Now is the time to be an entrepreneur and create a business from your passion. The cost of rolling out a business has never been lower – it only takes a few hundred dollars to incorporate a Limited Liability Corp (LLC) online, create your own website, use social media to get attention, and you are in business. In the early Internet days, it would cost a million dollars to get this far.
On the other hand, everyone is doing it, so that means more competition, and the market and technology are changing faster than ever before. Thus you have to do your homework to stay ahead of the crowd. Those that do it right also have the unprecedented opportunity to join the elite ranks of 250 unicorns (relatively new companies with a current valuation of over $1 billion).
Even the homework is easier, with free and mobile access through the Internet to more business assistance sources, opportunity data, investors, and competitor details around the world. Yet, as an angel investor myself, I can attest that many potential entrepreneurs try to take shortcuts, or ignore the realities of business. I suggest the following sequence of startup preparation steps:
- Create a business entity early to isolate business efforts. Co-mingling personal and business funds and accounts creates legal risk and tax liability and makes your efforts look like a hobby. These days you can create a C-corp or LLC online quickly at a low cost, to serve you well in signing partners, intellectual property, investors, and revenue.
- Prepare a pitch deck to document and share your plan. Advisors and investors need to see your whole story in as few as ten slides. Make sure you cover not only your solution, but also the opportunity size, competitors, financial projections, and team qualifications. A full business plan and financial modeling can come later to add details.
- Validate your solution with a prototype and real customers. Ideas are not enough to gauge business potential. You need something real that investors and customers can touch and feel. Most investors expect a minimum viable product (MVP) sold to at least one customer. Investment before that time must come from you, or friends and family.
- Build a following and start a brand through social media. The major social media platforms, including Facebook, Twitter, and Instagram, allow you to reach millions of customers around the world at virtually no cost. You need early customer advocacy and feedback before critical time and money are spent. This is the time for pivots as required.
- Participate in networking platforms and events for support. You need to recruit advisors, key partners, and cofounders well before approaching investors. In addition to local business meetings, this can now be done online through startup matchmaking sites, including CoFoundersLab, Founder2be, and StartupAgents, as well as LinkedIn.
- Build a quality team to complement your own skills. Building and running a business is not a solo task. Technical entrepreneurs need to surround themselves with people who have the financial, marketing, and operational experience in managing a business. A good team will likely consist of a mix of remote employees, freelancers, and contractors.
- Find investors through online platforms and crowdfunding. After starting with local investors acquired through warm introductions from friends and peers, you now have access to professional investors through online portals, including Gust and AngelList. A new online investor source is crowdfunding, with sites like Indiegogo and Kickstarter.
- Execute a pilot rollout before attempting to scale globally. A local pilot is a necessary move to test your manufacturing, operational, and marketing assumptions. Early pivots can be implemented here with minimal impact. In addition, global scaling will likely require additional investors, who will demand to see real revenue and customer demand.
With these steps, you really don’t need a rich uncle or a benefactor in Silicon Valley these days to start your own business and keep ahead of the crowd. The resources online are tremendous, if used correctly, and even small startups can have the same global reach as the big guys. The challenge is to do it right the first time, since time is of the essence in these time of rapid change. That also means you need to get started today.