Let’s say that the typical startup survival rate is roughly 10% to get things started. Yes, 90% of startups fail before they can expand enough to support themselves.
Due to their inability to provide a product that consumers genuinely wanted, over half of failing firms closed their doors. Some failed because they ran out of money, while others did so because their crew was underprepared.
Despite the grim image painted by the statistics, knowledge is on your side. Your IT company will have a fighting chance of surviving if you know the most significant pitfalls to avoid and have a solid plan to create, advertise, and sell apps users genuinely want to use.
So how do you get started?
For a tech company to succeed, you’ll need a market that is prepared to buy, the correct feature set to alleviate those customers’ problems, and pricing your market can pay. A hundred other factors you can’t reasonably know at the onset without laborious research and spending a fortune:
Because of this, startups operate best when they are developed iteratively, based on customer input from a constantly improving app. This unconventional manual on starting a low-cost technology company before you run out of cash has become the startup bible.
Don’t spend too much time immediately organizing an LLC if you want to run a lean startup. It carries unwarranted legal slack.
In actuality, a general partnership and co-founder are acceptable corporate structures. As a result, you avoid dealing with concerns like organizational structure and taxes before you even have a product to sell, which lowers your costs.
The technology is considerably more significant than the frameworks that support it in the lean startup technique. After all, your product will bring in the cash, so start there.
You can start setting the groundwork for a new software startup as a side hustle if you know how to code or are ready to learn, enabling your day job to cover the expenses. You’ll receive an early prototype that you may show prospective co-founders.
However, as a non-technical entrepreneur, you must persuade a potential CTO (chief technology officer) of your idea; this way, the technology only costs time.
It’s time to get things moving now that you have the bare minimum of company necessities in place and at least one technical team member.
6 Steps on How to Start an IT Company
We’ll go over a practical 6-step method in this post to start a prosperous IT company:
1. Make a Shortlist of the MVP’s Core Features
Most brilliant startup ideas come about because a founder cannot discover an effective remedy for their problem.
Regarding business ideas, “the verb you want to use is not ‘think up,’ but rather ‘notice. Ideas that spontaneously develop from the founders’ personal experiences are referred to as “organic” company ideas at YC. Nearly all of the most successful startups start this way.
You might be the most competent person to describe a product’s critical characteristics if you’re creating it in response to a problem you experience. However, if you believe that others feel the same way and are searching for a solution, you can enlist early adopters to assist you in improving your value proposition.
Your product roadmap must be well-defined, the input must be gathered, and the concept must be validated to succeed.
Making wise decisions at this stage is essential for survival since 42 per cent of failing firms fold due to poor product-market fit.
A straightforward structure like this can be used to specify user objectives and examine how various pain points correspond to essential product features:
- What is the main point?
- Who are the customers?
- Who are the ultimate users?
- Why would they want it, anyway?
- Why do we construct it?
- When creating an MVP, you must be extremely picky.
Focus on offering users the bare minimum of features they require to accomplish a task or get value; for example, your project management tool needs more attachment uploading than support for customized emoji.
2. Purchase the MVP
A lead capture page directed qualified businesses to a concierge demo for the GrowthHacker Projects MVP.
Getting paying clients on board as soon as possible is one approach to stop the issue of running out of money.
Customers will be willing to “co-develop” the product in exchange for getting the features they request (and will want to pay for) produced if they have a financial stake in the product’s success.
Sales are proof!
Finding out that customers will pay for what you have or are about to build is one of the critical turning points for every business.
The various MVP pre-selling techniques you can employ to validate a product concept quickly are listed below:
- MVP for a single feature. To prove that a part is needed and to encourage early adoption, concentrate on achieving just one user goal.
- Fragmented MVP. Reduce expenses by fusing already-available goods and services to create a distinctive offering. Your final output might, for instance, be the outcome of several Zapier zaps or a code-free prototype created with Bubble.
- MVP concierge. Perform some or all of the software’s tasks manually and collaborate closely with users to determine how to improve the product. Automate the manual work with technology using such knowledge.
- Wizard of Oz MVP. An MVP appears to be a software service but produces its outcomes through physical labor. This is a way to test whether users will pay for the products your app will deliver.
- Crowdsourced MVP. With crowdfunding, you may create buzz and gain feedback on a product before you put it into production. Many successful enterprises have come from videos of one-off prototypes uploaded to Kickstarter. This lowers expenses while providing you with money to live on.
