How to startup a startup

How to start a startup: Юридические основы запуска стартапа

Cтэнфордский курс CS183B: How to start a startup. Стартовал в 2012 году под руководством Питера Тиля. Осенью 2014 года прошла новая серия лекций ведущих предпринимателей и экспертов Y Combinator:

Дисклеймер: в этой части курса лекций стэнфордской стартап-школы изложены особенности западной юридической практики (что логично). Этот пример интересен, поскольку наглядно показывает, что российская практика усилиями экспертов ФРИИ развивается в том же направлении, что и общемировая, заимствуя и успешно адаптируя некоторые решения. Мы непременно продолжим знакомить вас с подобными юридическими тонкостями в нашем блоге.

Сэм Альтман: Кирсти и Кэролинн расскажут о финансовых и юридических аспектах работы в стартапе. Эта лекция, возможно, будет не самой интересной, но если вы усвоите этот материал, то вам удастся избежать неприятностей в дальнейшем.

Кэролинн: Как уже сказал Сэм, в этой лекции мы поговорим о некоторых принципах работы стартапа. Мы с Кирсти расскажем об основных юридических и финансовых проблемах, с которыми ваш стартап может столкнуться на ранних этапах своего развития.

В одном из своих видео Пол Грэм как-то сказал: «Основателям не обязательно знать все финансово-правовые особенности создания стартапа». Я подумала: «О, нет! Это же название нашей лекции».

На самом же деле Пол хотел сказать, что основателям не нужно углубляться в детали этих процессов, потому что это довольно опасно. Так или иначе, мы с Кирсти не будет рассматривать эту тему подробно. Нашей целью будет, по крайней мере, убедить вас в том, что не стоит запускать стартап во Флориде не подумав.

Кирсти: Мы очень волновались, что вам будет скучно слушать бухгалтера и юриста. До нас выступали потрясающие основатели, и они затрагивали очень интересные темы. Но, как сказал Сэм, если вы будете знать все основы, то сможете принимать правильные решения, избегать неприятностей и лишних хлопот, а самое главное – сосредоточиться на том, что для вас по-настоящему важно – привести свою компанию к успеху.

Мы часто ссылаемся на такое понятие, как «стартап». Наверняка, вы помните, что любой «стартап» должен быть оформлен как отдельное юридическое лицо. Об особенностях его формирования мы поговорим чуть подробнее в дальнейшем.

Кроме этого, вы, наверное, знаете, что у стартапа имеются свои активы, интеллектуальная собственность, изобретения и другое имущество, которое нужно оберегать. Мы еще коснемся этого вопроса, а затем поговорим о том, как привлекать денежные средства, нанимать сотрудников и заключать договора.

Перед тем, как создать собственную компанию, вам необходимо обсудить с другими основателями несколько довольно важных вопросов: в частности, кто и за что будет отвечать в компании, и какой долей акций компании будет владеть каждый из основателей.

Кэролинн: Для начала поговорим о процедуре запуска стартапа. Каждый стартап должен быть зарегистрирован как отдельное юридическое лицо. Вы, наверняка, уже знаете, что основной причиной выделения компании как отдельного юридического лица является защита личного имущества. Если на вашу компанию подадут в суд, то никто не сможет забрать деньги с вашего личного банковского счета – только со счета компании.

Расскажу короткую историю. Около двух лет назад мы в YC работали с компанией, первоначально зарегистрированной как ООО [англ. Limited liability company, LLC в США] в штате Коннектикут: так основателям порекомендовали поступить их знакомые юристы.

Когда эти основатели пришли в YC, мы сказали, что им нужно повторно зарегистрироваться в Делавэре. Юристы из Коннектикута стали оформлять документы на перерегистрацию и, к несчастью, допустили очевидную, но очень серьезную ошибку. Они обнаружили ее, когда привлекали очень большую сумму денег. На протяжении двух лет основатели компании думали, что она зарегистрирована в Делавэре, хотя по бумагам она все еще числилась в Коннектикуте.

Скажу лишь, что для выяснения обстоятельств этого дела было привлечено четыре юридических фирмы: две из Делавэра, одна из Коннектикута и одна из Кремниевой Долины. Сегодня штраф за неправильную перерегистрацию составляет 500 000 долларов.

Вывод очевиден – ничего не усложняйте. Мы регистрируем все компании из Y Combinator по одному и тому же принципу, потому что так проще. Если не будете мудрить, то сэкономите много времени и денег.

Кирсти: Как же все-таки создать компанию, после того как вы решили зарегистрировать ее в Делавэре? Необходимо выполнить ряд определенных действий. Первое – довольно-таки простое: вы всего-навсего отправляете в Делавэр по факсу два листа бумаги, где написано, что вы собираетесь создать компанию.

На данном этапе у компании еще нет своих активов, и в ней пока ничего не происходит. После этого вы заполняете ряд документов, устанавливающих, помимо прочего, правила внутреннего распорядка компании. В них указываются имена членов совета директоров и руководства компании. В случае если вы регистрируете компанию в Делавэре, в документах необходимо указывать имена исполнительного директора, президента и главного секретаря.

Кроме того, на данном этапе вам следует заполнить документы, которые подтверждают наличие у вашей компании изобретений или программного обеспечения, созданных вами как физическим лицом и принадлежащих компании. Помните, что в этот момент желательно решить, что вы делаете от своего лица, а что – от лица своей компании, которая является отдельным субъектом. Очень важно видеть здесь четкую разницу.

Есть множество сервисов, которые могут помочь вам зарегистрировать свою компанию. Конечно, вы можете обратиться в одну из юридических фирм, однако кроме них есть онлайн-сервисы, предоставляющие те же услуги. При работе с компаниями из YC мы часто пользуемся сервисом под названием Clerky, где все стандартные документы заполняются за вас, так что вы можете ни о чем не беспокоиться и сосредоточиться на том, что для вас действительно важно.

Примечание: Петербургские разработчики запустили консьерж-сервис юридической помощи – yurburo.ru. «ЮРБЮРО» – полноценная платформа для создания юридических услуг. В данный момент команда является резидентом Акселератора ФРИИ и участвует в реалити-шоу «Кандидат на взлёт».

Стоит отметить важность этих документов, потому что в них указано, что представляет собой ваша компания и чем она занимается. Очень важно, чтобы все документы хранились в надежном месте.

Звучит банально, но некоторые основатели не уделяют этому должного внимания. Они не знают, что указано в их документах и где они находятся. Никто не спорит, что бумажная работа – далеко не самая интересная часть ведения бизнеса.

Те моменты, когда ваши документы имеют большое значение, оказываются одними из наиболее напряженных в жизни стартапа. Наверняка, они сыграют определенную роль, когда вы будете привлекать инвестиции в раунде A или в период приобретения вашей компании. Вам придется тщательно изучить все документы, потому что с ними будут работать профессиональные юристы. Если вы не знаете, где хранятся ваши документы и что в них написано, любая стрессовая ситуация станет для вас еще более напряженной.

Главное – хранить свои документы в надежном месте и в строгом порядке. Так вы избавите себя от ненужной работы.

Кэролинн: Теперь несколько слов о финансовой составляющей стартапа. Для начала поговорим о распределении долей компании. Если стоимость акций вашей компании высокая, то встает вопрос о доле каждого основателя в компании. Если вы – единственный основатель в стартапе, то вам об этом можно не задумываться. Но если основателей двое или больше, вопрос становится довольно острым.

Во-первых, важно понимать, что фактическая реализация идеи важнее самой идеи. Во многих стартапах слишком много внимания и, соответственно, чересчур большая доля компании достаются именно основателю, придумавшему идею для стартапа. Без сомнения, идеи имеют большое значение, но сами по себе они ничего не стоят.

Вы где-нибудь видели, чтобы за одну идею кто-то заплатил миллиард долларов? Стоимость компании начинает расти, только когда все основатели работают над реализацией идеи. Не стоит поддаваться соблазну и отдавать чрезмерно большую долю акций основателю, являющемуся автором идеи для компании.

Во-вторых, нужно подумать, стоит ли распределять акции компании равномерно между ее основателями. На наш взгляд, вполне очевидно, что стоит. Доли каждого из основателей не обязательно должны быть равными, однако если они сильно отличаются, это должно настораживать.

Мы часто интересуемся мнениями основателей по поводу неравенства долей в компании. Возможно, один из основателей считает, что стартап долго не проживет. Возможно, кто-то переоценивает свой вклад в работу компании, свое образование или свой предыдущий опыт. Доверяют ли основатели друг другу? Откровенно ли они делятся своими мыслями по поводу стартапа и его будущего? Если доли основателей в компании сильно отличаются, то мы начинаем беспокоиться о том, ладят ли они друг с другом.

В-третьих, в стартапе очень важно смотреть в будущее и не оглядываться в прошлое. Иначе говоря, каждый основатель должен выкладываться на все 100%. Каждый должен спросить себя, готов ли он к длительному путешествию. Если все в стартапе считают, что каждый из основателей должен вкладывать в работу все свои силы на протяжении всего пути, то все, что происходило до создания компании, не имеет никакого значения.

