A startup is a type of business that has limited operating history because it is just begun. The business is still at its budding stage. It is still researching the market in order to understand it. The business just emerges in the scene with a new product or service and it is trying to find a way to win more customers or outdo older players. The competition that characterizes the doing of business makes it very difficult for a startup to succeed. It takes the effort of the owner of the business to succeed. This is because it is not just competing with other startups but big players in the industry that have large customer base with many years of existence.
The term start-up was popularized across the world in the recent past during the period a lot of dot-com companies were launched. All businesses that are newly established can be tagged startups but actually the term is most of the times used to denominate companies that are technologically based.
Startup businesses do not require much outside capital in order to be established. Its potential of yielding enough profit on investment is very high. Owing to the above factors, they attract a lot of investors. Startup businesses have better scalability than well established businesses. This is because of the fact that there is limited labour, land and investment on capital.
There are several ways through which a start up business can be funded. Most startup owners use their money to sponsor the business. There are some that get loans from financial institutions and banks in order to sponsor the business. However, there are some start-ups that are sponsored by venture capital firms. The venture capital firms will own some equity in the company and it is through those equities that they make their profits. Getting fund from an angel investor is another means through which a startup company can be funded. An angel investor variously called a business angel or informal investor is a rich man who is willing and able to sponsor a startup. Just like venture capital firms, angel investors also own some equity in the startup and it is through the equity that they make their money. Factoring is another funding option for a startup.
Establishing a startup
Starting a new business can be very challenging. If it is not properly done, the business may collapse easily. But well-established startup develops into a large company with many workers. There are some steps that you should follow in order to solidly establish a startup business. Here are some of the steps.
Research your products and services
You should first research on the product or service that you will sell to the public. Make sure that you are going to sell quality product to the people.
Do a feasibility study
Carry out a feasibility study in order to determine the possibility of the business becoming successful.
Determine how to raise fund
You should also determine ways through which you will fund the business which may be your personal saving or outside funding.
You should locate your business in a place where you can easily find your target.