- MVP smoke test. By driving paid traffic to a pre-release registration page, you may confirm there is a market for your idea. You can determine the amount of interest by counting the number of signups.
3. Find Talent by Using Equity
Technically inept? No issue.
You can find an enthusiastic technical co-founder if you have the correct startup idea and equity offer.
You can connect with your ideal CTO or CEO using a platform like VentureStorm without spending money on recruitment.
Although there is much discussion, most firms give technical co-founders between 10 and 35% of the company’s stock.
This is because further finance will dilute stock, making it risky for CEOs seeking investment to give away a sizable portion, close to 50%.
4. Choose the IT Services You Will Provide
Keep in mind that potential customers will be attracted primarily by your services. Your practice might offer a combination of these IT services:
Choose only those options for your offerings that you have prior knowledge of. Offering services outside your area of expertise to attract new clients can be appealing. However, doing an IT project that you are unfamiliar with can backfire.
5. Decide on a Corporate Structure
Don’t ignore choosing the appropriate corporate structure while launching an IT services firm. Simply having the necessary training and capital to launch is insufficient.
A sole proprietorship, a partnership, a limited liability company (LLC), or an S corporation are small IT services organizations’ most common business structures (S corp).
Your taxes, the amount of paperwork you’ll have to complete, and your liability will all be impacted by your chosen business structure.
A sole proprietorship is the simplest type of business organization for one-person businesses. There won’t be any papers for you to submit to your state. However, there is no distinction between personal and corporate assets if a client sues you.
6. Be Agile
Always read the Agile Manifesto and the literature surrounding it before starting a business.
It’s great to gather measurements and crunch stats, but at this scale, it’s easy to get mired down in information that may be less important than just making your product better.
It’s essential to make a product, feature, and marketing updates that positively affect your bottom line in light of user input and reports on crucial metrics like retention and activation.
The old Facebook maxim of Move Fast and Break Things is still a good lesson for startups. This means making judgments based on scant data and the opinions of a select group of devoted customers.
As it gains popularity, your staff and product will expand, but you’ll need internal procedures and structure to make that happen. That means: for a lot of successful startups.
Sprinting through work. Utilize 2-week sprints to iterate on the product, reviewing performance after each sprint and having open dialogues about what went right and wrong.
Tracking user feedback with seriousness. User feedback is crucial to the success of startups, yet it’s frequently handled poorly. Always maintain a Google Sheet with the most recent feedback snippets. At the very least, create specific tags in your support ticketing tool that identify the feature or aspect a user is referring to (#feedback-sidebar-ui).
Removing features or campaigns that are ineffective. Given your limited means, continuing on the wrong route is not something you can afford. Do the statistics indicate that a beta feature you’re pushing aggressively isn’t being adopted widely?
The statistics show that starting a tech company is no easy task. There is sure to be a lot of room for error when dealing with something as complicated as software and unpredictable as team dynamics.
But if you stick to these guidelines, you’ll have a tried-and-true structure that successful businesses like Dropbox, Uber, and Buffer have used to develop, validate, and promote their products.
To sum up:
Be clear on what your MVP will and won’t be. Make a list of the features and consider the simplest solution to address a pressing user issue.
- Sell the MVP in advance. Use relationships, crowdsourcing, and smoke testing to generate publicity and raise money.
- Build a strong founding team by providing stock. At the very least, IT startups need a CEO and CTO. Find a co-founder using talent sourcing websites with the necessary abilities, zeal, and perspective.
- Strive hard to attract your initial few clients. Without user input, the software might be developed incorrectly, wasting resources and ultimately leading to the company’s demise. Your first few customers’ payments are crucial, but their feedback on what you should add next is invaluable.
- Data analysis and pivoting are optional. Utilize customer analytics solutions to track user behavior, measure user retention, and follow other success indicators. Find out what’s wrong and correct it if something is broken.
- Apply agile principles. Your team and product become too complex to manage ad hocly as they grow in size. Agile enables startups to create products in definable sprints with sufficient Time between them to respond to user input.
- Get funding and expand your team. You have a sound idea if you’ve read this far. You only need to focus on what is already successful in earning money and advance. You have the freedom to carry it out, thanks to financing.
It’s a long path, but given how full of obstacles it is, the fact that only 10% of startups succeed is a positive thing since, with the appropriate action plan, you’ll be in a better position to succeed than most other firms who are trying to establish tech companies the wrong way.