Не важно, чья была идея, кто занимался разработкой, кто работал над прототипом и у кого есть степень MBA. Всей команде будет лучше, если доля каждого будет одинаковой, потому что реализовывать идею будет вся команда. К этому можно добавить, что среди лучших компаний YC, то есть тех, чья оценочная стоимость оказалась самой высокой, нет ни одной, где доли основателей значительно разнились.

Кирсти: Вы с основателями обсудили, как будете распределять между собой доли в компании. Что дальше? Очень часто основатели удивляются, что им нужно еще что-то делать, чтобы завладеть своими акциями. Им кажется, что их разговоры что-то решают. На деле же вы считаетесь не только физическим лицом, но и представителем компании.

Можно представить похожую ситуацию в крупной компании: если вы работаете в Google, и вам сказали, что часть зарплаты вы будете получать в виде акций, то вы можете предположить, что должны подписать какие-то документы на выдачу пакета акций. Если этого не происходит, вы подумаете, что здесь что-то не так. То же самое и в небольшой компании.

В данной ситуации вы должны подписать договор о купле-продаже ценных бумаг. Вы как физическое лицо покупаете акции у компании. А когда вы что-то покупаете, вы всегда вступаете в двухстороннюю сделку. В данном случае вы можете получить акции, если вы либо платите за них наличными, либо предоставляете компании свою интеллектуальную собственность, изобретения или разработки. Таким образом, все, что было сделано вами в прошлом, фактически принадлежит компании.

Такие акции еще называют ограниченными, потому что права на них можно получить лишь по истечении определенного срока. В дальнейшем мы рассмотрим этот вопрос чуть более подробно.

Если говорить о процессе предоставления прав на акции, то стоит упомянуть об одном очень важном документе, о котором мы постоянно твердим всем и каждому, потому что последствия могут быть необратимыми. В свое время из-за него было сорвано несколько сделок.

Мы заметили, что некоторые компании не заполняют так называемую форму 83(b) Election, и зачастую это приводит к срыву сделки. Не буду вдаваться в детали: лишь скажу, что от этого документа зависит объем налогов, которые вы выплачиваете как физическое лицо и как представитель компании, а это может серьезно сказаться на вашем бизнесе.

Поэтому главное – заполнить все документы, в частности, договор о купле-продаже акций и налоговую форму 83(b) Election, а также убедиться в том, что вы действительно передали эти бумаги на рассмотрение. Если вы не сможете этого доказать, у вас возникнут проблемы с налоговой службой (IRS), а инвесторы и компании, заинтересованные в приобретении вашего стартапа, не станут заключать с вами никаких сделок.

Кэролинн: Далее мы поговорим о процессе предоставления прав на акции, или вестинге. Как вы знаете, под вестингом понимают процесс обретения прав на акции по истечении определенного промежутка времени. Здесь мы говорим об акциях, которые вы приобретаете у своей компании, и которые дают вам право голоса. Однако в случае если вы уходите из компании до момента истечения срока вестинга, ваша компания может вернуть себе эти акции. Такой тип акций еще называют ограниченными, имея в виду, что акции находятся в процессе вестинга. Налоговая служба обычно говорит, что такие акции «подлежат возврату».

Каким обычно бывает срок вестинга? В Кремниевой долине так называемый стандартный срок вестинга составляет четыре года с клифом [англ. cliff – период, по истечение которого сотрудник получает накопленный им объем акций] в один год. Это значит, что через год основатель становится полноправным владельцем 25% своих акций, а права на оставшиеся 75% он получает ежемесячно в течение следующих трех лет.

Представьте, что на Рождество основатель покупает пакет акций, а в ближайший день благодарения, то есть до истечения срока в один год, покидает компанию. В этом случае у основателя нет прав на эти акции, так как он ушел из компании до истечения периода клифа. Если же основатель покидает компанию через день после следующего Рождества, то есть спустя один год и один день, он или она получает право на 25% акций, так как срок клифа истек.

Что же происходит с акциями после ухода основателя из компании? Компания может выкупить эти акции. В нашем примере с основателем, ушедшим через год и один день после приобретения акций, компания должна выкупить у него оставшиеся 75% акций.

Как? Компания просто-напросто выпишет основателю чек: точно так же, как основатель заполучил эти акции. В чеке указывается та же стоимость, по которой основатель приобрел эти акции. Таким образом, получается, что основатель просто возвращает свои же деньги.

Возникает вопрос: зачем вообще нужен вестинг? Важность этой процедуры связана с уходом основателей из компании. Если бы не было вестинга, то основатель после своего ухода забирал бы с собой достаточно большую долю акций компании. Разумеется, это было бы нечестно по отношению к его коллегам. Подробнее мы поговорим об этом, когда коснемся заработной платы основателей.

Помимо этого, вестинг стимулирует работу основателей в стартапе. Если основатель в любой момент может уйти из компании со своей долей, тогда зачем в ней вообще оставаться и инвестировать свои силы и время? Ведь работа над стартапом требует титанических усилий.

Нужен ли вестинг единственному основателю в компании? Нужен, потому что у него тоже появляется дополнительный стимул к работе. Инвесторы хотят, чтобы все основатели, в том числе единоличные, были заинтересованы в длительной работе.

Наличие вестинга в компаниях с одним основателем также является примером для других сотрудников. Можете представить, как глупо будет выглядеть, если основатель станет рассказывать своим сотрудникам, что в течение четырех лет он должен получить права на свои акции, когда на самом деле эти акции ему вовсе нужны.

Вестинг влияет на корпоративную культуру компании: основатель, которому нужно получить права на акции, задает темп работы для всего стартапа, когда говорит: «Мы с вами настроены на длительную работу, мы все собираемся получить права на свои акции, и будем делать это вместе».

Кирсти: Двигаемся дальше. Мы грамотно зарегистрировали компанию. У каждого имеется своя доля акций. Вся стандартная бумажная работа завершена. Что теперь? Следующим этапом развития стартапа будет привлечение финансирования.

В предыдущих лекциях несколько инвесторов и основателей уже поделились опытом привлечения средств. Если они рассказывали о стратегиях получения инвестиций, то мы расскажем об оформлении необходимых документов и о том, что нужно делать, когда кто-то готов вложить в вашу компанию свои средства.

Что касается привлечения финансирования, то тут возможны два случая: либо стоимость, на которую ориентируются инвесторы, установлена, либо она не установлена. Под стоимостью имеется в виду оценка стоимости компании. В принципе инвестиционные раунды можно называть как угодно, но, как правило, если речь идет о посевном раунде, значит, стоимость еще не установлена. В так называемых раундах A, B и так далее, стоимость уже определена.

Если информации о данной стоимости пока нет, то получить денежные средства проще. Данная операция проводится на основании соглашения об особой форме конвертируемых займов, которая в английской литературе носит название Safe.

И вновь в сделке принимает участие две стороны. В документе прописывается, что, допустим, сейчас инвестор выплачивает 100 000 долларов, а взамен получает право на получение акций в следующем раунде, когда стоимость компании уже будет известна. Стоит отметить, что после оформления документов этот инвестор не является акционером и поэтому не имеет права голоса в компании. Он будет обладать другими правами, о которых отдельно расскажет Кэролинн.

Вполне естественно, что инвесторы хотят получить что-то взамен, когда вкладывают свои деньги на самом раннем и рискованном этапе развития компании. И здесь надо упомянуть о таком понятии, как оценка капитализации компании, о которой, я уверена, многие наслышаны.

Во время раунда с неустановленной стоимостью компании должен быть подписан документ, в котором указывается величина капитализации при конвертации акций. При этом она отличается от текущей оценки компании.

Оценка капитализации – это верхний предел стоимости компании, который в дальнейшем используется для подсчета числа акций, принадлежащих инвестору. Предположим, инвестор предоставляет компании конвертируемый займ в размере 100 000 долларов с капитализацией в 5 миллионов.

Если через год компании удается привлечь инвестиции при оценке ее стоимости в 20 миллионов долларов, то стоимость одной акции для первого инвестора снизится примерно в четыре раза. Таким образом, на вложенные им 100 000 долларов инвестор сможет купить примерно в четыре раза больше акций, чем если бы он вложил ту же сумму в раунде A. Так инвестор может получить выгоду от того, что вложился раньше других.

How to Start a Startup

A Step-by-Step Guide for 2022

Startups are businesses created with rapid growth in mind that shake up their industry and challenge the status quo. If you’re a self-motivated, passionate, creative, and adaptable person with a great idea; you might be made for startup entrepreneurship.

Learn more about how to launch your own business with our step-by-step guide on how to start a startup. From business planning to marketing, we share the top tips and strategies to help entrepreneurs reach success.

You can also use the drop-down below to learn about starting a startup company in your state!

Just Select Your State to Begin!

How to Create a Startup in 10 Steps

Are you ready to launch your own successful startup company in 2022? Keep reading or use the links below to find a specific section in our startup guide.

