There are several reasons why one would want to start a tech business. The tech industry is one of the most growing and evolving fields in the time being, which means there are a lot of opportunities for innovation and room for growth. In addition to that, tech startups have the potential to provide significant financial rewards for founders and investors if the right idea is developed by the right people for it.
According to research, 305 million startups are created globally each year. So, for your business to stand out, multiple measures should be taken, but most importantly the problem-solving approach. The best way to sell something to someone is if that person needs it. Accordingly, the first step of many to introduce your tech business to the world is the incomparable idea that in a way, helps address a problem or need in the market.
Who doesn’t want to be the next Facebook, Uber, or Whatsapp creator? Exactly. No one. Having your startup become one of the most successful companies in the whole world and starting from a few thousand dollars to become a multi-billion dollar industry is every inventor’s dream. We gathered some tips that would help put you at the beginning of the road, in this article you will find:
- What is a Tech Startup? How does it differ from other businesses?
- 8 Reasons Why Most Tech Startups Don’t Make It
- 10 Steps on How to Build a Sustainable Tech Company
Starting a tech company can be challenging, exciting, and -if built the right way- a rewarding experience. It will require a lot of hard work, dedication, and perseverance as you will need to have a deep understanding of the market, come up with an idea, build a team to help you, and eventually secure funding from investors, just to name a few of the steps. So, if this is your current dream and all you can think about, keep reading for all the insights.
What is a Tech Startup? How Does it Differ From Other Businesses?
A tech startup is a company that uses technology to develop innovative products or services that solve a problem or meet a need in the market. These companies are often focused on creating technologies that can change the way people live, work, or interact with the world around them. They can range from small, early-stage companies to large, established firms, and can operate in multiple industries.
In the dynamic world of technology, tech startups are on a mission to create innovative and groundbreaking solutions that can transform people’s lives, and they differ from other types of companies in that they focus on technology to develop innovative products or services that solve a specific problem or a market need. While other businesses may focus on traditional methods of production and distribution, tech startups are often focused on creating technologies that can reshape work practices, and redefine how we interact with our surroundings.
Additionally, tech startups tend to operate in various industries such as software development, e-commerce, biotech, and more. The goal of a tech startup is to create new possibilities through cutting-edge technology that leads to a sustainable business model that generates revenue and that is rapidly growing.
8 Reasons Why Most Tech Startups Don’t Make It
Here are some statistics when it comes to launching a new tech startup: The yearly failure rate for new startups is around 90%. That means that the average survival rate is only around 10% out of all new businesses that are launched around the year, and first-time startup founders have a success rate of 18%. According to research, most microbusinesses cost around $3,000 to start, considering how each business is different and will require different expenses.
There are several reasons why many tech startups fail in the early stages. One of the most common reasons is the lack of a viable business model. Some startups may have a great idea, but they fail to monetize it or generate revenue to sustain the business. Another reason is the lack of a strong team or leadership. Without a team that is capable of executing the vision, a startup is likely to falter.
Additionally, market timing, competition, and funding are other factors that can contribute to a startup’s failure. It’s important for entrepreneurs to carefully plan, execute, and adapt their business strategies to increase their chances of success.
We listed down the most common reasons why tech companies might fail in the early stages and here are they:
1. Incomplete research: This may occur due to poor planning or rapid decision-making. The first step of launching any business should be good ideation for a product/service that provides a solution. If you do not perform well-organized market research before the deployment stage, your concept may have already been created before, accordingly leading to your idea’s downfall.
2. Lack of product-market fit: While your idea may be perfect, sometimes it could fail to address a real need in the market. If there’s no demand for the product or service in your marketplace, it’s highly unlikely to succeed.
3. Insufficient funding: Many startups require significant capital to get off the ground, and if you can’t secure the funding they need, you may not be able to execute your plans effectively. Accordingly, it is recommended to know the type of capital your startup size is going to require before diving head first.
4. Incompetent team: If your team lacks the skills, knowledge, or motivation to perform their job duties effectively, this will lead to poor quality work and will eventually damage your business’s reputation and lead to a loss of revenue. An incompetent team can also result in increased costs due to the need for rework or additional training.
5. Poor leadership: A company’s success often depends on the quality of its leadership. If the founders or executive team lack the experience, skills, or vision to guide the company, it will struggle to succeed.
