The idea of building a startup from scratch can be overwhelming.

When to start? How to conceive ideas & validate them? How to execute ideas? What are the legal requirements?… The list goes on & on…

I too faced such numerous questions when I started out first. Having seen & learned from my mistakes, I do not want you to repeat the same with your startup venture.

As per Forbes, 90% of the startups fail. That’s scary like hell.

But, the question is why do startups fail so often? In my opinion, it’s all about the process.

Startups generally are built in haste, without following best practices or processes.

Take an example: Generally, this is how a startup is built. A million dollar idea > Hiring > Building product for months > Marketing > Sales.

Does the aforesaid process work? No, not always because you never know if your product will ever be accepted by your target audience. Case in point: What if you follow the aforesaid process & build a product over a period of 1 year that no one wants to buy? Well, you are going to lose money & eventually your startup will shut down.

So, startups most often gamble with their dream ideas & products. This is the core reason why 90% of them fail.

The whole idea of this post is to help you build your business empire, the risk-free way.

Following the below steps, you will have a high chance of success with your startup idea. Even if your startup doesn’t turn out to be successful, at least you won’t lose much of time & money.

Talking about being risk-free, I would recommend the following pre-requisites:

  • If you are doing a job or studying in college, do not drop out until unless you achieve a successful outcome at Step #3 below.
  • Invest only the amount that you can afford to lose.
  • Avoid paying for fancy office spaces or furniture etc.

So, let dive in to discuss the 7 risk-free steps to build a startup from scratch.

HOW TO BUILD A STARTUP FROM SCRATCH

1. Get A Co-Founder(s)

A startup is not at all about being a one-man army. You definitely need a co-founder(s) to share your vision & work.

There are a few websites like CoFoundersLab that can help you to find like-minded entrepreneurs or aspirants for your startup.

Or else, you may try finding a co-founder among your friends, family or colleagues. I prefer this method because you know these people well enough & thus helps in avoiding friction.

What are the qualities that you must look in a prospective co-founder? As per my view, he or she should be:

  • A good marketer
  • Inquisitive
  • Having good people management skills
  • Strategic mindset
  • Growth-oriented

Once you have your ideal co-founder shortlisted, go ahead & make it official by entering into a draft (yet legal) agreement. Such an agreement will spell out important terms like individual responsibilities, equity share, exit conditions etc.

No, you don’t need to worry about incorporation or other legal formalities at this stage. Just a simple aforesaid agreement is required to assist in fulfilling legal requirements in Step #4.

Make sure that either you or your co-founder is a domain specialist (in your startup field) or else you won’t be able to proceed ahead with the next step. Example: If your startup is going to be in electronics field then either you or your co-founder needs to be having thorough practical knowledge of hardware & electronics.

2. Generate, Brainstorm & Shortlist Business Ideas

At this step, you need to start generating, brainstorming & shortlisting startup ideas with your co-founder.

A great business idea always solves users’ problems. Alternatively, it makes the life of its users more simple, convenient & productive.

At idea generation & brainstorming stage, you would ideally want to only list those ideas that solve users’ problems.

There are various sources that can help you to generate & brainstorm business ideas easily:

  • Q&A platforms like Quora. People would be discussing their problems here.
  • Social media groups like Facebook groups. Ask users to share their specific problems (preferably via a poll).
  • Meet actual users via seminars, meetups etc. Most likely they will share or talk about their pain points.
  • Try the blue ocean strategy principles. A great way to generate innovative startup ideas.

Now, let’s move to shortlisting stage where you need to select your final idea out of all ideas generated.

Make sure that the final idea not only solves acute problems of users but also is operationally & financially feasible.

3. Build & Test A Pilot Product

Once you have a startup idea, start building a pilot product around it.

If your startup idea is tech or software based, then make sure that your pilot product only has the basic features of the idea. This will help you reduce the production time dramatically.

And, if your startup idea is non-tech then you may use 3D modelling or rapid prototyping to produce the pilot product fast.