Keep reading to learn more about starting a startup, or simply have a professional service form your startup for you:

Note that forming a corporation is recommended for startups, especially those seeking outside investors, while forming an LLC is recommended for small businesses that do not plan to raise outside investment. You can learn more about which legal structure is right for you by reading our guide, Should I Form an LLC or Corporation for My Startup?

1. Assess Your Entrepreneurial Skills

Launching a startup is not for the weak at heart.

Starting and growing any business takes dedication. Launching a startup company takes even more.

Although there are numerous types of entrepreneurs, there are a number of common characteristics often attributed to startup founders. Some of the most important entrepreneur characteristics are passion, creativity, motivation, and self-discipline. Entrepreneurs also have to be adaptable, observant, and willing to take risks.

Other common characteristics often attributed to entrepreneurs include:

A keen sense of the industry’s problems and challenges acquired through industry experience can give you and your startup a competitive edge. However, not every startup CEO has a technical background or experience to pull from. Many successful entrepreneurs simply have the vision and foundational skills to run a company, and they hire qualified employees to fill the gaps in their skillset.

Recommended: Are you ready to create a startup and become an entrepreneur? Take the Entrepreneurship Quiz to find out! You can also visit the Startup Savants podcast to gain insights and advice from founders themselves.

Watch our latest founder interview to learn more about what it takes to launch your own startup!

2. Develop Your Startup Idea

If you are looking for startup ideas, one of the first places to begin your search is by looking at what you already know. Keep in mind, however, you are not limited to your current skill set. For example, there are many tech startup founders that are non-technical.

Most often, startup ideas are developed from solving a problem. Whether it is a problem you personally struggle with or one you have identified that could use an alternate solution, forming your startup’s product or service around an identified problem can help you not only develop your minimum viable product (MVP), it can also help you find your target market before you get started.

Analyze the Industry Landscape and Develop Your Idea

Before you launch a startup, analyzing the state of the industry landscape, including the:

The goal of doing this is to establish whether there is ample opportunity within the industry to support your entrepreneurial goals.

Validate Your Startup Idea

Now that you’ve got a basic understanding of your industry, competitors, and the industry’s projected growth, your next step is to validate your startup idea and solidify your MVP.

There are a few ways to validate your startup idea:

Recommended: Looking for more inspiration to help you launch your company? Check out our list of the top startups to watch!

3. Create Your Startup Roadmap

Whether you begin with an informal or formal business plan, the process of writing your business plans down requires you to think through all of the key elements of your business such as industry, market, and competitive position.

There are many different types of business plans, depending on the stage of your venture and the purpose of your business plan. In the earliest stages of your business idea, you may want to start with an informal business plan such as:

However, once you are ready to begin seeking investments, you will most likely be required to provide a formal business plan to lenders and potential investors.

Create a Pitch Deck

Before you secure funding as an early stage startup, there are a few things you need to have in place to increase the likelihood that your pitch is successful, whether you’re reaching out to angel investors or attempting to acquire a small business loan. The most important being your pitch deck. Crafting a compelling story is essential not only to the success of your startup but also to creating an impactful pitch deck.

A startup’s pitch deck should include the following;

4. Build Your Founding Team

Find Co-Founders

Startups with two founders are 19% less likely to scale prematurely than startups with a solo founder. Research shows that aspiring entrepreneurs launching a startup without a cofounder take 3.6 times longer to see significant growth — enough to outgrow the startup stage.

Despite these statistics, not all startup owners need a co-founder to be successful in their startup journey. Bringing on co-founders is all about filling important gaps to ensure all of the company’s needs are met, such as:

If you do choose to bring on a co-founder, you need to have a founders’ agreement. This document outlines all expectations now and in the future, including:

Hire a Lawyer if Needed

The next step is learning how to find a great lawyer for your startup. What makes a good startup lawyer, essentially, is understanding the nuances of startups, such as establishing deal terms with venture capital firms and applicable business taxes.

Every company should build a relationship with a lawyer to help with all of the legal requirements associated with forming and operating a business. Not only will your lawyer be essential in ensuring that your startup is legally formed without a hitch, they can help ensure that your business stays compliant if you plan to implement customized vesting schedules or share allocations.

Network Network Network

Networking is one of the most impactful tools for startup entrepreneurs to grow and support their businesses. There are many different networking resources available to entrepreneurs, such as startup incubators, networking events, and local entrepreneur communities to make connections.

To develop the most impactful networking strategy, you need to connect with a wide range of people, such as:

5. Formally Establish Your Startup

Name Your Startup

Naming your startup is a very important consideration. Choosing an optimal name depends on the type of business, industry, and target audience.

Once you have chosen a name, you will need to ensure that the name you choose is not already in use and that the domain name is available. You can do this by searching the web, Federal Trademark Records, and your state’s Secretary of State website (or equivalent state department).

You can also search GoDaddy for available domain names:

Find a Domain Now

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Once you register a domain name, we recommend choosing a business phone system to enhance your customer service. Phone.com provides a high-quality phone service that integrates with all devices.

If the name you were hoping to use is already in use, you will have to come up with another. If you end up having trouble coming up with a name, here are a few tools that might help:

Choose a Business Structure

One of the first things you will need to do to establish your startup as an actual business is to choose your business structure (i.e., the legal form of your startup).

These are the main types of legal structures for startup ventures:

The most popular corporate structure for startups with aspirations of high growth is the c corporation. This is because most investors prefer C corporations. A C corporation (C corp) has investor-friendly taxation rules, simple transfers of ownership, and natural exit strategies, and many angel investors and venture capitalists will not invest in ventures that are not incorporated.

For more information on establishing your business as a formal legal entity, read our comprehensive guide, How to Incorporate a Startup.

Considering Using an Incorporation Service?

Hiring a professional service will help simplify the formation process for you. Click below to check out our review of the best online incorporation services for startups!

Choose a Location

While some locations such as Silicon Valley have become synonymous with startup culture, generally the best location to start your startup is the state you’re already located in. Starting a business in a state other than the one you’re located in requires more complicated paperwork and complex tax requirements. However, if you’re thinking of starting your startup in another state, some states are more business-friendly than others.

For example, many founders choose to incorporate their startups in Delaware due to their immense business-friendly policies. Startups that form in Delaware are able to do business in other states and therefore bypass the state income tax — a huge tax advantage for any business. However, this isn’t the case in every state. We recommend consulting with a tax professional or attorney before deciding to do business in another state.

Choose your state from the list below to read more on starting a startup in your state:

If you’ve chosen a physical location for your startup and understand the laws, regulations, and potential benefits of the state you’ll reside in, it’s time to start searching for office space. We’ll help you decide the right office space for your startup based on the stage your company is at, its needs, and the many types of office spaces available with this guide to selecting and leasing a startup office.

If your startup is primarily run online, especially when it comes to ecommerce, your business website is most likely the lifeblood of your company. If you don’t currently have a website, consider building one or having one built for you. You can read more about business websites and their role in your startup’s branding in Step 8 below.

Create a Founder Employment Agreement and Vesting Agreement

Startup owners aren’t typically bound by severance agreements that would be applicable to other employees. Instead, founder employment agreements represent the legal agreement between the founder and company.

A vesting agreement is an agreement between the company and a shareholder (typically an employee) that provides restrictions for the shareholder’s ownership of the company. In short, the employee will not be granted their share until the vesting requirements are satisfied.

Formalize Advisory Agreement

If your startup chooses to involve startup advisors and equity is involved in the relationship, you will need to also formalize an advisory agreement. Essentially, this means that all the requirements and stipulations of the relationship between your company and the advisor are outlined including terms of equity and confidentiality.

Startup advisors can be especially helpful during the beginning stages of startup ownership if you aren’t fully confident in a specific aspect of business ownership, such as legal and compliance requirements, marketing, or manufacturing. Additionally, startup advisors are helpful in making key introductions to help your startup grow as well as helping develop ideas and concepts for the company.

Looking for startup advisors? For high-scale startups, investors (venture capitalists or angel investors, typically) are often great startup advisors. However, if you’re launching a business that doesn’t have high growth in mind, you can find startup advisors through resources such as SCORE or the Small Business Development Center (SBDC) in your area.

Create Cap Table and Issue Shares/Certificates

A capitalization table, otherwise known as a cap table, is a document (such as a spreadsheet) that outlines the equity capitalization of your startup company. The cap table outlines your startup company’s securities (e.g., stocks, warrants, certificates, etc.), who owns each security, and the percentage of ownership they have.

Next, you will want to issue shares or certificates of your company to each party based on the cap table you’ve created.

Establish Corporate Governance

Corporate governance is essentially the rules, regulations, and guiding principles that govern a company. Not only does the corporate governance provide much-needed structure to help the startup obtain its goals and objectives, it balances the needs of each company participant. From shareholders to employees and the community, corporate governance ensures every need is balanced and met.

Appoint a Registered Agent

A registered agent is an individual or entity who will receive documents and other legal communications on behalf of your startup. Most states require every business to designate a registered agent when forming a corporation or LLC.

We recommend hiring a professional registered agent service to help you stay compliant with the law and provide you with peace of mind.

Register Your Business with the IRS

It is recommended that one of the first things you should do is register your business with the IRS by obtaining an Employer Identification Number (EIN). An EIN is the IRS’ way to identify a business.

