Technology is one of the fastest growing segments in business startups. If you think about starting a tech business, you may wonder how you’ll stand out amidst all the competition and what exactly it takes to run a tech-based biz.
Around 58 percent of businesses in North America and Europe believe revenue will increase this year. If patterns report from the year before, now is an excellent time to start a new business because the economy is on an upward tick. However, there is far more to starting a business than simply whether the economy supports it. You must also consider a number of other factors that spell disaster or success. Here are 11 things to consider before taking the plunge into business ownership.
1. Survey the Competition
There are many different types of businesses in the tech sector, so figure out who your direct competition is and check out what they do well and what needs improving. Can you compete with them? Is there a way to turn your idea into something unique no one else offers at this time? For example, if you want to start a business intelligence company, you have a lot of competition and much of it from established names in the industry. However, you might come up with a specific app that solves a problem for businesses no one else has addressed and find great success.
2. Improve What’s Already Created
Starting a tech business doesn’t mean you have to invent something new. In fact, some of the most successful companies take something already on the market and make it better, such as Apple with the iPhone. Experts in innovation suggest peeling back the pain points and getting to the heart of solutions consumers need. Innovation isn’t just making a tweak here and there but completely revamping a product or service to address the things no one else thought to fix in past offerings.
3. Write a Business Plan
Most things in life simply go better if you have a plan in place and know what steps you need to move forward. A business plan offers a basic outline of what your business looks like, how much money you need, what your day-to-day operations are and how decisions are made. If things start to feel off-kilter, you can refer back to a business plan to get back on track. Every good business plan has some key elements, such as short sentences and a table of contents. A strong business plan also gives you something to take to investors or to a bank for startup money.
4. Secure Funding
Even if you start on a shoestring as a solopreneur, you’ll need some seed money to get your business going. Think through where you’ll secure financing. About one-third of successful businesses started with less than $5,000, so you don’t need a fortune to get your business off the ground. There are many ways of coming up with the money you need, such as loans from family and friends, angel investors, your own savings or a loan from a financial institution.
5. Create a Model
If you plan to sell an actual product, use computer-aided design (CAD) and create a model to make sure the product works the way you think it will. People have high expectations in the tech industry and demand products which fulfill their promises. If your product is digital, use wireframing and prototype platforms to create the product and test it before releasing it to the world.
6. Plan Out Cash Flow
One of the biggest problems businesses run into during their first few years is cash flow. Either your business grows too fast and it’s difficult to keep up with demand on the funds you have, or customers fail to pay on time and tie up your money. Over time, you’ll learn to set aside funds for slow seasons, bill customers differently and create a flow of cash that is steady rather than sporadic.
In a poll of 500 entrepreneurs, around 91 percent of small business owners indicated they spend upward of 20 hours a week dealing with cash flow issues, including payroll, invoicing and inventory. This impacts their family time, personal stress levels and time doing the things they love. Figuring out how to manage cash flow more effectively frees up your time and gives you extra hours to spend on the things that matter most both in your business and personal life.
7. Hire a Graphic Designer
Unless you have design skills yourself, you should hire a professional to come up with an overall design for your brand. People expect a certain level of sophistication from a tech company, so a website or business card that looks like you created it from a cookie cutter template isn’t going to cut it. Start with an amazing logo and color palette and then add other features as you can afford. Make sure you present a consistent image across any platform where you have a presence, such as an app, your website and social media pages.
8. Assess Your Own Skills
Do you currently have what it takes to run a business? What if the business takes off suddenly? Where will you enlist the help you need to keep things moving forward? If you don’t feel confident in your management skills, take a few online courses through a site such as Lynda or Udemy. Call up your local Dale Carnegie and find out what business courses they offer. Take a few classes through the local community college to brush up on the skills you lack, whether accounting or marketing. As a startup, you’ll fill almost every role in the company at first, so it’s important to develop a wide range of skills.
9. Find a Mentor
No matter how prepared you think you are, you’ll run into situations you don’t know how to handle. It’s important to have someone who’s taken the steps you’re about to take and can offer solid advice. You can find a mentor by talking to local business owners you already know and admire, through online coaching, a professor from one of those classes you took or by attending local chamber of commerce networking sessions and connecting with someone with more experience.
Another idea is to attend trade shows in your industry and get to know people doing something similar to you but still not your competition. Once you make a connection, approach the person and ask if they’d mentor you. Not everyone will say yes, but that’s okay. You want a mentor who sees something special in you and wants to take you under their wing. Keep asking until you find the right match.
10. Know the Trends
Before leaping into the costs of starting a tech business, consider the current trends. Will your idea still be viable in five years with the advancement in artificial intelligence (AI) and other advances not yet known? How will you adapt to the changing science of tech? The global tech industry should hit about $5 trillion this year. However, a big portion of that spending comes from corporations and governments rather than individual households. Consider how far your reach is for your idea – is it applicable to businesses?
11. Find the Perfect Location
Where will your home base be? Think about the future growth of your company. When it comes time to hire people with technical knowledge, what areas have a nice selection of employees with that expertise? Look at the costs of doing business in different locations and the cost of living for yourself and your employees. You may already be established in an area with family and friends settled in. However, you still can look at surrounding cities and figure out if you want offices in a city or more rural area, and what would be best for costs and attracting the best employees.
If you have an amazing idea and are ready to tackle the challenges of running a tech biz, then get everything in order and go for it. There are dozens of stories of people taking a startup tech company and turning it into a huge operation employing thousands of people. With the right determination and mindset, you can make your tech startup more successful than you imagined.