Starting any business can be fraught with difficulties, but a tech business can be even trickier. We look at what things you should do to make your business a success.
Starting a business is the dream for anyone with a bit of entrepreneurial spirit, but turning dreams into reality is never easy. This year alone, more than 70,000 start-ups have opened for business according to Startup Britain. Each year, more than half a million people start a business.
But what if your dream is starting a tech business that could one day rival the likes of Apple or Google. What do you need to turn an idea into a Unicorn (a private company worth more than $1 billion)?
Should the business you start be something you love or something that will make lots of money?
If you do it for money you will never make much of it, according to Stuart Miller, CEO and co-founder of ByBox. “You don’t need to be in love with your actual product,” he says.
“Being honest, even though they are at the heart of everything we do at ByBox, I don’t actually love lockers! But I do love proving people wrong and the journey involved in building a world-class business.”
Tom Davenport, founder and co-owner of TalentPool, says that ideally, it should be both. He says very often loving a business (or, more specifically, a product) is the best way to make lots of money. “However, we’ve learned over the years to be increasingly commercial.
“Some of the decisions we made in the early days we would now see as naïve; as in, not thinking properly about the bottom line. So a good and responsible business leader should never forget the numbers. After all, a sustainable business isn’t one that makes fluffy products, it’s one that doesn’t go bust.”
When you get an idea for a new tech business, how soon should you move? Henry Latham, founder at BackTracker says that many people e assume that founders have a ‘eureka’ moment, come up with an idea and start a business the next day.
“It’s good to jump in at the deep end and get going, otherwise there are infinite excuses not to, but you can take steps towards the moment when you quit your job and focus on your business full-time. As long as you have a clear timeline and targets, then that’s progress,” he says.
Once the idea has been settled upon funding is another thing to consider. Michael Gould, CTO and founder of Anaplan says that when starting any business, you need to spend the necessary time looking at your idea objectively to determine whether you really have a compelling argument as to why your product deserves investment. “When I started my business, I spent close to two years hidden away in my Yorkshire barn developing a prototype before I felt that it was at a point where I could pitch the product. This level of planning is crucial to building a solid foundation for your business – particularly if you are trying to solve complex business problems with your product,” he says.
Bivek Sharma, head of KPMG Small Business Accounting, says that for tech entrepreneurs, funding has to be realistic, “both in what you ask for and what you promise”.
“Vagueness or unrealistic numbers can quickly kill a deal. Lenders and funders need to know exactly how much money you need and when they’re going to start seeing some of it back. Ask for too little and the need for further loans or investment rounds can damage credibility. Too much and you can out-price future funders,” he says.
Once you have turned your idea into a business and got funding, how do you manage resources and built up a team? Davenpot says that in his experience, it’s best to limit the number of people you have in the company at the early stages: “It is essential to have a very capable and flexible core team which together covers every area of the business (even if you outsource some delivery). And of course it is critical to have at least one member of that team as, either in title or in effect, your CTO,” he says.
Latham says that when it comes to finding the right people for your tech start-up, two key attributes of a successful team member are resilience and potential.
“You’ll spend up to 2 years working 14-hour days, for no immediate reward or visible progress and you’ll generally have much easier employment options available to you. If you don’t have the grit to stick it out for this period and decide to leave, then this can have a hugely damaging affect on the team, particularly at an early stage,” he says.
Latham also says that in addition to getting the right people in, time is an important resource: “Your allocation of your time will determine your success or failure. Without a very clear goal for your day, week, month, etc., you can spend every waking hour working without seeing any progress,” he says.
Latham adds that his management team holds a Skype meeting every Monday, while the product development team meets twice a week. “These progress updates (through Slack) ensure everyone understands their position and how their work affects others,” he says. “We also use Trello to show what we are doing and what’s in our stack/to-do list, so everyone’s work remains entirely visibility and transparent.”
While having the right team behind is one thing, getting advice is also crucial to success as a tech start-up.
“I think having a mentor is one of the best things you can do for a business,” says Thomas Coppen, managing director of Keel Over Marketing. “I have had one since I began. There are also a few charities that provide free mentoring as well. You should always take advice. That said, I tend to grow my business faster than advise by my mentor, so you need to have your own idea in there as well.”
There will be challenges when any start-up, but as long as you have the right technology in place alongside the right people and you have researched your market and more importantly your customers, your tech start-up can succeed.
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