There are several reasons you may need an EIN for your business:

You can apply for an EIN for free on the IRS website or by mail, by fax, or by phone. For more information on how to apply, read our guide on How to Get an EIN (For Free).

Register Your Business for Sales Tax

Depending on the nature of your product or service and the state you live in, you may need to collect a sales tax.

Sales tax, or «Sales and Use Tax,» is a tax charged by states, counties, and municipalities on the sale of certain taxable goods or services. Each state, and certain counties and municipalities, has its own set of rules and rates on what is taxable within that jurisdiction.

Check with your state’s Department of Revenue (or equivalent state department) as well as your local tax office to find out what you are required to collect sales tax on in your state.

Obtain Licenses and Permits

In addition to registering your business, you will likely need to obtain a number of licenses and permits from your local, state, and federal government.

Federal Permits and Licenses

If your business falls under the regulation of any federal agency, you will likely need to obtain the appropriate permits from that agency. These include commercial activities in:

For more information on federal licensing, visit the Federal Licenses and Permits page on the sba.gov website.

State Permits and Licenses

Most businesses are required to file for a permit or license to operate legally within their state. The permits and licenses you may need vary widely by state and type of business.

To find out more about the permits and licenses in your state, use TRUiC’s Business License guide to find business license resources for your state.

Local Permits and Licenses

Most businesses will need some kind of local license or permit to legally conduct business within their town, city, or county. These may include anything from occupancy permits and food and beverage permits to special permits and licenses for signage, lighting, and noise.

You will need to check with your local county clerk’s office about the types of licenses and permits required.

Get Insurance for Your Startup

Most startups will need insurance in one form or another. Some forms of insurance, such as worker’s compensation or unemployment insurance, may be required by your state. Other forms of insurance may be optional but are important to protect you and your company from disaster.

To learn more about the types of insurance you may need, or search for our specific guides on startup insurance recommendations in over 650 types of small businesses, make sure to read our Small Business Insurance guide.

Find out the real cost of getting insurance for your business. Get a free quote or call 855-602-1925.

Protect Intellectual Property (IP)

Protecting your startup’s competitive advantage means you need to obtain the proper patents, copyrights, and trademarks to ensure your intellectual property (IP) is protected. By registering ownership of intellectual property, you mitigate the risk of competitors utilizing the ideas, designs, or concepts that are protected.

Furthermore, developing a Founder Intellectual Property Assignment Agreement essentially transfers the founder’s IP rights to the company, allowing the startup to utilize the IP while still maintaining its protection. Since founders are typically also shareholders in the company, they still benefit financially from their IP.

6. Get Startup Funding

Startups require funding for a number of reasons. Startups often need capital to cover their initial expenses until they become profitable, and they need money again to expand, grow, build inventory, and even get through slow seasons.

When planning your business, you should determine what types of business funding options your company will need and when. You need to be completely aware of startup costs and your financials and financial projections before seeking outside funding.

The most common types of business funding are:

Recommended: Establish financial credibility for your startup with a business bank account and a business credit card.

Keep in mind, your startup will require different funding sources during different stages of development. For example, during the seed stage, bootstrapping or friends and family loans may be the best funding choice. However, as your startup becomes more established and reaches the growth stage, a venture capitalist or angel investor are more likely to want to invest.

That isn’t the only factor you need to consider, however. The type of startup you’re operating also plays an important role in determining the right funding source.

7. Set Up Accounting for Your Startup

Business accounting is an important (and required) aspect of operating a startup. Accounting allows you to:

In addition to serving legal and tax-related purposes, you also need an accounting system in place to accept payments, pay your employees, and manage your startup’s finances.

There are a number of options for handling your business accounting, including hiring an in-house accountant, hiring a bookkeeper, using a payroll service, or using small business accounting software. However, no matter how you handle your startup’s accounting, you will need to have an accounting system in place.

Recommended: Schedule a consultation with a business accountant today to find out how much time and money your business could save on tax, payroll, and bookkeeping services.

8. Establish Your Startup’s Brand

Just because you build an awesome product, service, or experience does not mean that customers are going to show up at your door. You are most likely going to need to find them first and let them know about your startup and what you have created. To generate startup success, you will need to build your brand identity.

Design a Logo

One of the first things you will need to do is to design a logo for your brand to begin building awareness and recognition. A well-designed logo helps people to identify and remember your brand and builds trust.

Try our free logo maker to generate thousands of professional, high-resolution, downloadable logo options for no charge. You can also find alternatives by reading our review of the Best Logo Makers.

Build a Business Website

Every legitimate business needs a website. And sooner than later, your startup is going to need its own website too.

If you have never built a website before, don’t worry. It is easier than ever, and TRUiC’s How to Build a Business Website guide walks you through it.

When choosing a website builder, there are many to choose from depending on your needs. Website builders like GoDaddy offer a multitude of features, functions, abilities, and applications based on your company’s needs.

One thing to keep in mind when designing and writing content for your website is your search engine optimization strategy. Search engine optimization (SEO) is the process of increasing your website traffic (and your brand) by designing your site and content to rank higher in search engine results.

Recommended: Build your startup website today with GoDaddy.

Establish a Social Media Presence

In addition to building a website, you will also likely need a social media presence to establish your brand identity and grow your startup. Social media provides a way to reach, connect, and engage with customers and potential clients.

The most popular social media platforms include Facebook, YouTube, Instagram, TikTok, Snapchat, Twitter, LinkedIn, and Pinterest. However, additional platforms such as Yelp, Reddit, and Quora all have large followings of niche users. The social media platforms and strategy you choose to establish your startup will depend on the nature of your product or service and your target consumers.

To learn more about establishing your startup’s presence on social media, feel free to read our guide, How to Improve Your Startup’s Social Media Strategy.

Distribute Press Releases

Another way to let people know about your startup is by creating your own publicity by writing press releases.

A press release is an official statement by your company written by you and distributed to the press to provide public knowledge and promote your business and brand.

Of course, you can hire professional press release writers or press releases distribution services such as eReleases.

9. Hire a Team

A company is only as strong as its team. Building a team that is passionate about what your company does, skilled at their jobs, and trustworthy is vital to the success of your startup.

To begin, startups typically need to fill the following roles:

But, before you can hire for these essential roles, you need to solidify your startup mission statement to accurately describe your company’s purpose and values. Additionally, learning to write effective job descriptions helps parse out candidates that may not be a great fit for the role by providing them with accurate information about the job and your company.

Finding Talent

Once you’ve established the roles you need filled, the next step is to work towards finding the right candidates to make up your team. A few common methods for finding talented candidates to choose from are:

Recommended: Find freelance talent with Fiverr.

Additionally, it can be beneficial during the hiring process to amplify your job offer by offering incentives such as stock options to employees. This is most common for venture capital-funded startups and has the potential to not only build brand loyalty but also provide the team with an incentive to work actively to propel the company forward.

Employer Legal Requirements

The next step is to register for employment taxes. On the federal level, you will need to register for FICA Tax, commonly known as payroll taxes or withholding tax.

Additionally, every state has different tax requirements for employers, but many states require employers to pay some version of unemployment insurance (UI) tax as well as workers’ compensation insurance.

You’ll also need to create an employment agreement, a legal document that outlines the agreement you are making with your new employee. Inside your employment contract, you will include agreements that are applicable to your company as well as applicable policies surrounding the termination of the agreement, reimbursement of expenses, disputes, company clients, and anything else that pertains to your startup.

Here are a few agreements that you may want to consider including in your employment contract:

Set Up Payroll

How will you pay your employees? Setting up an effective payroll system or service for your company ensures that employees are paid on time and that the appropriate taxes are paid and documented for tax season.

Generally, we recommend startups utilize payroll software like ADP to streamline this process and get their employees paid worry-free.

Company Culture

Startup companies are known for their emphasis on company culture. Before you build a team, you need to ask yourself, “what kind of company ethos do I want to create?” This should be the basis for the personality types and values you look for in potential employees.

A strong set of company values sets the tone for the startup’s success by providing a foundation for the team’s purpose, motivation, and attitude. It can also contribute to better employee morale and retention.

10. Launch and Scale Your Startup

The work doesn’t end at launch or after your first sale. You will then need to focus on carrying out your plan, keeping up with industry trends, and growing your business. This will require dedication, perseverance, and the willingness to seize opportunities to grow.

These opportunities might include expanding to new regions, seeking additional target consumers, or expanding your product or service offerings.

Opportunities for growth also might come along in the form of innovation, quality improvement, customer-focused development, and streamlining your business model.

Or, opportunities for growth might include internal growth factors such as building your entrepreneurial network, growing your team, and building a strong company culture.

Boost Your Startup Marketing

In order to start gaining more customers and grow your startup’s revenue, your team can build a marketing plan that’ll help guide you along the way.

When you have a solid marketing plan for your startup, you’ll know exactly who your target customers are, what marketing channels you’ll use to reach them, and the exact strategy your startup wishes to follow in order to boost your customer base.

