The pandemic had minimal effects on the operations of tech startups as employees started working from home. Despite this, the finances of these small companies took a hit as funding sources started to dry up. It was particularly true among enterprise-oriented businesses as large companies reduced IT expenses to weather the storm.
But the situation quickly changed as the startup community surged as Americans set up around 4.4 million startup businesses in 2020, which is an increase of around 24 percent compared to 2019. Much of the increase was in the warehouse and retail industries as more businesses focus on e-commerce rather than brick-and-mortar stores.
Government funding also played a role as people had access to funds they didn’t have when the pandemic started. At this point, many entrepreneurs may be planning to set up a startup. Here are some tips they can follow when setting up a startup.
Develop a Business Plan
Similar to other businesses, the first thing an entrepreneur should do is to develop a business plan. Without a plan, the startup will have no direction. It will also find it challenging to obtain the funds it needs for its operations. Investors may also have second thoughts in putting up capital for the startup. Additionally, the startup will also have a bigger chance of expanding since it has a blueprint for it. The business plan should outline the strategy of the startup in the next three to five years. The entrepreneur should also prepare a plan for the next five to ten years in case it achieves its three or five-year goals.
Assemble a Team
The entrepreneur should also include in the plan the team he should assemble for the startup. A tech startup will need programmers, web developers, and other tech-inclined professionals. But the entrepreneur should not limit the team to these professionals since any company will also need other people who may not be as tech-savvy as him. The startup will also require the services of an accountant, lawyer, and financial advisor. These professionals are experts in their fields, and a good entrepreneur knows to consult them for tax, legal, and financial matters. At the start, the entrepreneur can get a consultant before hiring a full-time employee as the startup expands.
While a new professional may be an affordable option, getting an experienced one can provide more benefits for the startup in the long term. The entrepreneur should also go through the professional backgrounds of these professionals so that he can hire the most experienced among all of them.
Look for Funding
The entrepreneur should also look for funding for the startup. They have several options to getting the funds, including family, friends, angel investors, and venture capitalists. But before they can approach these funding sources, they should prepare a financial plan. The financial plan typically has a sales projection, balance sheet, profit, and loss statement. A cash flow statement is also important since it provides investors an idea of how the startup can work on its cash flow and avoid issues with it.
The entrepreneur can also work with a private equity marketing agency to look for investors in the startup. These agencies typically connect investors with startups that are looking for funding for their business. Since most of the funding available for startups is in the tech industry, if the entrepreneur sets up a tech startup, he will have minimal issues looking for investors.
Build a Website
The global digital population or number of people using the internet has reached around 4.6 billion as of January 2021. In the United States, around 90 percent of the population uses the internet. Due to this, the entrepreneur needs to build a website for the startup.
The website serves a lot of purposes, including getting to connect with potential investors of the startup. The startup can showcase its planned products and services to entice these venture capitalists and angel investors to set aside funding for the startup.
Additionally, the website can also serve as the marketing platform of the startup once it starts offering its products and services in the market. Since most consumers went online after the pandemic started, the website will be the main connection of the startup with its target market.
Without an online presence, the startup will not last long, especially if it offers tech-related products and services. The startup can even use the website to receive pre-orders for its products and services to get an idea of its possible demand.
Setting up a Startup can be challenging in the middle of a pandemic. But entrepreneurs can overcome any obstacle if they know what to do.