Once you have your pilot product ready, open it up for alpha users. Take feedback & improve your product further.

After improving, pitch it back to a group of beta users. Repeat the feedback & iteration process.

At the end of the loop, you should be having a pilot product that is tried, tested & validated. Cool!

Please note that in this step, you not only need to take the technical feedback but also market feedback.

Take an example: If you are building a SaaS product then not only you should take feedback on user experience but also on product usability, usefulness & user benefits.

I won’t recommend hiring an employee at this stage. But still if needed you may consider outsourcing a part of this process to a freelancer.

Now that you have a pilot product ready, time to give your startup a legal shape.

At first, you need to give your startup a great business name. Using the name, you need to form a registered company (LLC in the USA).

After formation of your company, you need to get a federal tax identification number (in the USA). In other countries, you might need to register for VAT or GST. For more information, contact the nearest CPA or tax consultant.

At last, you will need to open a business bank account. Done!

Additionally, depending on your line of activity, you may be required to obtain business licenses or permits.

And, do not forget to trademark your business name to avoid your competitors take advantage of your success.

5. Build A Final Product

Once you have legal formalities completed, start creating your complete & final product for mass users.

A final product is generally an extended version of the pilot product. Of course, the users would like your product to be complete in all respects (not just having basic features as is the case with the pilot product).

Take an example: If an accounting software is a product then a pilot version would be having all basic functionalities to ensure proper maintenance of books of account. Whereas, the final version would have some extra features like integration with 3rd party applications.

Here as well I won’t recommend hiring an employee. You & your co-founder should aim to finish this step without any outside help. Of course, if needed the option of hiring a freelancer is always open.

6. Market & Build A Customer Base

Once you have the final product ready, you should start pitching it to prospective clients or customers.

Remember, marketing is not that easy as it seems. Therefore, in Step #1 I had listed good marketing skill as the first criteria that you should be looking for in your co-founder.

To save time & money, I would recommend you to use the following platforms to market your startup:

  • Quora (Works perfect for B2B software products)
  • Product Hunt (Great submission site for tech startups)
  • Guest Post (A very effective way to establish your startup authority)
  • Feed My App (A popular site that features startup apps)
  • Hacker News (If your target audience is tech industry)
  • Reddit (Good for B2C startups)

There are many more such submission & promotion sites. You can search the web to find out more.

Marketing, if done properly, can drive massive traffic to your website or product. But, such traffic is of no use if you don’t tap it (convert visitors to subscribers).

So, make sure you collect email or other relevant details from your website visitors. The email list will become handy if you decide to re-target website visitors who didn’t buy (Of course, most of them won’t buy on the first visit).

Needless to say that, you also need to promote your startup among your friends, relatives, colleagues & local community.

7. Sales & Hiring

At last, you need to convert your website visitors into customers. Ideally, the sales process should be short & smooth.

You or your co-founder should handle the customer support function yourself at the beginning. This will help in better understanding of the needs of the customer.

As your sales pick up, you would need to hire (yes, finally) outside employees to handle & scale operations.

I like to tie the number of employees to some kind of sales tier. For example, an employee to every 20 customers. So, this way, if you have 5 employees to a 100 customers. It all depends on the revenue, cost & margin of your startup.

It is very vital to ensure that you hire the right startup-kind candidate. He or she should possess the following qualities:

  • Leadership
  • Innovation
  • Strong domain skills
  • Good communication

If not able to afford then you may offer equity to deserving candidates or employees.

Conclusion

Many startups have failed in the past & will continue to do so in future. But your startup should not be one of those.

Building startup has to be risk-free because our money & time are valuable. Following the aforesaid 7 steps will ensure that you build a startup or small business from scratch, a completely risk-free way.

Starting up is just a start of an exciting & long journey. To scale up, you will need careful planning & right tools.

How do you plan to build a startup from scratch? What are your thoughts on the aforesaid steps? Please comment below.