5 Practical tips for a startup business

Basic choices in an early-stage startup: Starting a business is never easy. Although we start from an idea, starting a business takes more steps. Once you have the idea and know that it is a viable business model, you need to start some practical steps in setting up a business. Thankfully, creating a business and setting up the foundational structure is fairly easy. We will cover some of these practical tips for a startup business in this article.

Practical tips for a startup

We will talk about the following 5 tips to build your startup business.

• Company structure – type of entreprenuership
• Fund raising – Loans, venture capital etc
• Founding team – your core partners in business, how to motivate them
• Key Employees – business model in which they are motivated
• Customers – to define your market positioning

They all will lead to a shorter form of a business model canvas. But this will get you a great head start in setting up early parts of your startup business.

Company structure

This will be the first thing to think about. What type of company is yours? The normal choices are LLP, LTD or sole ownership. I’d normally recommend a Ltd company since it is easier. There are plenty of options that generate share certificates. The Ltd option is normally popular for startup funding with investors.

However, you may choose differently if you’re considering a different type of startup or small business. A sole trader type of business might work well for people in consulting roles. But generally, for a startup trying to expand, Ltd is better. You’ll anyway have to get into this stage during fund rounds for equity shares.

Fundraising for the startup

The easiest way to fund a startup is to have your own money. Any form of fundraising is difficult. The nice part of the startup world is that there are usually plenty of opportunities for equity funding. You can choose from a variety of funding options. Most of my experience has been around seed and Series A funding.

The seed funding has a few tax rebates that investors can benefit from which will derisk their investment. If your idea is good and has a scalable option – certainly something to consider. Also, look out for early-stage grants or awards that can help you make a proof of concept for your business plan or prototype.

Founding or Entrepreneurial Team

What will be the structure of your founding team? Will it be a sole founder or do you have a core team already. If you do, make sure that you have a transparent conversation about share splits etc. Investors like to see a team, it shows them certainty and better trust in your business plan. It is a sign that there are more people convinced about the opportunity aside from yourself.

A co-founder or director etc will be a great value add during the early stages. Normally an investor would like to take on the role of a Non-Exec director when they invest in your business. This will not attract more shares, but to keep a sense of control over your spending etc.

Key Employees

This is important. Take your time but make sure that you hire the right people. This will be the most significant investment you’ll make. For a startup, a traditional hiring routine might not work. You’ll need people who wear multiple hats and are comfortable with a level of uncertainty. Hiring in a startup will require people who can work and carve a role for themselves as you grow.

Customers in early stage startup

You might not have customers already. But you ought to have a segment of customers that you’re focusing on. Depending on the type of customer you can devise your startup strategy. This will directly influence your financial projections and funding rounds.

If you can start with getting a few letters of intent. This will help immensely with your funding as a source of vetting your business idea or plan.

Pricing Models

Pricing follows directly from the market segmentation. Try to approach pricing from a perceived user value approach. Pricing is a function of market, the importance of the timing of your product and the competition. Consider these into account while positioning where you want to sell.