Startup companies are a projection of the entrepreneurs in charge. The projects turn into organizations, which can be scaled and gain validation in the economy. Tech startup or technological startup companies are one of those businesses that aim to bring technology-related services and products to the already competitive market.
These tech startups may aim to provide services directly to customers/consumers or to businesses. To innovate new ideas in a pre-existing market is difficult but there are some things to consider before and while running a tech startup.
Well, no need to search further, I am going to talk about 10 things a tech startup needs to know to run the business and emerge successfully.
Rise of Tech Companies During The 4th Industrial Revolution
What really is the 4th Industrial Revolution? We all know more or less about the history of the industrial revolution. Well, the 4th industrial revolution refers to the phenomena of transformation in manufacturing and traditional industries, i.e. automation and digitalization.
The term “4th industrial revolution” was coined by Klaus Shwab of the World Economic Forum. According to him, this new age revolution in the industry indicates a new transformation of technology usage; a mesh of biology, hardware, and software.
The transition of tech Businesses
The revolution of technology eventually led to innovative entrepreneurial projects relating to business and creating more products and services. That is where Tech Companies started establishing itself. Silicon Valley is a widely known term in today’s time. It is not just a “marketplace” anymore, rather a “market” for technology-related organizations and businesses.
Tech companies started off as creating solutions for users around the internet, which around the rise of social media was starting to gain movement. In the present time, it is almost impossible to think of successful and scaled companies without a presence in the internet and modern technology.
The economy is ever-growing ever-evolving. Technology has played a big part in it. It still is. The next step to come is Ai (Artificial Intelligence), and even that is almost in hands reach now. That being said there are pros and cons present in this fringe of the wider industry. Therefore, a cautious approach must be taken while jumping on the bandwagon to start up a tech company.
10 Things A Tech Startup Needs To Know
Any startup may need a checklist in order to navigate through the business world, whether or not they survive in the long term is a concern for later on. But to emerge successfully, it is necessary to keep a few things in mind, focusing on the “tech” part of your startup.
Hence, without further ado, here are 10 things a tech startup needs to know.
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Market Research and Analysis
Even though it is a given obvious assumption that any sane entrepreneur would do, there are things to consider as a tech startup. Research, but on what?
According to Author and Former dot com business executive, Seth Godin,
“Don’t find customers for your products, find products for your customers”
Market research indicates that you, an entrepreneur, must know about your customers. Customers don’t only mean B2B clients; it also refers to end-users. In other words, the users who will “consume” your final product.
In order to analyze your market thoroughly, you need to know the demands of all kinds of your clients. For example, as a tech startup, whether you are selling and providing services specific to hardware, you must know the average norm of products most customers use. You can then gain an idea of what type of hardware you need to stock up on, which you can supply.
And it’s not just that, you also have to gain knowledge about your competitors. It is a known fact that technology does not have a fully established monopolist regime. Thus, you need to know about the strength and weaknesses of your competitors in the tech industry, which will indicate the same of your own startup.
Besides, you would need research for creating the brand, patent and copyright issues, etc.
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Know Your Position in Technological Advantage
In an evolutionary industry such as Tech Businesses, it is a must to know where you stand as a tech startup. Different countries are engaged in different sectors of production. Some are advanced in labor-based productivity, some in capital-based ones. The fundamental advantage lies in technological advancement.
The entirety of the business world is up to advancing their products, trying to make better products than before. The determination of who thrives more is in gaining a technological advantage. It is one of the unofficial factors of production, referring to the simplified notion of “who can invent faster and better”
Thus, while launching or brainstorming for your tech startup, know where you stand on that spectrum. It will do you and your business a lot of good in the long term. Because you will know your lacking and will be able to move from there. Simply, you will get to know your starting point and adjust your end goals.
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Set Up Roles For Your Team
This is important and somewhat crucial. As a startup tech company, it is normal to have less staff. But, that being said, the staff must know their designated roles and responsibilities, in which case “what do you bring to the table?” question rises up.
As the entrepreneur and organizer, you must assign and regulate so your company gains infrastructure and can move on to the next phase. Necessary communication and rapport is mandatory to turn a startup into a successful business.
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Investment Investigation
It is a no-brainer that any startup needs seed capital. The major part of the business world is pre-dominantly capitalistic. So, it is redundant to say that capital is necessary for any kind of business.