A marketing plan should be the foundation of your startup’s marketing efforts and is intended to be the “guiding light” for your marketing strategy.

To begin, take note of all of your startup’s business-critical goals and what you’ll focus on in the near term. Ideally, you’ll want to make these SMART goals:

Once your goals have been identified, figure out who your target buyers are and what kind of compelling message you’ll use to draw your potential customers in. Having a clear, compelling message is critical in order to grab your future buyer’s attention.

After completing those initial steps, your team can begin implementing your marketing strategy and focusing on the marketing channels you believe will generate the largest return on investment (ROI). This can be content marketing, online advertising, PR campaigns, social media campaigns, and more.

Marketing Channels

Choosing the right marketing channels for your startup can be challenging, but once you identify which channels bring in the best return on your investment, you’ll be able to leverage these channels further and scale up your marketing efforts.

Here are some popular startup marketing channels:

Create a Strategy to Motivate Growth

While growth can happen organically, you are more likely to reach your startup’s desired objectives if you create a strategy for growth. This means, once you’ve captured initial customers, expand your reach beyond early adopters and existing customers to establish a sustainable growth trajectory that includes tactics for both profitable and sustainable growth.

Start by asking yourself the following questions:

Additionally, you will need to work toward not only understanding but improving unit economics such as:

These unit economics can be measured by channel, customer segment, and product line. By developing strong measurements to better track and understand this data, you’ll be able to more easily develop strategies to grow your customer base and product line as needed.

Recommended: Read our guide on How to Grow Your Business for tips on seeking and finding opportunities for growth.

Startup FAQ

How do you define a startup?

A startup is a young company born out of a desire to solve a problem, fulfill a demand, or bring a unique product or service to the market. Typically, startup companies are funded solely by their founders or with the help of friends and family.

What are the types of startups?

Startup vs. small business: What is the difference?

The fundamental difference between a startup and a small business is longevity. Generally, while small businesses are focused on sustained growth, startups tend to focus on gross revenue and rapid growth since this is a temporary business model. Learn how to start a small business by reading our guide.

What is a lean startup?

A lean startup is a methodology developed by Eric Ries that tests the viability of a startup company or product through experimentation and hypothesis testing. This method is based on gauging the interest of customers to produce a product or service with a built-in market.

What makes a startup successful?

There are a multitude of ways to make a successful startup, but the foundational reasons startups succeed are because they offer a usable and unique product or service, have sufficient financial backing, and have an unrelenting dedication to making their business succeed.

What makes a good startup founder?

Starting a business takes a great idea and an even greater entrepreneur to make it all happen. Great startup founders are passionate, adaptable, confident, and have an eye for detail.

Recommended: Want to learn more about starting a startup from entrepreneurs themselves? Visit our startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

How to Start a Startup

Learning how to start a startup is important to your success. In this article, you’ll learn the step-by-step process to move forward with your startup idea. And, we provide you with details and resources to help you within almost every step. This way, you’ll be able to advance more confidently after completing each phase.

There are a lot of steps to starting and building a startup, and you’ll see the table of contents below which gives you insight into what needs to get done. This post also acts as a startup checklist of things you need to complete so you can start and grow.

Table of Contents

Introduction

Let’s briefly discuss two facts about the startup industry so you can become mentally prepared for your journey.

2) Up to 90% of startups fail overall.

While these statistics may seem shocking, with a combination of this post, learning from our book called Startup Survival Secrets, reading Why Learning About Startup Failure is Critical to Startup Success, and by taking advantage of our online startup incubator platform, you can learn not only how to start a startup, but also learn how you can avoid mistakes, giving you a greater chance of achieving long-term success.

Secondly, before I dive into each step, I want to share the number one reason for startup failure is so you can try to prevent it.

Then, after this brief section, we dive into the 30-step process of how to start a startup.

The First Step to Take Before You Start Building

Founders often start building a product that nobody wants and/or the founder(s) don’t have the background and expertise to start a startup in a specific niche.

Because of these things, 42% of startups create products that the market doesn’t need — and it’s the number one reason for startup failure.

That’s why it’s important to validate whether your startup idea is really worth pursuing by seeing if you’re making something people actually need, rather than what you think they need.

That’s why we show you how to start a startup in this guide which includes how to validate a startup idea because idea validation is one of the most important steps you can take.

Step 1: Assess Your Level of Expertise and Passion

Assess your ability to solve the problem that your target market has and your passion for your idea.

Passion is required for startup founders. Expertise in the target market and is also highly preferable. If your expertise and passion for your startup idea are low, then don’t quit your day job to pursue it. Be gladly willing to work on your startup for up to 10 years.

Moreover, expertise in the target is pretty necessary because you’re going to have a really tough time developing something you have little to no clue about.

Step 2: Determine How Much Time You Can Devote

Since it’s a better idea to keep one’s full-time job to be financially sustainable while validating an idea, determine how much extra time you can devote after coming home from work each day. Different roles have different responsibilities, but there’s always going to be work to do. The more people that work with you, the fewer things you need to juggle at once. If you have great business partners to start out with, then you can start up quicker. Having co-founders will provide a lot more flexibility, productivity, and speed to everything you do. Four founders is usually the suggested maximum. However, being your own boss does not mean freedom. Rather, it’s just a different lifestyle choice. Customers and the market become your boss and the job requires longer hours than “normal” 9 to 5 jobs.

Here are some things to consider:

Again — don’t quit your job if you’re working full-time already. Put most of your spare time towards developing your startup idea and seeing if the idea is worth pursuing before taking further action. This is called idea validation. The reason behind doing idea validation while working is so that founders have money to live. They don’t want to go homeless because they can’t pay rent or mortgage. Moreover, nor does one want your wife or husband divorcing them because they can’t pay bills. Once your idea is fully validated and you’re financially secure and have a runway of six to twelve months of money, then you should be able to take the risk and quit your day job.

Step 3: Further Develop Your Startup Idea

If you haven’t already, part of starting a startup properly is brainstorming. Write down your startup idea and describe the problem you are going to solve for your target industry or niche.

Think of your startup idea as a hypothesis so you can test it and see if it works. That’s because it really is a hypothesis until you have validated it by talking to potential customers to see if it’s something they need.

Brainstorm the different business models you can use. Write them down and keep them organized. You will need them for your idea validation when you’re talking to potential customers. You may also get new ideas on how to improve your idea when you’re talking to your potential customers.

Unfamiliar with idea validation? Start learning How to Validate a Startup Idea.

There’s also scientific method for building startups called the lean startup model, and it was created by Eric Ries. This method is talked about in detail in our post, Product-Market Fit: What It Is, Why You Need It, and How to Get It. Keep this in mind when you’re further developing your startup idea.

However, there are many bad startup ideas that even the lean startup model cannot save.

Your startup can truly be a good startup if you’re creating a solution to an existing problem that people experience in a sizable market. When you create this solution and you get significant traction, you’re on your way towards getting what’s called product-market fit. That’s like the holy grail of achievements for startups.

But what’s equally important is making money.

Do you know how you will make money with your potential startup?

Whether you don’t know or you do, I would suggest that you review the 10 major B2B and B2C startup business models to see what will work best for both your target customers and your business.

Step 4: Build Customer Profiles and Buyer Personas

Find out who your ideal customer is because your company will be based on what your customers want and need. You want to know as much about that ideal customer as possible.

Click on the following link to get the best understanding of how to build customer profiles and buyer personas.

When you build out your customer profile, you’ll need to write down their pain points within their industry or niche so you can better understand what is important to them and what isn’t. Pain is a feeling that creates emotion.

If you can help alleviate some of their pain or eliminate it all-together, then you are on the right track.

You’re creating this buyer persona by stepping into the shoes of your target user and you’re thinking about their life, how they act, what they’d want in a product, their interests or affinities for interests, the type of job they have, and so forth.

You’ll also want demographics, device usage statistics, market segment data, what types of websites they are likely to visit, and any other information you can learn.

Photo by Amy Wright. Source

This is a truly important step for when people are learning how to start a startup. That’s because 42% of startups die because they made something their target customers didn’t want or need. Therefore, really do your best to get to the root of their pain and frustration with your idea for your product/service and make sure they’d use it.

Step 5: Create Your Value Proposition & Unique Selling Proposition (USP)

Develop your value proposition and unique selling proposition to show how you provide value to your target customers and what makes your startup unique, or stand out.

A value proposition states what value you are going to be able to provide your target customers.

This value doesn’t inherently mean what is your product doing for them, but rather it answers what problem(s) you are specifically solving for them.

Write down the benefits of your product or service to your target customer and not the features.

What is the pain you’re alleviating from their lives?

Write down how you’re helping your target customer solve a pain point they have.

Get into the root cause(s) of their pain psychologically.

Make your value proposition short but sweet where you tell the target user the main benefit of your product or service.

Need some ideas of some strong value propositions?

Step 6: Market Research

Perform market research to find out information about your market and its demographics.

Find out the market size by typing in your niche and then “market size statistics.”

It’s incredibly important to do your research because you have to find out if your startup idea is really worth pursuing.

Furthermore, if your startup idea is indeed worth pursuing, then you’re going to need all of the research that you did during this phase for other aspects of your business.

