5 Things You Must Do to Successfully Launch a Business

The effort required to launch a new venture can
seem daunting. Of course, specifics vary based
on the type of business you're establishing;
manufacturers face unique challenges, as do
retailers and consulting firms. But once you have
your concept and your finances in line, there are
some basics that are universal.
We talked with business owners, consultants and
professors to boil down the bare necessities of
getting a startup off the ground into a handful of
manageable steps. Apply these fundamentals to
your own industry, and you'll be ready to tackle
the specifics of creating your successful
business.
1. Validate your idea.
Einas Ibrahim, founder of Talem Advisory, a New
York City startup consultancy, says the biggest
mistake she sees new entrepreneurs make is
starting to work on a business idea before
confirming that there is market demand. If your
startup aims to sell a widget the world has never
seen, make sure the world, in fact, needs your
widget. Perhaps it doesn't exist yet because no
one needs it. If it is needed, then make sure the
world is willing to pay for it.
"Don't work on the business until you've validated
the idea," Ibrahim says. "Make sure there's a
market. Make sure it's what the customer wants.
Sometimes the entrepreneur's vision doesn't
align properly with what customers want."
Market research proves especially critical for
startups with big dreams. If you're aiming to
become a billion-dollar business, take steps to
ensure that the market can satisfy your
aspirations.
"Entrepreneurs find this out after they start
talking to investors," Ibrahim says. "The idea
might be sound, but it might be too small to
become fundable by a professional investor, or by
angels or venture capitalists. If the whole market
is less than $500 million, it's not going to be
worthwhile for a venture capitalist to fund you."
2. Shore up your plan and budget.
Even the best business plans go awry.
Successful startups will expect the unexpected--
and have an answer ready for it.
"Have a plan for how the business will be run,"
says Leonard Green, founder and chairman of The
Green Group, a New Jersey-based accounting,
consulting and tax firm, and entrepreneurship
professor at Babson College. "It's a form of
making decisions before you have to make
decisions."
Those decisions should range from your startup's
mission to its business structure (LLC, sole
proprietorship, S Corporation) and compensation
policy.
When budgeting startup cash needs, assume your
business will generate zero revenue for the first
year, Green says. "Many times when you have
sales, you don't have collections for a few
months," he adds. "You still have to cover rent,
utilities, inventory, salaries and promotion."
Image credit: Jesse Dittmar
3. Build the right team.
Perhaps the most critical step in the evolution of
your startup is assembling a team that works well
together and can deliver the goods. "Many good
entrepreneurs are by nature connectors of
people, so they have strong networks, which puts
them at an immediate advantage," notes Mark
Coopersmith, a longtime tech entrepreneur and
senior fellow at the University of California,
Berkeley's Haas School of Business.
Your teammates need to share your ideas about
how the business should be run. "The crucial
element here is that entrepreneurship is a team
sport," Cooper-smith says. "Build the team early,
and build it around shared values. Because if you
bring on employees and partners and you agree
upon common values, you can use those values
to come to decisions."
Coopersmith invokes the late Peter Drucker, the
management guru who 60 years ago wrote that
corporations have only two core functions:
marketing and innovation. In other words,
businesses exist to build and sell product. "I
would ensure my team comprises those two skill
sets," he says.
Additionally, you need a team that's pragmatic
and able to work together when times get tough.
Sit down with critical team members and plan for
all contingencies. "What happens if your partner
becomes disabled? Sick? Divorced?" Green asks.
"Or suddenly the business does poorly, and now
we have to go to a bank? You've got to decide
those things beforehand, so that it's not you or
me, but it's us."
4. Establish a support system.
The entrepreneur's journey can seem like a
solitary quest. But before you embark on such a
voyage, you need to make sure your loved ones
have your back. In fact, it's essential to your
emotional health--and to the health of your
company.
"I always say it takes a village to raise a startup,"
says Margaux Guerard, co-founder and CMO of
Memi, a firm touting wearable technology
designed for women. "As an entrepreneur, you
just can't do this alone. You need the mental and
emotional support of your friends and family to
help you weather the storm."
Guerard left her job as director of marketing at
Diane von Furstenberg to start Memi with her
business partner, Leslie Pierson, in 2012. Her first
entrepreneurial venture has been an around-the-
clock whirlwind--exciting, frustrating, rewarding
and upsetting, sometimes all in the same day.
She relies on her loved ones to help keep her on
track.
"I see myself as being the cheerleader for the
company," Guerard says. "When everyone is
saying 'no,' I'm putting my pompoms on and
saying 'yes, yes, yes' at the top of my lungs.
When I'm feeling frustrated and sad and beat up,
some days I need help doing that. Who do I count
on? My family, my friends, my husband."
5. Respond to feedback and refine
your model.
When Bayard Winthrop conceived his notion to
manufacture an American-made hoodie, he
outfitted hundreds of potential customers in
prototypes and asked them what they thought.
How did the fabric feel? Was it too rough? Too
soft? Too clingy?
Without soliciting such detailed feedback from
your most likely customers, says Winthrop,
founder and president of San Francisco-based
American Giant, you'll never know if your idea is
a good one. "We did everything from putting
imagery up on the website to making 100
sweatshirts and getting them into people's
hands," he says.
American Giant, which launched in 2012, has
been credited with rethinking every inch of the
ubiquitous hoodie. Before the company launched,
Winthrop asked customers their thoughts about
all aspects of the garment: the cuffs, the fit, the
hood, even the zipper. The fabric alone took six
months to fine-tune.
"In our particular, narrow world of sweatshirts,
getting that right is like cooking a great meal,"
Winthrop says. "That required getting it onto
backs and asking people what they would pay for
it."
Feedback led physician Mitesh Patel, co-founder
of Docphin, to tweak his technology. He designed
his platform to help healthcare professionals get
fast access to research articles published in
medical journals. The emphasis was on fast.
But the site's initial registration process proved
cumbersome, leading many frustrated users to
log off. Docphin scaled back, asked fewer
questions of first-time users and reduced the
average sign-up time to two minutes. Users
returned in droves. Today Docphin serves 500
hospitals nationwide.
"For us," Patel says, "it was all about finding out
what is the value of the end user, and how can
you get them to achieve that value as quickly as
possible. What we found was the real value was
speed."
For startup entrepreneurs, the need to constantly
tinker with the business never ends. "You have
always got to be thinking about how you can
tweak whatever you have to make it even better,"
says David Rush, co-founder and CEO of Earshot,
a Chicago-based company that helps businesses
acquire new customers through social media.
Rush's initial venture was an app called Evzdrop
that allowed strangers in the same location to
communicate with one another. Customers told
Rush they wanted to be able to access more
widely used social networks. Seeing a better
business opportunity, he pivoted, and in October
2013, Evzdrop became Earshot.
"You have to be acutely aware of what the data
are telling you and what you are able to learn
about either your competitive landscape or the
market you're trying to serve or the problems
you're trying to solve," Rush says. "It's a
continuous product. You're never satisfied."