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What is Startup? Things needed to be consider before startup

What is Start-up?

What is Start-up?

You've probably heard or seen the word "startup" quite a lot as the term is used in a lot of TV shows, videos or business documents. However, it is quite interesting that there is no exact definition for this term. Therefore, in this article, instead of trying to assign it a fixed concept, I will put it in certain contexts, through which you can come up with a definition for yourself. most accurate way.

Startup is a newly formed business

Startup is a newly formed business

Startup (start-up) is a term used to refer to newly established businesses, individuals or organizations that have just started a self-employed business in a particular field. For example, in the recently popular Shark Tank program, the Sharks (investors) used the word startup to refer to the businesses of the participants in the program to raise capital.

Startup is to build a new business

In many cases, a startup can be understood as building a whole new business, when one or more individuals decide to start building their own business, business or brand. In other words, startup is the process of forming a new business so that it has all the basic capabilities (capital, products/services, personnel, equipment, facilities, etc.). .) to be able to satisfy a certain need of customers in a market.

Startup is to build a new business

Startup is about creating a new source of value for society

A startup, whether successful or unsuccessful, brings a certain source of value to society. This source of value is expressed through products/services provided to the market to meet the needs of customers, jobs for employees, or in the case of profits, will generate income for the startup itself. and shareholders contributing capital.

Differences between Startup and SME

Many of you when learning about business often confuse Startup and SME (Small Medium Enterprise). So how are these two concepts different?

As analyzed above, a business is considered Startup when it has just come into operation. Meanwhile, an enterprise is considered small and medium-sized when the number of employees is between 10 and 200 people, the capital is from 3 to 100 billion VND, the revenue per year is from 3 to 100 billion VND. Thus, Startup is a term that defines the status (newly opened for operation) of an enterprise, while SME is a concept that stipulates the classification of businesses based on the size of their operations. A Startup business that has just come into operation with the above scale is also considered an SME and vice versa.

Bonus: Enterprises with less than 10 employees, capital and annual revenue of less than 3 billion are classified as micro enterprises (SSE - Super Small Enterprise).

Who can startup?

Anyone, regardless of gender, age, country, race, religion can start a business, as long as your startup can bring positive value to society. However, you should also consider factors such as the language of communication between you and your clients, between you and your colleagues (associates), religious & ethnic ties between you and your startup's environment. Friend.

When should someone startup?

Startup does not specify a specific number of years, age or specific time. It depends on the person, the environment or the situation. An 18-year-old young man or a 60-year-old man can start a startup and have the same chance of success. However, before deciding to start a startup, you need to prepare the following factors and conditions:

  • Have you clearly defined your target market?
  • Do you have a good understanding of the needs of your customers and consumers in the market you are targeting?
  • Do you have the ability to create products/services that meet the needs of that target market?
  • Do you have good governance (business planning, resource allocation, training, assignment, financial management...)?
  • Do you have good leadership (employee morale)?
  • Do you have enough capital to both meet the initial costs and allow your startup to sustain for a certain time (even at a loss)?
  • Have you prepared a plan (alternative) if your startup goes bankrupt?
  • Are you confident, enthusiastic and passionate about your startup?
  • Is this the right time for your startup to enter the market when compared to supply, demand, competition?

If all the answers to the above questions are yes, then you are ready and now is the right time to start a startup.

Required qualities of a "Startup person"

In addition to capital to cover the initial costs, "Startup people" need to equip themselves with the following qualities to ensure a smooth Startup process:

Mastering Marketing Knowledge

Mastering Marketing Knowledge

Marketing is the most appropriate starting point when you start building a Startup. Sure, you can't start production until you understand what the market you are targeting is. Or you can't sell if you don't have a product/service in hand or you don't know if your product/service can meet the needs of your customers. Instead, Marketing will help connect the market and the startup. Through marketing research, that startup can understand the needs, wants and level of competition in the market. Through market segmentation, a startup can select segments as its target market so that it can bring the best profit and value to that startup.

When the startup has gone into stable operation, Marketing will play the role of promoting and communicating the value of products/services to target customers. In the long term, Marketing helps startups build a strong brand, with the right core values.

In short, the head of a startup needs to master Marketing knowledge to be able to build a business that exists and develops in an increasingly competitive market economy.