The research will help you when you write your executive summary, your marketing plan, your pitch deck, and for writing blog posts, too.

Want to see how to do market research?

Step 7: Competitive Analysis

Perform a competitive analysis to find any competitors and write them in the competitive analysis spreadsheet.

Search by keywords (1 to 2 words) and long-tail keywords (3 to 7 words) in Google, Bing, as well as in social media outlets.

The keywords would be the same keyword combinations someone would use if they were looking for the services or product your startup would offer.

You also want to find out:

Another excellent article by HubSpot shows you how to do a competitive analysis: How to Start a Competitive Analysis: 57 Questions You Need to Ask [Free Kit]

Step 8: Determine How You’ll Build Your Product, Platform, or Service

Determine if you can personally build your product or service and website or if you need outside help.

If you can’t build it or find anyone else that can, then there are, at times, workarounds to create mockups.

Mockups are the most useful when you’re in the process of validating your idea to potential users and/or for investor presentations.

Mockups can help you define how you want to make your app or product so you can show investors and potential customers in order to get funding to build your app, product, service, or site.

Three great sites for creating mockups, wireframes, and digital prototypes are:

Programming

If you’re a programmer and you are able to build the software and site for a tech startup, then that’s great.

You will have a lot to learn on the business-side to build it up operationally and to market it properly. Luckily, our startup development kits can help you with that.

However, if you’re not a programmer or web developer, then you will obviously need some help.

Moreover, finding a good developer to work for equity is rare, but it happens.

Learn how and where to find a technical co-founder via this guide: How to Find a Co-Founder and What to Look For.

However, without a technical co-founder, you usually will have to pay someone or an agency to build your website and/or software/hardware.

In that case, then you could check out the many talented programmers at sites you can find in this post: 13 Best Freelance Websites to Hire Top Talent.

Physical Products & Prototyping

In addition, for startups making physical products, you’ll need to make a prototype. This article from Entrepreneur called Creating a Prototype from will help you understand physical product development better.

Also, check out this guide to the best 3D printers from 3DHubs.

Step 9: Distribution & Acquisition Channels

Determine where and how your product or service will and can possibly be sold (physical &/or digital).

Think about the physical geography, the digital landscape, if the product needs packaging, or if the product will need to be sold in stores, or online stores, or just your website.

Distribution channels for physical products:

Distribution channels for digital products:

Acquisition Channels:

Step 10: Financing Your Startup

Determine how much money you can devote to building your startup and if you need outside investment to build and grow it.

Be frugal in the sense that you should only spend money on things that are absolutely necessary.

Try to be self-funded as long as possible. Seeking money from investors implies that you’ll be giving up equity in your startup and that’s okay. You just have to weigh the opportunity.

If you have no expertise in product development or software/web/database development, then you will need to pay a manufacturer or developers to build it. But you need to fund its development, too.

So where can you get outside money to fund your product development at the beginning?

Step 11: Create Your Business Model

Build out business models using Excel to see exactly how you’re going to make money with your startup.

Include any overhead and fixed costs you have in that model, including a marketing budget, and roughly project future salaries.

Create several pricing strategies so you can see how the different financial models work.

Remember that this business model is exploratory so you can find out if your startup idea is worth pursuing.

It’s an essential element in how to start a startup, but you don’t need to have an insanely detailed spreadsheet.

Gross profit is how much money in sales you get.

Net profit is how much money you have left over from sales after subtracting all of your costs.

You want to have at least a 40% net profit margin so you can continue to expand. 50% margin or more is the rule of thumb.

Ad revenue is unsustainable for a startup 99% of the time unless you have hundreds of millions of users.

Don’t even worry about how much market share you should aim for.

What matters is how you can improve your growth rate week over week and month over month.

However, you won’t convert every website visitor into a customer, so you have to take that into account.

You should aim to convert between 5 to 10% of your new visitors into leads, and around the same percentage range for your overall leads because there’s attrition.

Depending on your pricing strategy, if you can consistently reach those conversion rates or do better, then you’ll probably have a sustainable business.

Moreover, when projecting revenue for the first two years, factor in how many customers you expect to get per month, based on percentage ranges of your traffic. To learn more about what assumptions to have for a startup financial model, check out this article.

I recommend you check out the article on Medium called SaaS Financial Model: Simple Template For Early-Stage Startups.

To gain a more detailed understanding of financial modeling for startups, check out this article by SlideBean and download the spreadsheet provided by them. Warning: their spreadsheet is complex.

Step 12: Re-Evaluate Your Startup Idea

Re-evaluate your idea to determine if your idea is plausible after the competitive analysis by seeing how saturated the market is based on market share and market size.

If your idea holds up, then find your target customers through social media or other places you know they gather and ask for their opinions on your startup idea.

Ask if your target customers would buy the service at the costs you mention. Ask them if it would be indispensable to them if they had it.

An internet SaaS startup that targets small market sizes less than 10 million people are much less likely to be worth pursuing, especially if you’re looking for angel or venture capital financing. Moreover, it’s important to be able to make money with your startup, though, without investors.

Step 13: Perform a SWOT

Conduct a SWOT analysis of yourself and the business idea to better understand yourself.

SWOT stands for strengths, weaknesses, opportunities, and threats.

To do this on yourself it requires you to be open to analyzing yourself, but it’s very useful. Can you constructively criticize yourself? This is especially useful when you’re starting your search for co-founders, which you will learn more about in the next section.

However, a SWOT is only applicable for your startup when you have market data on your competition because they represent the threats.

Step 14: Find Co-Founders

Look for co-founders with complementary skill sets and with minimal skill overlap.

If you’re a business developer, look for a technical co-founder, and vice versa. This concept is the same if you’re a marketer because you’ll then need a technical co-founder.

You don’t want to find people to build a startup based on an non-validated idea.

It’s better to validate your startup idea first, and find co-founders after that, because finding the right co-founders is a very serious thing.

Check out this post How to Find a Co-Founder and What to Look For which goes into more depth than anything else.

You can look for co-founders on several sites which are listed in the above link. And there may be people you may already be friends with that have the expertise you need to be a co-founder of yours.

However, don’t just jump into a business partnership. Rather, take some time to make sure you are both on the same page with expectations, company culture, equity allocation, company direction, etc.

It’s important to make sure they have a good personality and are someone whom you could get along with well and spend a lot of time with. Be prepared to work with them for ten years.

In addition, the values you have and set up for your startup will help you find a co-founder that’s the right fit for you.

In our article How Startup Culture Can Make or Break Your Success, we also discuss finding co-founders who have the same value system because it affects your startup’s ability to stand the test of time and thrive in the long-term.

Step 15: Name Your Startup

Pick a name that has something about your product/service’s core offering within the name.

The process of naming a startup can take a several hours or can span over a period of days, but it’s quite worth it when you find a startup name that fits perfectly with your startup description.

The most basic way to explain how to name a startup is through brainstorming words that match your industry, startup description, customer profile, and all synonyms for them. Then, try to mix and match. In addition, you should obviously make sure that your startup name will be available as a domain name.

However, I suggest you check out this short post to help you figure out how to name a startup: Naming a Startup: How to Name One and Why It Matters. The post will give you a more complete description of how to go about naming your startup.

Step 16: Get a Logo Made

You can make your own logo via Canva’s Online Logo Maker or via Logo Maker (this is not the same logo maker).

Canva’s Online Logo Maker can help you build your brand identity the quick and easy way, thanks to its intuitive, easy-to-use drag-and-drop design platform that’s online and free to use.

If you don’t want to make your own logo, then we suggest you check out this post with the 13 Best Freelance Websites to Hire Top Talent.

There, you’ll discover several websites that feature countless designers who can create a quality logo for you.

Tip: Get two versions of your logo – a square logo and a 16:9 logo for different purposes.

Step 17: Build Your Website

Build a basic website that describes your future product offerings and make a landing page with an email signup.

WordPress is an amazing free website-building tool that has its own comprehensive content management system. However, you’ll need to use a web server hosting company to host your website and there is a learning curve for WordPress & for hosting servers.

You can pick from thousands of free website themes to style your website and hundreds of thousands of plugins to enhance the usability of your website.

Or, you can use landing page builders from places like Mailchimp, HubSpot, Clickfunnels, and more.

Check out this post: How to Structure a Startup Website. It will help you learn about the formatting you need to have for your website and get your mind locked into the mindset to build a great site.

Step 18: Social Media Account Setup

Set up social media accounts so you can reserve your account names before other people get the same idea and snatch up the usernames.

If you don’t have a graphic designer on hand, then find a freelancer that can make social media banners for you.

Alternatively, you can use one of the other previously suggested sites to find someone else to make these banners.

Step 19: Learn More About Entrepreneurship and Startups

Start reading books on entrepreneurship for one hour a day or watch videos, listen to audio interviews/lessons, listen to podcasts…just always keep learning.

And, as a founder, you need to constantly do other tasks that you’ve never done before.

Visit StartupDevKit daily or weekly to learn more.

