for my business?

7. Commitment

• Are you committed to working hard so that your business will succeed?
• Do you really want it to grow?
• Have you put your own money into the business?

Conclusion

Starting up a new business requires a lot of planning on your part as an entrepreneur. This post has been able to highlight 5 of the essential elements you need to focus on during the startup planning phase of your new venture.

Under each element, I have highlighted the actionable process you need to take during your startup planning. Doing them is what will guarantee that you launch your new business successfully!

Over to you

Are there other critical factors entrepreneurs need to consider during their startup planning? Feel free to contribute through the comments section below.

Thanks!

Source: Naijapreneur