Master basic financial skills

Master basic financial skills

A startup does not need to be very good at economic knowledge but needs to master basic financial knowledge and skills. The goal is to solve simple business problems such as calculating costs, revenue, profit, predicting break-even time... Without these skills, it is easy to lose money.

Proficient in management

Proficient in management

To be able to survive in the market for a long time, a startup business needs to find the right personnel in the development path. Therefore, "startup people" need to be proficient in managing (administrative) everything, from planning, assigning, resource allocation, implementation, quality assessment... to the implementation. handle crisis situations that arise. Without the ability to manage, "startup people" no matter how good they are, will make their business quickly perish.

Have good leadership ability

Have good leadership ability

Referring to the human factor, in addition to management, startups also need to have a good leadership ability. Leadership is the job of connecting members in an enterprise, as well as transmitting motivation, belief and strength to subordinates. A startup with good leadership will help his followers always be in a state of peace of mind, excited and enthusiastic about working, always respect and dedicate themselves to the leader. On the contrary, if the leadership ability of the "startup" is too weak, the employees of this business are always in a state of insecurity, anxiety, confusion or even contempt for the leaders of that startup.

Accept unstable income and be able to withstand high work pressure

Accept unstable income and be able to withstand high work pressure

Startup is not like working for a certain company in which you only do certain jobs with a stable salary. If you have decided to start a startup, you must be ready to accept a volatile income, as well as do everything from production, sales, customer care... to small jobs like composing. documents, repairing machines, cleaning... in case those jobs are not undertaken by anyone. Besides, you must be willing to work without a day off from the time you set up the startup until it goes into stable operation. Sometimes, you are under pressure from many sides (customers, personnel, finance... or even from family, friends, children...).

Have good presentation skills

Have good presentation skills

There will come a time when your startup needs capital from investors outside the business. At this time, besides the feasibility of the startup, presentation skills are the second most important factor to help startups raise capital successfully. Investors often don't have much time to hear you say "long-winded" and get nowhere. They need short, concise, easy-to-understand information through an impressive presentation style that still retains elegance.

What is a successful startup?

With the naked eye, it is very difficult to judge a startup as a success or failure after a process of operation. Even though a technology startup has a loss of several hundred million dong, having tens of millions of users using it every day is still considered a success. Or another startup, even though it maintains a monthly profit, the number of customers coming to this business is getting closer to zero, which means that the startup is about to close.

The key to evaluation lies in the value of the product/service brought to the target customers of that startup. A successful startup will bring to market products/services with high value to consumers. Customers or consumers, after feeling this value, will return to that business to continue using, as well as ready to recommend to friends and relatives. Since then, the brand value of the startup has been further enhanced. In contrast, a startup that is considered a failure fails to demonstrate the value of its product/service to customers. The rate of customers returning to use the products/services of these businesses is usually very low. Naturally, if there is no change or repair, they will be eliminated from the market after a certain time.

How to start a successful startup?

As analyzed above, a successful startup will bring to market products/services with high value to consumers. Thus, for a startup to be successful, you must create products/services with high value to consumers.

Then how to create such products/services? The answer will depend on each person, each industry, field, region... However, the implementation process goes through the following steps:

Step 1. Market Research

Startups need to do market research to understand the needs, tastes, characteristics and behaviors of customers or consumers in that market. In addition, market research also helps startups understand the number of customers that the business can reach, as well as the number of competitors present in that market.

Step 2. Market Segmentation

The startup divides the market into many small segments, in which each segment is a collection of customers who share a certain characteristic (geographical location, gender, age, income, occupation, behavior) Because...).

Step 3. Select the target market

After segmenting the market, the startup will choose one or more profitable segments as the target market.

Step 4. Product Development

After selecting the segments as the target market, the startup will begin to develop products/services to best meet the needs of customers in the segment.

Step 5. Market Test

Products after the development process will be brought to the market for testing. The initial customer reviews are the basis for the startup to take the next step.

Step 6. Product optimization and improvement

Startup optimizes and improves products and re-implements market testing. This process iterates until the startup has the version of the product that offers the most value, and of course at a commercialable price.

Step 7. Commercialize the product

Products after completing the market testing process will be officially launched into the market for commercialization.

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