In addition, a pro-productivity tip is that you can “kill two birds with one stone” by listening to pertinent podcasts or audio interviews while exercising or doing things that don’t require brain-power..

Step 20: Build a Minimum Viable Product

Your minimum viable product is meant to be something that will assist you in validating your product/idea with customers early on.

You’ll need a minimum viable product (MVP) to start out. This basically means it’s a barebones version of what your full idea is supposed to be.

Go to the following link to learn How to Build a Minimum Viable Product.

However, in short, you:

Remember, your hypothesis is going to be about solving a pain point for your target customer.

Step 21: Register Your Startup in Your Country

You should register as a corporation, LLC, or LLP (USA Only) once you start seeing lots of users signing up and talking about your product/service.

Legalzoom.com

Legalzoom offers basic services for registering your startup, but they’re not as comprehensive as you might want it to be.

Clerky: The easiest way for startups to get legal paperwork done safely

Clerky has more than just company formation documents. They also have fundraising, hiring, and commercial categories that they provide their services to, as well.

Stripe Atlas: The Best Way to Start an Internet Business

Cooley GO

Cooley GO is a great free resource for startups to learn about the legalities of starting a corporation, LLC, or LLP. It was created by the law firm, Cooley LLP, and they have extraordinary lawyers for startups. Cooley has 900 lawyers across 12 offices in the United States, China, and Europe.

However, Cooley GO has one-upped LegalZoom and other incorporation services and made this free Incorporation Package Generator.

As per Cooley’s website:

The Cooley GO Docs Incorporation Package Generator allows you to generate any or all of the following documents:

Gust Launch

Step 22: Get an Accountant (CPA is better) and Lawyer(s)

Find an accountant and find one or more lawyers for the type of startup you have.

Accounting

Look for an accountant who can help you keep your books in accordance to the law. You’ll need to track: operating cash flow, profits and losses (P&E), assets, taxation, return on equity or capital gains, net margin, gross profit margin, accounts payable, accounts receivable, EBITDA, etc. You’ll also need to keep track of your burn rate, run rate, and cap table, to name a few.

CPAs are better than regular accountants because there are people with quickbooks experience or something similar who can do many accounting functions, but not all. Ideally, you use someone who became a certified public accountant rather than someone without a license.

Legal

Find a lawyer that specializes in the needs a startup has, such as for business formation and corporate law. If you operate in one state of the United States, but are a registered Delaware corporation, then you’ll need someone with that type of experience.

As you scale, you’ll need attorneys that can also protect your company by keeping you in compliance with human resources practices.

In addition, you may need other lawyers for anything else that’s really important, such as for patents, intellectual property, and copyrights.

Patents and Intellectual Property

Look for any existing patents that may prohibit your product from being built.

You might want to schedule a free consultation appointment with an intellectual property, patent, and copyright lawyer (most first-time appointments are free of charge).

See if your product/service violates any intellectual property and patents or if you need specific licensing rights from other companies in order to sell it.

Do the research because you’re better safe than sorry.

Step 23: Learn How to Use Google Analytics

Sign up for Google Analytics and Google Tag Manager for your website.

Google Analytics is going to be an integral part of your strategy to obtain product-market fit and growth hack your company to success.

Why? Because the only way to scientifically growth hack is to use analytics to measure and analyze the results of your campaigns. You want to make sure you’re measuring as much as you possibly can.

You will want to measure:

Here’s another golden nugget for you:

You can learn all about how to use Google Analytics through free courses by Google!

If you’re using WordPress, you can download a plugin for Google Analytics and it will place the code on every page of your website.

However, if you’re not using WordPress, then you can search on YouTube or Google “How to set up Google Analytics on your website/android app/iOS app” or about any other questions you may have regarding it.

Step 24: Test Your Hypothesis Using Your MVP

As you start marketing, this is going to be considered the first real test of your hypothesis of whether or not your MVP is going to get traction for you.

The traction is going to be considered how many signups that you’re going to get as well as the number of users that are signing up per day/week/month.

To get signups, you need to have an email list to subscribe them to. Try MailChimp. It’s free for up to 500 subscribers and the price scales up based on the number of subscribers you have unless you want advanced features such as automation.

However, to get signups, you also need to have opt-ins and other ways to get leads.

You’ll get strategies, tools, and tips on how to make it happen.

Your goal is to get product-market fit where 40% of your paid users basically say that they “can’t live without” your service/product or it becomes indispensable.

When you have reached this goal, you’ve successfully growth hacked your product to product-market fit.

Usually, the process of getting to attaining this 40% goal is also called growth hacking, by experimenting with your marketing activities to make it work.

Step 25: Hand-Pick Your First Customers

Hand-pick your first customers. You can find them on social media or through their websites and contact them via email.

A great article to illustrate what’s meant by hand-picking your customers is by a famous entrepreneur, Paul Graham, called “Do Things That Don’t Scale,” check it out.

Tell your target customers what you’re doing with your startup and why. Show value to your target customers and get feedback on your product/service from them, as well.

You can often get them to pre-order your product if it’s a good match for them.

As discussed in 10 Lead Generation Strategies to Help You Grow Like Crazy, I also mentioned doing things that don’t scale and finding your customers the old-fashioned way.

You can also join startup directories, Facebook groups, LinkedIn groups, and find people through meetups.

If you want to find out who the startup directories are, check out 31 Startup Directories That Can Explode Your Visibility and Growth.

Step 26: Market Your Product or Service

Start your marketing and focus on marketing on one channel very well, like Facebook, Twitter, LinkedIn, or Instagram.

When marketing, tout the benefits your target users will receive more than the features you have with your product or service. Show them how you’re going to improve an aspect of their life.

Facebook converts the best and has the most users on it. Your goal should be to bring as many people back to your landing page to sign up to your email list/newsletter as possible.

Provide as much value as possible to your target market and they will be much more likely to sign up to your email list, especially in exchange for an attractive offer.

Here are some helpful growth-based social media marketing resources for you:

Or, you can build a community on one of the major social media platforms! Facebook groups, Slack, Clubhouse, and Discord are great for this.

In addition, you can market with paid ads by using Google Adwords, Google Ads, and Facebook Ads.

Here are some helpful ad-based resources for you:

Step 27: Get Press For Your Startup

Contact members of the press to feature your company to their audience.

Make sure you’re writing information that’s going to be relevant and interesting to the audience of the publication. Don’t do email blasts with your press release! This is NOT how to get press.

Instead, you should email each reporter individually.

Communicate like a human being and show value to the reporter that you’re contacting. Show them that you have relevant information that their audience would like. If they ask for more information, then give it to them, but keep it concise.

Step 28: Get a Bank Account

Go to the bank that has the best combination of convenience and account perks.

To do this in the United States, you will first need to file for an EIN, or employer identification number.

You can do so quite easily online and get it within minutes.

You can find the link to the page here.

Whatever bank you pick, remember that you’ll usually have a minimum account balance and monthly maintenance fee.

Don’t worry about checks for your business bank account because you can buy those anywhere for cheap.

Step 29: Start Charging for Your Product/Service and Gain More Traction

Charge money for your minimum viable product and/or do pre-orders for your product/service.

Email is the best converting medium for sales. That’s because your subscribers have warmed up already, assuming you have had consistent email marketing and have built up trust with them.

This means you’ll want to convert your website visitors into leads. Your minimum baseline should be a 2% conversion rate, but you should work towards having at least 5% to 10% of your visitors converting into leads. More than 10% is above average. 15% is great. Any higher is stellar!

The best way to achieve better conversion rates with subscribers and making sales is through better copywriting and A/B testing.

An email drip campaign will help you enhance your chances of making a sale, even if it’s a pre-order.

However, be aware that there are three phases of the buyer’s journey:

Moreover, you want people to be as comfortable and informed as possible so that they’re fine with making the decision to buy from you.

Even though email is the highest converting medium to get sales, you’ll still need to do a combination of different activities such as:

Step 30: Work to Obtain Product-Market Fit

If you’re not hitting your target marks, keep tweaking your content, features, customer experience, and UX/UI.

Measure those tweaks via analytical testing methodologies such as A/B testing and multivariate testing. Experiment to find out what is working and what is under-performing. Experimentation is the act of growth hacking.

If you change everything at once your data will be skewed. The best approach is by tweaking and measuring one thing at a time. Learn more about how to growth hack, check out this post on How to Growth Hack Your Startup.

Conclusion

The single most important thing you can do for yourself and your (potential) startup’s future is to make sure you have a good idea that fills a need or gap in the market.

Work hard, stay positive, be focused on your goals – one by one, and you can be victorious with your startup.

What are some of the insights you’ve had from your startup development?

How to Start a Startup

Pardon the tautology, but starting a startup is the hardest part about running your business because of, well, starting… No matter how tough the going might eventually get, it is the beginning of your startup journey that is the most difficult.

As a company that runs its own spinoff startups, Smart IT is quite conscious about bringing a new idea to life. With that in mind, we would like to share our experience (and wisdom) to make starting your startup a little easier.

Starting a startup: step by step guide

So you have a great startup idea, you think it will blow everyone’s minds and you can make it happen tomorrow. That is usually how it goes, but let’s turn the excitement down a notch and work everything backwards. Here are the steps you should begin with to launch a startup.