But in terms of tech companies, it is even more crucial. That is because there are adversities in the tech industry. Some of those are: not starting with enough capital, pouring most of the seed into developing an MVP (Minimal Viable Product), not having multiple like-minded investors, ignoring the possibility of angel investors.
Hence, it is absolutely necessary to keep these in mind, or at least have an advisor who will bring forth the issues so these can be handled as soon as possible.
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Challenges and Opportunities
The tech world may seem vast but in regards to products and services, it may be a while before a whole new sub-division is invented to lay the groundwork on. Thus, there are more challenges for tech startups to tackle. That does not mean there aren’t opportunities as well.
Some of the challenges for a tech startup are-
- Creating a unique service or product
- Arranging sufficient seed capital and reserving cash for further usage
- Setting up a good team
- Keeping the work ongoing and holding on to it
- Efficient time management
- Determining where to pivot your strategies
Opportunities for a tech startup are-
- Gaining a seat in the tech industry
- Entering a market with a higher success rate for startups
- Using social media to advertise and create your brand
- Gaining traffic and traction
- Building a network of Venture Capitalist firms
- Establishing your company in the Silicon Valley
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Financial Metrics to Focus On
Even when a CEO doesn’t have much background knowledge on Finances, they should acquire knowledge about business issues nonetheless. In order to run the company successfully, they must have a basic foundation on the main financial metrics. Here is a shortlist-
- Cash burn- the positive monthly cash flow
- Total revenues- total earnings from the product sale as well as account balance of investment
- Total expenses- fixed and variable cost summation to run the entire company
- Total profit margin- the sum of leftover revenue after leaving off the expenses
- The lifetime value of a customer- a customer gained is a customer for life. That is when the customers become more or less part of the team, which is why many companies name their users “part of the family”.
- Customer traction cost- this simply adds to the cost of marketing and advertising expenses. The cost of gaining customers through the promotion of your brand.
- Customer Defection- the loss of users from your target market
These are the terms and information any tech startup CEO must know about.
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Business Plan
The key to a success story is having a business plan. A business plan is anything that you decide for the business you are leading. Such as-
- What scale will my company remain or proceed to (partnership, public ltd., etc.)?
- What are the milestones I would want my company to reach?
- What is the objective of my company?
- Where will the money flow circulate?
- Is my team on board with the bigger picture?
- How will the divisions of labor; independently and as a united front; communicate, interact and develop?
Although many will say that a business plan is not necessary, any smart person will know it is better to know your roads and adjust later, than having no chartered course and navigating without foresight.
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Marketing Strategy
For tech startups, marketing strategies are somewhat similar to a starting point. Here are some simple marketing strategy ideas for tech startup companies:
- Use Search Engine Optimization (SEO). This will enable users to find your products at the top searches.
- Promoting your business through social media (via Facebook, Twitter, Instagram, LinkedIn, Pinterest, etc.)
- Content marketing engagement (by publishing guest articles regarding relevant websites and relevant industrial products and services)
- Establish exclusive news on any significant events of your company
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Legal and Other Issues
Legal issues are necessary to be taken care of if you see that the growth of your company is steady and can be stated as “pre-successful”. Here are some legal and other issues you need to keep in mind for your tech startup:
- Tax license and Business permit
- Registration and Patents for your product(s)
- Official documents of the company must be kept in order
- Acquire a domain to start building an internet infrastructure of your company
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Learn and Develop Pitch
What does pitching mean in a startup? Pitching an idea or product is necessary to attract investors as well as clients. This is a primary level of advertisement for your product.
While pitching your products, you are basically selling to a percentage of the hierarchy your business may soon follow through. Therefore it is necessary to learn how to pitch your idea or product to add gains for your tech startup.
We know tech companies need huge cash inflow amounts. Hence, you will have to keep developing your pitch in order to bring in even more high roller investors and client base. The key is to have confidence in your creation and not give up.
It is tough to navigate in any industry for a startup. But tech startups have great opportunities. It is possible for them to be successful if they develop and progress on a “trial and error” process and still keep going to establish their company.
So, hopefully, these 10 things a tech startup needs to know will definitely help them progress in their journey and help achieve their goals.