The steps to starting a startup tech company are pretty straightforward. However, some unspoken rules are crucial for success in the long term. Find some great tips below that could help you with your business.
A startup tech company has its growing pains, much like any startup. The risks are significant, and failure is always a possibility. Some reports put the failure rate of all startups in the 50% range within five years and the 90% range within ten years.
The failure rate appears to be especially high for tech startups. According to the Statistic Brain Research Institute studies, the information industry has a failure rate of 63% after four years. That is the highest rate compared to other sectors such as retail, finance, and manufacturing.
The fear of failure can cause many entrepreneurs to take false steps. However, that does not have to happen. Here are pieces of advice you can take to keep your startup software company afloat.
Expect a lot of Pressure
Starting a startup software company comes with more risks than other types of businesses, as mentioned above. Pressure is particularly great for minority and women-owned startups because they feel they have much to prove. The tech industry is unfortunately not immune to racial bias, which carries over to entrepreneurship.
The actual or perceived challenges to the abilities of minority and women entrepreneurs cause them to be more risk-averse. In other words, they might not take chances because they think people expect them to fail. Social and mental pressure is exceptionally high for startups.
That said, the fear of failure can cause entrepreneurs to give up earlier than they should. Whether you are a minority startup owner or not, expect a lot of pressure when you start a tech company.
The trick is handling the pressure, not buckling under it. Don’t let anxiety and stress stop you from moving forward with your plans. If you learn to manage your expectations, it will not overwhelm you when the worst happens.
Think about Scalability
Tech startups typically scale quite quickly, but it will not happen without a system in place for it. If you want to grow your business, integrate systems of scalability into your core business processes.
Whether for product development or client acquisition, the systems must be consistent, predictable, and excellent. Think about delivering products, services, and customer support consistently and well to one or one million clients. These systems will pave the way to growth at any point in your venture.
Protect your Startup Tech Company Brand
If your brand is successful, someone will try and use it to further their ends. That is not a bad thing. The big issue is maintaining control over your intellectual property. Nothing can damage your brand more than other people using it without your approval.
Take steps to prevent others from unauthorized use of your name and brand. Look up trademark laws in your country and file for a trademark as soon as you decide on a company name.
Create a Startup Tech Company Pitch Deck
Traditional business plans are several pages long, so create a pitch deck to condense your message in a few slides. Show your pitch deck to as many people as you can instead of a business plan.
Send your business plan only when you feel a nibble. Interested investors will take time to read a business plan if they like your pitch deck.
Get Deferment on Legal Fees
Starting a business involves legal documentation. In most cases, you can pay for legal help and advice on an as-need basis. However, having a reputable law firm on retainer can give you a boost when it comes to dealing with investors. Of course, lawyers are expensive, so that is also a significant consideration.
Some law firms specialize in helping startup companies. In many cases, they will defer their legal fees up to a certain cap until after the company gets investors. Some may ask for equity, however, so you need to think carefully about that.
A law firm, in that case, might arguably act in your best interest, but that is not always true. A law firm might advise raising funds quickly rather than helping the company grow to get paid faster.
Be smart and work with a law firm that will defer fees without asking for equity. A law firm that agrees to that will most likely give you the best legal advice. A deferral will also help you stretch a small budget further.
It should be evident by now that an online presence is crucial for any business, especially for a startup tech company. Make sure you include building an excellent online reputation in your marketing plans. Make it easy for potential clients and investors to find you.
Avoid Premature Scaling
Early success in your startup tech company can cause you to scale up faster than you should. That can lead to the eventual failure of your startup.
Scaling is part of the life cycle of a startup tech company and crucial for growth. It might involve hiring more people and becoming more aggressive with marketing. However, it can be a problem if you scale up too quickly.
One example of premature scaling is launching an aggressive marketing campaign before the product is ready. This is what happened to Groupon. Having too many employees is also a common sign of premature scaling.
Avoid this deadly sin by doing market forecasting at each stage of your startup software company. Get the feedback of stakeholders, analyze the sales data, and monitor market trends in your niche. The data will help you contain your enthusiasm and ensure you don’t scale prematurely.
Look for Early Investors
Seed capital is not always necessary for tech startups, but they do inspire confidence for future investors. Get one or two investors on board at the start of your operations or even before. Seed investors will put your company on the top of investors’ lists
How to get startup funding is a bit tricky, however. Investors are naturally careful where they put their money. However, some investors will give a startup software company a leg up if you have a great pitch deck.
Some also focus on segments of society, such as women-owned startups. InnovateHer KC, for instance, has made women empowerment in Kansas City its mission. You can listen to InnovateHer KC CEO Lauren Conaway on the Startup Hustle Podcast. She is one of the hosts and regularly talks about startup funding tips.
Build a Great Team for your Startup Tech Company
You might have started your company by yourself, but that is not sustainable. It would be best if you had a great team around you so you could scale up your business and leave your “startup” moniker behind.
Full Scale knows all about the needs of tech startups. It began as a two-person startup but quickly scaled up because they found the right people to grow with. In turn, we build IT teams quickly and affordably for other startups, including tech startups.
Are you planning to set up a startup tech company? Let Full Scale help you get started!