Экономические науки/6.Маркетинг и менеджмент

Okhrimenko I.Y., Bogdanova V.S.
Donetsk National University of Economics and Trade
  named after Mykhailo Tugan-Baranovsky, Ukraine

Successful startup and its main components

Many startups are created by people who have no experience in a particular field or in business in general. Therefore, turning ideas into real products, aspiring entrepreneurs may encounter various problems or failures. This question is particularly relevant for Ukraine because in our country institutions for small and medium-sized business support are very young, and the services of consulting companies are very expensive.

The aim of this work is to identify the main components of a successful start-up in order to prevent erroneous actions of aspiring entrepreneurs.

First of all, a good start-up - it is a good idea, product or service and is the target audience that is willing to pay for it. The idea should carry the information about what and for whom you are doing, whose urgent problem of deciding who and how many people are willing to pay for it. Your product must have a sustainable competitive advantage due to the uniqueness of the product and its quality or by advanced or innovative format of promotion. But it is necessary not to get hung up on one idea only because often startups offer products which can be not of interest for clients. So before you start a project, it is advisable to conduct an experiment. Conduct even a simple experiment before the project starting will give much better results than surveys and focus group discussions which can be carried out for months. The experiment allows you to run the project with already solved problems that arose when running. For example, Nick Svinmern, founder of online shoe store Zappos, decided to conduct a little experiment before he started his project. He went around to all the local shops with a request to photograph their products. In exchange, he has promised to place a photo on his website and if someone wants to buy the shoes online, he or she will have a chance to buy it in the store.

The main problem faced with start-ups is the attraction of money to build the business. There are several possible sources: personal savings, bank loans, venture capital. Since most startups do not have enough personal savings, but to take a bank loan is unreasonable under current interest rates, especially for a man with no experience in starting the business. It is necessary to say that the most appropriate option is to attract investors (business angels). Business angels are accomplished people who have earned at some of their business willing to invest in startups. It is believed that investing in risky activities must not exceed 3% of the portfolio. Also, if you run a startup, which has successfully operated similar in the West, the chances of finding an investor increase.

An equally important point is the plan to exit from the investment and management of funds invested. Exit from investments is one of the processes of business. Investors should know what you can expect in each case, from the beginning to have a plan to continue to release updated. First, determine how long it takes to reach the point of liquidity. If the company is at a very early stage of development, the period of development of the product to market can take years. In this case, investors should be ready to finance a startup for a long time. Investment money should be small. In fact in this case, all the financial resources will be spent most efficiently. Seed money in the first place it is advisable to put on building distribution channels for the organization of the first sales as sales - is the foundation of any business.

At start-up entrepreneurs often do not have any plan of action, even for the first time after starting the business. This can cause the collapse of a start in the first months of its existence. Running a business without a preconceived plan of action at least for the first year may result in loss of invested money. It is extremely important to assess the quality of the business model of a startup when considering investments. First, examine the plans to promote products or services startup list of actions that are needed to build a system of sales, to attract customers. One of the main characteristics of high-potential is a clear understanding of the potential market penetration strategies and presence. Second, estimate the level of market demand. Third, the startup must have thought out and realistic financial calculations. Poorly informed, contradictory or unrealistic sales figures and operating profit put the success of the project in question. You also need to assess the adequacy of net working capital. Net working capital shows the ability of businesses to grow and expand.

Usually at an early stage to launch a new business especially if it is a small one there are not a lot of people in the team. Often this is one founders who is trying to do everything himself. The problem with these businesses that close at the right time has specific expertise with which to share their views or who can provide the necessary advice. There should be at least two of them who must constantly exchange information and delineate responsibilities in accordance with the strong features of each of the partners. Staff should be trained and motivated. A strong team is a sign of a stable business opportunities.

As a conclusion it is possible to say that the main components of a successful startup are a good idea, sufficient start-up capital, a clear plan and a strong team. Attention should be paid on the organization of sales, an increase in sales and marketing which will lead to an increase in cash flow and ensure the financial stability of the business.

References:

1. «Кое-что о стартапах» http://www.garagebiz.ru/view/koe-chto_o_startapah/startapi

2. «Где взять деньги для стартапа» http://www.garagebiz.ru/view/gde_vzyat_dengi_dlya_startapa/startapi

3. «Типичные ошибки начинающих предпринимателей» http://mirsovetov.ru/a/business-and-finance/finances/mistakes-start-ups.html

4. «Признаки «правильного» стартапа» http://www.istartup.kz/article/show/id/88

5. А.Бондаренко «Стартап без потерь», журнал «Новый маркетинг» №7, 2012