Understand the problem you want to solve

In the digital world, software solutions, products and services are often built to solve concrete user problems. This is why instead of providing a solution to a solve a hypothetical problem, successful startups dwell on real-life problems and user needs.

Engineering a software product any other way just does not make sense. Startups that start their journey this way run the probable risk of selling to a non-existent market.

Speaking of markets.

Study the market

Do it. Do not think you can glide over studying the market. You do not always have to throw stacks of cash at preliminary market research either. As a founder, this could be something you do on your own.

When you get down to it, ask yourself the following questions:

If after syphoning information on the above points, you can build a list of hard answers – you are on the right track.

At the end of the day, if your startup idea solves a problem that is already being solved differently, you can always pick out what could be done better. If it is not, you should be asking yourself what your solution will bring to the table.

Make a business plan

Making a clear business plan will be one of your biggest challenges when starting a startup. Writing out a business plan is usually a time-consuming process and requires a lot of foresight and thinking ahead.

Incidentally, this will also be one of the most important steps on the way to creating a successful startup. Make sure that your business plan includes the following:

Develop a great product concept

If you have not thought this through just yet, now is the time to do so. Because you cannot, and this is not stressed enough, sell on positive vibes alone.

Drafting a product concept and business plan can happen concurrently. The difference between the two is that the product concept will look at your offering through the eyes of your potential customer and how well it addresses their pain points.

Your concept can also go into detail on some of the features your product will boast and delve into product use cases.

Create an MVP

If you are the kind of founder, who wants to be armed with knowledge before they jump into startup arena pit, consider building a Minimum Viable Product first. Also referred to as an MVP, this version of your product tests out product-market fit.

An MVP fits between a prototype and the final product.

Once the first set of users get their hands on the MVP, you will have a better understanding of what needs improving and what needs to be abandoned altogether.

It is a worthwhile practice as it can save you time and money having to deal with product changes once your startup is up and running.

Secure investors and funding

Provided you already know how to capitalize your startup, this is the step where you make the bold move to secure the funds.

How does one start a startup with no money? If you are a startup founder in most cases this means taking out a loan, finding an investor or bootstrapping it. Each capitalization approach has its advantages and disadvantages and it will be up to you to decide on the one that works best for your startup.

As a rule, at this stage you will be expected to speak less about the product vision, and more about the numbers. Your preliminary market research and business plan will both come in handy. Especially if you are seeking an angel investor or taking out a bank loan to found your startup.

Partner up

Guess what, you do not have to go the startup founder journey alone. Most startups were founded by several people. Each co-founder usually comes with their own skillset and strengths.

Co-founders do not have to be progenitors of the original idea. Some can even come on board as part-time executives to help in the early startup phases.This was the case with Smart IT’s own Alex Kulitski, serving as co-founder and chief technology officer for a telemedicine startup.

Even investors, for the most part, can offer insightful details into running a startup. Most will willingly share a lifetime of experience with those willing to listen and ask the right questions.

You will not go amiss to invite a co-founder to help you navigate the startup journey.

Final tip

Prepare for the unforeseen when you embark on founding a startup business. If you have already taken the first steps from this list, then you are way ahead of the curve.

If there is a parting tip we would like to share, it is to surround yourself with talented people. A skilled crew will help weather any storm and will offer counsel on any matter. Always have a team to fall back on, come what may.

First and foremost this is a journey of discovery. Just bear in mind it is not one you have to go through alone.

05 October 2020

Pavel Kaplunou, Marketing Communications

Pavel is Smart IT’s Marketing Communication Manager. He oversees content creation and is in charge of the official Smart IT blog. Contact Pavel to learn about potential media and content collaborations. [email protected]

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Follow these 10 steps to turn your idea into a startup

Follow these 10 steps to turn your idea into a startup

A great startup begins with an idea, but it has to be put into practice. Here are 10 steps to get you started on your startup journey.

Everyone has at least one idea for the next big thing. What makes startup founders different is their willingness to take action to make one of those ideas a reality.

If you’re thinking you may want to leave your day job and set out as a founder, it might be helpful to reflect and make a plan but, once you’ve made up your mind, you need to go — and quick.

A big part of execution is simply getting started, but once you’ve got the ball rolling it’s helpful to have a checklist of steps to follow to make sure everything is in order.

1. Do your market research

Conducting market research is the first step to determine if you really do have an idea worth pursuing. Begin your research by writing down what you think the problem is that your business idea would be solving. Physically write it down and keep it in front of you.

Figure out how many people are having this problem that you’re solving and go talk to them. Consider writing up a survey for these potential “customers” to take and see what they have to say. After you get your results, check out the competition and figure out if you are different enough (in a good way) to do battle with them.

Keep all of your research materials when you are finished, as they could be helpful in securing funding later on.

2. Secure intellectual property

Intellectual property (IP) refers to the process by which an individual or company can own the rights to a created product. Examples include patents, copyright, and trademarks. It is vital to the success of your company that you follow the proper protocol to protect your differentiating factor.

By securing your IP early on, you’ll protect yourself against copycats. Conversely, make sure you’re not the copycat, even inadvertently. Confirm that you aren’t violating any existing IP rights or non-compete agreements, otherwise, you could face serious legal ramifications. Once you know you’re in the clear, file your patent or apply for your trademark or copyright.

Pro tip: Once you have command of the IP, transfer it to the ownership of the company once it is incorporated.

3. Decide on branding

Branding is about more than just choosing a name, it’s about deciding on an identity for your idea. You want to choose something you love, but you also want to choose a name that conveys the experience of using your product and the problem that it solves.

Be aware of any existing product successes, or failures, that are associated with the name you choose and how they may impact adoption. This is the time you should also secure your website domain name and other associated marketing materials. This is also where you craft and internalize your elevator pitch, so you know exactly what to say to anyone who may ask what your company does.

4. Incorporate

Incorporating is a big deal for a startup because there are so many aspects of the startup lifecycle that affect it, and are affected by it. Incorporating is the process of turning your business into a legal entity and deciding how it will be structured. Typically, startups will be incorporated as an LLC, a C corporation, or an S corporation. Both LLCs and S corporations have special tax exemptions, while a C corporation is considered a taxable entity.

In addition to the tax differences, there are a host of other considerations that you need to make when incorporating. For example, equity compensation, which is a major issue when raising capital, is different depending on the business structure you choose. Additionally, you’ll want to consider where to incorporate, as different states have different ways of taxing businesses.

One of the de facto standards is to incorporate as a Delaware-based Corporation because Delaware is considered by many to have favorable corporate law practices, and because C corporations tend to be looked upon more favorably by venture capital investors.

5. Choose a co-founder

Not having the proper support for even the best of ideas can kill your execution. In fact, some investors look at the founding team first before looking at the idea when considering making an investment. If you have a co-founder already — awesome. If not, you should consider bringing someone else into the fold.

Look for someone with solid track record who you have, at least, some history with. The key feature is finding someone with a skill set that is complementary to yours. Style and personality are also considerations to make, as you will be working alongside this person every day and need to know that you can accomplish goals as a team. Also, there might only be room for one person in the spotlight, so understand that one of you might be working behind the scenes and will need to be ok with that.

6. Write a business plan

One way to set your startup off on the right path is to write a good business plan. Using the market research you did earlier, create your plan of attack and decide what you want to accomplish with your new business. Determine goals and milestones, and what steps you need to make it to those milestones.

7. Pick a workplace

Where you work actually does have an effect on your startup as you’re getting off the ground. Different environments will suit different working styles best. Many founders choose to work from home initially to save money, but others choose to rent at a coworking space, share an office, or rent and office for themselves. Don’t be afraid to experiment, but don’t let the search for the perfect space get in the way of your work.

8. Find a mentor

Mentorship is a touchy subject. First, you should determine if having a mentor is good for you as a founder. If so, finding the right mentor can make a huge difference. Even with the combined expertise of you and your co-founder, a mentor can provide deep industry insight and wisdom to help you navigate some of the challenges that come your way.

9. Apply for an accelerator program

If you need some additional resources and expertise, consider applying for an accelerator. An accelerator is a program for startup businesses that helps speed the growth of the company by providing a mentor network and sometimes a small investment. These programs can also give their companies the opportunity to formally pitch the media and other members of the startup community during a demonstration day at the end of the program. Bear in mind, however, that most of these programs require equity share of your company.

10. Raise capital

For many startups, taking it to the next level requires a financial investment in the company. Founders give equity in their company to angel investors or venture capital investors in return for money and, sometimes, advice. The resources can be an enormous help, but taking capital investments does have a dark side that should be understood before you move forward.

If you need to raise capital for your business, you should begin by deciding how much money to raise and how it will affect your startup. Once you have that figured out, you should decide how you’ll be raising it — by crowdfunding, from an angel investor, or through a traditional VC firm. Then, you need to practice your pitch.

This list is not exhaustive, and the complete set of steps you’ll take will likely be determined by your individual situation. However, these steps should help get you started and on your way to a public launch.