6. Ineffective marketing: Even if a startup has a great product, it won’t be successful if no one knows about it. Effective marketing is key to building brand awareness and driving customer acquisition, and if your startup lacks good exposure, your hard work will not pay off.
7. Lack of customer service: When customers have a negative experience with a company’s customer service, it can lead to decreased customer satisfaction and most importantly, negative word-of-mouth reviews, and due to the fast world that we live in, this will ultimately result in a decline in revenue and profits for the business.
8. Strong competition: In many markets, there are already established players with significant market share. It might be tough for a new startup to compete with these companies, especially if they have more resources or a stronger brand.
These are just a few of the many possible reasons why tech startups might fail in the early stages.
10 Steps on How to Build a Sustainable Tech Company
Nothing is guaranteed in the business world, however, if you follow the below steps thoroughly, you will be enhancing your chances to be amongst the 10% success stories of startups and you might just become the next big thing!
1. Take your time ideating: It is not about who does it fast, it is about who does it right. Before you start building your product or service, it’s important to identify a real problem or need in the market you are launching in that your startup can address. Conduct detailed thorough market research and talk to potential customers to validate your idea. When you figure out the answers to the below questions, then you are ready to proceed to the next step:
- What is my target segmentation?
- What do they need?
- Who already provides that?
- How can I make it different or add to it?
2. Study your competitors well: In order for you to guarantee that your project will be unique, you need to study the market very well, specifically study your competitors if there are any. Prying on your competitors will give you an edge by finding out what their weaknesses are to avoid falling through the same patterns.
3. Know your audience criteria: Understanding who your potential customers/clients are is a crucial step when starting a business. You should gather information about their demographics, preferences, and behaviors. You can be able to do that through several steps:
- Using surveys, focus groups, and online tools to gather information about your audience and what they need
- Figuring out what competitors are offering and who they are targeting
- Utilizing Social Media platforms such as Facebook, Twitter, and Instagram to gather information
- Attending networking events can help you connect with potential customers and industry experts.
4. Develop a business plan: Create a solid business plan that outlines your vision, goals, target market, revenue model, and marketing strategy. This will help you stay focused and organized as you build your startup. Here are some essential sections that should be included in your tech startup business plan:
- Executive Summary: An overview of your startup, including its mission, vision, and objectives.
- Company Description: A detailed description of your company, its history, and the products or services that you offer.
- Market Analysis: Outline your target market, including its size, demographics, and purchasing behavior.
- Competitive Analysis: Your competitors and their strengths and weaknesses.
- Marketing and Sales Strategies: Your plan to market and sell your products or services.
- Operations Plan: How your business will operate, including production processes, supply chain management, and logistics.
- Financial Plan: Financial projections, including revenue and expense forecasts, balance sheets, and cash flow statements.
- Funding Requirements: How much funding you will need to start and grow your business, and how you plan to raise that funding.
5. Build a strong team: Assemble a team of talented individuals who have the skills and experience needed to execute your vision. Look for people who are passionate about your mission and share your values. It’s crucial to have a skilled and motivated team that is committed to the success of your business to ensure its growth and sustainability.
6. Develop a minimum viable product (MVP): Build a minimum viable product that addresses the core problem or need you provide. The MVP should be simple, functional, and user-friendly.
7. Test before launching: Once you have an MVP, start testing it with potential customers. Gather feedback and use it to improve the product. Keep iterating until you have a product that people love and are willing to pay for.
8. Secure funding: Depending on the scale of your startup, you may need to secure funding from investors or venture capitalists. Prepare a pitch deck and be ready to answer tough questions about your business.
9. Invest in marketing: Develop a marketing strategy that reaches your target audience and builds brand awareness to guarantee the required exposure.
10. Launch and market your product: Once you have a solid product and funding, it’s time to launch and start marketing your startup.
Always remember that building a successful tech startup takes time, hard work, and perseverance. So, try as much as you can to stay focused on your mission, be willing to adapt and pivot as needed, and don’t be afraid to ask for help when you need it.
We at Ovarc aim to help organizations grow and expand into complex markets like Egypt and the Middle East effortlessly. We manage to move clients straight through to their business goal, hassle-free of all the legalities, incorporation hassles, and post-incorporation challenges.
You can fill the form in the contact us page to have a representative contact you to schedule a free consultation session and discuss all matters related to how we can help provide you with optimal solutions.
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