Best Practices for Launching a Startup Business

More people than ever are launching new businesses in the U.S. – and some aim to change the world with their ventures. If your bold startup dreams and financing needs are holding you back, this guide can help you take the leap! You’ll learn the best practices for launching and growing your business.

What’s the difference between startup ventures and new small businesses?

Traditional small businesses often begin with the goal of creating something lasting for the owners, their families, and their communities. For these businesses, growth is an important business goal, but it’s rarely the only goal. They’re also about bringing new jobs and support to their communities, offering services that help people feel their best, or building a legacy business with a lasting positive impact on people they care deeply about.

Although they may not get the recognition that Silicon Valley startups do, they are essential to the U.S. economy, making up about 99% of all businesses in the U.S. and employing about 59 million people.

For years in major technology hubs like San Francisco, Austin, New York, LA, and Boston, and now, across the U.S., the phrase “startup” has come to mean something different than simply an early-stage small business. For these businesses, which often center around technology, startups are initially small but have enormous growth goals.

Among the key differences between traditional small businesses and those considered “startup” ventures are that:

• A traditional small business may launch without any goals of national or global reach, while a startup usually launches with a specific goal of worldwide reach, often by getting acquired by a larger business in the same or a related industry (or by taking over other businesses).
  
• A traditional small business startup may focus on many products or services, while a startup venture usually focuses on a single product or service, such as the creation of an app, new technology, or a service model that will disrupt the mainstream or introduce something totally new. Some common examples include Amazon, Tesla, and Uber.
  
• A traditional small business often bootstraps early on, then seeks financing through small business loans, lines of credit, and other sources, while a startup will bootstrap for a relatively short time, then seek major investment through angel investors, venture capitalists, and other sources.

Even for small businesses that eventually become multinational corporate empires, growth is often decades in the making and achieved through business models such as franchising or slow-but-steady expansion into new markets.

What are the startup best practices?

Every now and then, someone – or a small group of people – has an idea with the potential for enormous and lasting impact on how you live your life. While the group at the core of the operation may be small to start, the plan is always to build something with near-infinite scalability. For these businesses, starting small is just a necessary first step toward worldwide expansion.

If your ideas are the kind that could have a global impact, how do you go from zero to launching a startup? The path will be different for every venture, but there are a few key steps to get you started.

1. Develop a strong plan

The first step is to develop a strong plan. Without this, you’ll be left with an unclear path forward and won’t have a strong foundation for your business. To create a strong plan, you’ll need to:

• Set clear goals: It’s important to define your mission, vision, and goals and align those with your long-term objectives. Using specific, measurable, achievable, relevant, and time-bound (SMART) goals allows you to focus your time and resources effectively.

• Create a business plan: A startup business plan is an essential roadmap for your business launch. It outlines your vision and goals, target customers, competitive analysis, marketing plans, market opportunities, and more. By having an effective business plan, you’ll be able to plan your resources better, communicate your goals effectively, identify your risks and opportunities, and make more informed decisions.
  
• Test your product or service: For any business to be successful, there must be market demand for your product or service. That could mean inventing something completely new, improving on goods and services that are already available, or bringing them to new markets.
  
  Be sure to test your product or service to ensure it’s viable and scalable. If you don’t perform this test early on, you could end up spending enormous time, energy, and financial resources on something that simply won’t work. This is your chance to test, improve, and pivot before you get too deep.

2. Gain financial stability

If you go by stories on social media or the news, it seems that startups are rolling in cash. In reality, founders typically self-fund in the earliest days, pooling savings and other resources, until they secure some key investors. Early on, insufficient financing can be a hurdle. Sometimes, too, after investors are secured, having too much available cash can be just as much of a management challenge. Here’s how to move forward at both of these critical points.

• Secure initial financing: The amount of funding needed early on varies tremendously from business to business. Depending on what you want to bring to market, in the earliest stages of launching a startup, you may not need much to get going. Even still, most startups today seek initial investments of several million dollars while creating their goods and services.
  
  If you have an achievable, valuable, and highly scalable idea, there are several ways that you can build your funding base:
  • Enter startup competitions that offer cash prizes
  • Join university-based business incubators or partner with their research-and-development (R&D) programs
  • Connect with local economic-development agencies
  • Pitch to angel investors and venture capital firms
  • Research government grants and startup assistance programs

• Prioritize your financial management: Poor cash management is one of the leading reasons that startup ventures fail. You’ll want to develop a good understanding of your business’s financial management, including learning to budget, manage your cash flow, and monitor your business’s financial health. Tools and software like QuickBooks or Expensify are available to simplify your financial tracking. You could also hire an in-house financial officer or an outside CPA.

3. Build your team

As you’ll quickly learn, launching a startup places a huge demand on your time, taking a toll on your focus, energy, and determination. That’s why building a strong team around you is essential to your success. You should:

• Attract and retain great employees: It takes a lot of effort to attract and retain great employees, especially on a startup budget. You’ll want to use low-cost strategies to help set your business apart and foster a great workplace culture, so once you build that team, you won’t lose them.
  
• Expand your skills and expertise: When building your team, you don’t want to hire people with the same skill set as you. Just because you come up with a game-changing idea, doesn’t mean you have all the skills necessary to see it through, you’re likely missing some expertise areas.
  
  For example, a coder who has created an AI-security breakthrough probably doesn’t have the CFO-level financial management skills needed to manage millions of dollars in investments. A startup needs key financial, marketing, compliance, legal, and other team members.

4. Be ready to adapt

In this world, things are constantly changing, and you should be ready to pivot at any point. You can:

• Continuous learn: As a small business owner your work is never done. You need to stay motivated and keep up your skill development and growth. You can achieve this through courses, books, workshops, events, networking, and more.
  
• Be adaptable: It’s important to take feedback and pivot when necessary. You should stay informed about any industry changes and emerging opportunities – and be ready to address them when necessary.
  
• Use customer feedback: Customer feedback is crucial to product and service development. As a startup, you may have some adjustments to make. You should make a plan for requesting and receiving feedback so you can communicate directly with your customers to find out what they like and don’t like.
  
• Be prepared for a slow start: Maybe you’re doing everything right, but you’re still experiencing a flat start. To prepare for this, you should set aside capital for the worst-case scenario so that you aren’t panicked or stressed when you don’t see the initial traction as planned.

Pursuit provides financing and more

Remember: Launching a startup and seeing it through to success begins with someone with a dream and the courage to pursue it. With careful planning, hard work, and smart decisions, your startup could be the next success story.

Pursuit helps small businesses get the financing needed to launch and grow with strength. We also provide information and resources that can help you create a path to success. As a leading small business lender serving businesses across New York, New Jersey, Pennsylvania, Connecticut, Nevada, Illinois, and Washington, we offer loans and a line of credit for working capital, commercial real estate, equipment, and more.

Start your application so we can help you.