Are you launching a startup? 5 lessons from a successful founder

Starting a new business or startup should be an exciting time in your life, however, it also comes with its challenges. Elaine Yang, the founder of Aussie beauty startup askbella, gives us her first-hand suggestions on the not-so-obvious things to consider before launching.

There are so many factors to consider before launching a new business. Beyond the obvious elements like getting together a solid business plan, there are other important tasks that entrepreneurs should consider before jumping to launch their startup.

5 things to consider before launching a startup

Do your research

Many people have lofty dreams of starting their own business, but once it starts to reach a stage of potential development, it’s incredibly important to do your research. There are many ways you can conduct research so you have an understanding of the industry you’re entering. However, one of the best ways is conducting market research. This can provide you with the data you need to decide whether your product or service will be desirable to your target audience.

What is market research, you ask? Well, it’s simply making a concerted effort to gather information about target markets and potential customers. This means gathering data that allows you to know more about your target audience, what their preferences are, purchasing habits and driving forces. Market research should be an important part of your business strategy before you move forward to any other phase. Market research can also help you to understand the best time to launch, as well as the best geographic to launch in.

Take Uber, for example; before launch, their main competition was going to taxi companies, so they conducted market research to determine which cities had the biggest discrepancy between taxi supply and demand. This then informed them about launching during times when that demand was likely to be the highest, for example, during the holidays when people tend to stay out late partying.

When developing askbella, we conducted a considerable amount of market research to really understand Australian consumers’ buying habits (especially when it comes to the beauty industry). The data we captured from our research informed the various iterations of our business model, as well as allowed us to be confident in moving forward with our concept.

Our research found that 74 per cent of customers are overwhelmed by too many product choices. This alone gave us the confidence that our business had the potential to be successful (especially since askbella’s entire concept is built on filtering out all the choices and providing unbiased advice based on skin types). Further research conducted by askbella found that more than half (57 per cent) of Australian beauty shoppers like being left alone when shopping in-store, and over one-third (36 per cent) would use a virtual assistant to help them select new products. Knowing all of this information has informed so many decisions and allowed us to build out our concepts while continuing to evolve our business model.

Find your niche

 Finding your niche is another important consideration before launching a startup. Beyond allowing your business to become the expert in that particular vertical, finding your niche helps ensure that specific customers will want to buy from your business instead of your competitors. In a world where it seems like every idea is taken, sometimes it’s a case of just finding that niche to allow your startup to be set apart from the rest.

If we look again at the example of Uber, while for many people their niche might be the transport industry, to Uber themselves, their niche is technology (so much so that their legal name is actually Uber Technologies Inc.). Uber was one of the first companies to launch the concept of a ‘sharing economy’ through their two-sided digital marketplace for drivers and riders (this simply could not exist without having niche in technology).

Today the ‘sharing economy’ is no longer a new concept, however, startups continue to launch using this business model, yet they find a niche to set them apart. Take Uber’s new competition inDrive for example. inDrive is a new ride-sharing app that has just launched in Sydney, but their niche is in the fact that it lets you pick your driver and suggest a fare. At a glance, it could be considered just another ride-sharing app, but they’ve honed their niche and, with a bit of luck, will prove to be a strong contender in that industry.

Determine your startup  audience

Ask yourself, ‘who is my target market’? If the answer is ‘everyone’, you have a lot more work to do. For startups, determining your target audience can take a lot of time and research (which often involves a lot of tweaking along the way). Yet clearly defining who you are selling to provides you with valuable insight into the needs and motivations of your potential customers. It’s important to note that most businesses can’t be all things to all people, so it’s better to define your audience and tailor your business model and marketing strategy to appeal to them (rather than trying to appeal to everyone). By clearly identifying this demographic, it will be easier to capture your customer’s attention because their needs and goals are front and centre.

Understand risks involved in your startup

While we all want to go into business with a positive outlook, putting on rose-coloured glasses when it comes to potential risks is a big no-no. Sure, it’s great to be optimistic, but you simply cannot bury your head in the sand. Having a strong grasp of the real risks involved can set you apart from competitors (and potentially save you a lot of heartache and money down the track). The trick is to understand and know your risks, but don’t focus or dwell on them (unless you absolutely need to). Finding the right balance between being optimistic and realistic will be key.

Know your finances

This sounds pretty obvious – knowing just how much money you have available and how much things will cost should be pretty straightforward, but there are so many financial factors to consider when running a startup. My advice would be to build out an entire financial plan that includes a budget, tracks expenditures, plus sets aside cash flow for things like wages, tax and GST. On the tax and GST point – speak to an accountant who can set you up with the right business model for you, plus inform you of exactly what you need to know. In Australia, businesses or enterprises must register for GST when gross income is expected to be $75,000 per year or more. As for how much tax you’ll need to pay, your accountant can help you plan this out.

Starting a business and need more advice? Why not check out our Getting Started section?

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, Twitter, Instagram, and LinkedIn.