We live in a day and age of innovation and technology integration that has led to the expansion of many industries at a rapid pace. The proliferation of technology is one of the main reasons why we are seeing a flurry of startups, especially in the tech domain.
Despite the fact, that many avenues can help entrepreneurs to build tech startups, 90% of them fail. The rate of failure is so alarmingly high because the organizations dream big but are unable to execute the small steps regularly.
We understand that big steps for startups are necessary, but in the long run, what matters is the level of execution of these steps. There is a great demand in the market for innovative tech solutions and that is why many business enthusiasts want to build tech companies; they have to understand that to disrupt any industry, it is essential to understand its trends and requirements. Therefore, in this blog, we will put light on seven of the most actionable steps that will guide a budding entrepreneur to start a tech company. We have curated this list while keeping all the necessary conditions in mind, lack of money being the primary! So read along as it would help you not only to build tech startups but also to scale them ahead.
Understanding the KISS (Keep it Simple, Stupid) Strategy
Before we get into the core steps of starting a tech company, it is essential to understand a simple fundamental. As mentioned in the introduction section, why do you majority of startups fail to achieve success? The simple answer to this is that they ‘forget to keep things simple’.
We have had a lot of examples such as Quirky, ScaleFactor, Layer, Homejoy, etc. that had an excellent start but failed to keep up the momentum. Therefore, for startups to make money, they mustn’t overcomplicate things. To understand financial management for technology startups, it is important to learn the trends, build on them and continuously analyze the measures for sustainable growth.
The entrepreneurs who build tech startups based on the customer’s feedback tend to go up the ladder in a constantly improving way. Also, even if these business organizations face tough times during their journey, they do not change their ‘keeping things simple’ thinking process and eventually achieve their target.
7 Steps to Build A Tech Startup
Business founders should understand that not all tech startups, even if they have similar products or ideas, start the same. But, regardless of their beginning, the future of tech startups lies in how the plans and ideas are executed in the long run.
Therefore, here are some prolific guidelines that will have the budding tech startups begin their business on the right note, sustain it, and thrive amidst tough competition.
1. Understand the solution you are providing
The first step to building tech startups is to ‘start with a why’. Yes, it is necessary to know the main purpose of providing a solution, before actually providing it. Entrepreneurs should invest their time in studying the market, and analyzing trends related to their genre before jumping on to the bandwagon.
Generating ideas for rendering the best solutions in the market can be very exciting, but if it lacks a base, the company would have a short run in the market. Therefore, break down the business idea into important compartments and see what sections are viable to the market. Moreover, it is important to identify the target audience and understand what the actual problem is before carrying out the solution.
The ‘why’ will also help an entrepreneur to build tech startups despite knowing the fact that there are already some big players. So, if the solution is good enough to render an optimal solution, it will enhance the life of the company in the market.
2. Have core features of the MVP at your fingertips
The other major reason why startups fail to achieve their target is that they build a ‘poor-market fit product’. Thus, for the survival of the company, always consider building a minimum viable product (MVP) considering the customer’s requirements.
An MVP is a short-featured application that tech startups release to understand what their targeted customers want. The MVP development helps in bringing early adopters who can help the business organizations to refine their loopholes and enhance the value proposition.
The simple framework to develop an MVP is:
- What is the idea of the solution?
- Define the customers and the end-users
- What are the actual pain points of the end customers?
- Why are you building the solution?
Focusing on this minimum but solid set of parameters will help the tech startup owners to realize the value of their business and achieve the goal. Moreover, it will also assist the app markers to intake in informing business decisions and not overpopulating the solutions with unnecessary features.
3. Source talent correctly
Once you have decided what kind of features you wish to put in the application to build a tech startup, it is time to build a startup team. Because, no matter how competent the plan is, if the team of developers is not able to execute it well, it will be of no use.
We understand that for bootstrapped tech startups, a money crunch is always a hurdle to having a team of good developers. Here is when the outsourcing app development requirement comes in.
By outsourcing application developers, the entrepreneurs would have access to a wider range of talent across the world. Moreover, by delegating the app development work to the outsourcing app development service partner, the business owners can invest their time in marketing and processing other big steps for the startup for its strategic growth.
4. Always analyze the market
To build a tech startup, the entrepreneur must be aware of the market numbers thoroughly. They must understand how well the application is doing in retaining old customers, acquiring new ones, what is the customer churn-out ratio and more.
