A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. Startups are often initially bankrolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand. The failure rate of startup companies is very high so failed entrepreneurs, or restarters, who after some time restart in the same sector with more or less the same activities, have an increased chance of becoming a better entrepreneur.
Every startup owner wants to succeed. Why put your blood, sweat, and tears into launching a new venture, only to watch it fail? And yet, many of them do. A principle is a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning. The principles of a startup are the driving forces that make it successful. They are the backbone for the organization.
Here are the principles that underlie the creation of the most successful startups in the world.
1. Lean startup
Is a popular set of principles to create and design startups under limited resources and to build their ventures more flexible and have a lower cost. It is based on the idea that entrepreneurs can make their implicit assumptions about how their venture works explicitly and empirically test them. Lean startup focuses on a few lean principles:
- Find a problem, then define a solution.
- Engage early adopters for market validation.
- Continually test with smaller, faster iterations.
- Build a function, measure customer response, and verify the idea.
- Evidence-based decisions on when to pivot by changing your plan’s course.
- Maximize the efforts for speed, learning, and focus.
2. Market validation
A key principle of the startup is to validate the market need before building a solution Because startups are uncertain, you don’t want to waste time or money building something that has weak demand. Validating your ideas before deciding to invest heavily in building something is a wise move no matter how confident you are.
3. Design thinking
It is used to understand the customers’ need in an engaging manner. Design thinking and customer development can be biased because they do not remove the risk of bias because the same biases will manifest themselves in the sources of information, the type of information sought, and the interpretation of that information.
4. Decision-making under uncertainty
In startups, many decisions are made under uncertainty, and hence a key principle for startups is to be agile and flexible. Founders can embed options to design startups in flexible manners so that the startups can change easily in the future.
Startups may form partnerships with other firms to enable their business model to operate. To become attractive to other businesses, startups need to align their internal features, such as management style and products with the market situation. Startups usually need many different partners to realize their business idea. The commercialization process is often a bumpy road with iterations and new insights during the process.
6. Entrepreneurial learning
Startups need to learn at a huge speed before running out of resources. Proactive actions enhance a founder’s learning to start up a company.
7. Business model design
With the key learnings from market validation, design thinking, and lean startup, founders can design a business model. However, it is important not to dive into business models too early before there is sufficient learning on market validation.
8. Startup costs
When you launch your startup you must take these costs into consideration, accountant’s fees, legal fees, registration charges, as well as advertising, promotional activities, and employee training. Also called startup expenses, preliminary expenses, or pre-opening expenses.
There you have it, the principles upon which to conceive, grow, and expand your business. Each business needs a shape and structure, and these principles will give your company an outline, which is necessary for it to thrive.