Startups must not stick with the numbers of app downloads and customer signup, they tell just one part of the story. Below are the few important metrics that will help the startup owner to understand the number game in the startup market in a better way:
Measure the active users
The users who regularly return to the application are known as active users. To measure them, the entrepreneur has to decide on a particular period. Let’s say, a startup wants to analyze its monthly active users for 30 days, they can use free tools such as Google Analytics and paid ones like Mixpanel or Amplitude.
App user retention rate
App retention rate is an important metric that if analyzed correctly could bring in a paradigm shift for the tech startup. Through this, the entrepreneur would know how many people have logged back after their initial signup process. Generally, the retention rate for tech apps is low, but if there are no signups in let’s say a month, the tech entrepreneur must concentrate on putting money into retaining customers rather than generating leads. This is because retaining the older customer would cost 6-7 times less than acquiring a new one.
To calculate the customer retention rate, the formula is (Number of old customers at the end of a time frame- number of new customers in that period) *100. To build startups, it is important to know the user retention rate for a month. Moreover, as an entrepreneur, if you want to dive deep into the customer profiles, you can understand their buying behavior to target the promotion content on the app more profoundly.
5. Have a plan and understand the business workflow
Business entrepreneurs must stick to a plan no matter how tough the situation gets to build tech startups. Although, the plan must be flexible and must have room for changes if the situation demands it.
Having a concrete business plan would also save your startup oodles of money. It will help the entrepreneur to look for more avenues to build tech startups along with making informed business decisions and calculated risks. For example, having a business plan would make the owner understand what is the targeted audience of the app. Therefore, they will not target the wrong segment and build an app that perfectly fits in with the market. A clear roadmap will also allow the startup to gain more early adopters and would render a much-needed head-start in today’s cut-throat competitive scenario.
Apart from having a business plan, it is essential to understand the business workflow as well. As an entrepreneur, it is alright to hustle and take big steps for startups, but it is also important to know how to handle the business. Therefore, along with the plan, it is necessary to manage the workflow of the business as well.
Whether the tech startup is outsourcing the app development work or hiring an in-house team, having a workflow will help in getting things done effectively. The assigned tasks to the team would be defined in the business workflow so that the owner would get real-time detail about the project’s progress. In addition, apart from reducing the efforts, a defined business workflow would help in cutting costs as well.
6. Generating buzz among the target audience
After validating the minimum viable product, selecting the best team, and iterating the user feedback, it is time to create hype about the app. To build tech startups and get ahead of the curve, it is important to release the product to a wider set of audiences. This is because the wider section of the target audience will give the right platform to the app to expand its horizon.
In today’s startup business scenario, businesses must take the oxygen out of the room and grab as much space as they can. Moreover, if you are short on money, it is certainly not the end of the road for your startup. In a money crunch situation, all the entrepreneur has to do is concentrate on manual promotion and scale the horizon of the app bit by bit.
Moreover, in today’s digitally connected world, a well-received product launch or a good piece of content can make your app viral. Try to shoot the visibility of your product on websites such as Hacker News, Reddit, Quora, etc. as regular content promotion on these sites can make your marketing process highly cost-effective.
7. Don’t get bogged down in face of adversity
Success and failure are part and parcel of any business activity and the process to build tech startups has a similar story as well. The entrepreneur should understand that when their company is young, it can be more prone to failure as the product is trying to cement its position in the market. But, in case you face adversity at any point, analyze them thoroughly, look at what your competitors are doing right and understand the behavior of your audience.
Careful analysis of failure will help the startup to bounce back and expand its market horizon at an even greater pace. The business owner who never loses their focus and always has an inspiring vision of their product would always find a way to get out of the dirt. Also, having a master plan that helps in every difficult situation always helps, especially to build tech startups. Moreover, focusing on the ‘holy trilogy’ of business: marketing, accounting, and operations when the situation is tough, always helps.
Along with the above-mentioned steps to guide and start a tech company, the entrepreneurs must look for crowdfunding and angel investors to scale their startup organizations. Accelerators, angel investors, and crowdfunding will help the tech startup firms in their initial deals and generate real revenues for the organization.
To build tech startups is no walk in the park. But by implementing the seven actionable steps there are notable tech startups who have made it big in the market. Whether it is Uber, Buffer, or Dropbox, all these businesses have taken big steps for startups to build, validate and market their product.
At Third Rock Techno, we boast a team of experienced developers who have in-depth experience in developing great apps for startups. From building a strong MVP to scaling the app product to a wider range of audiences, our work portfolio has everything in it. Contact us to know more!