Countries such as the United States, Israel, Germany, and Sweden are home to many startups. In the right hands, as corny as it might sound, a startup can change the world.
If you want to learn how to start a startup from scratch, you’re at the right place. We’ll walk you through each step of creating a startup company.
Table of Contents
1. Doing what you love (forming a business idea)
Most startups begin with business ideas. Depending on where you’re at in the startup journey, you might already have a business idea formed. If so, you can skip this step. But if not, we’re here to help you come up with ideas.
A common misconception about starting a startup from scratch is that you must come up with a 100% original idea. If you can, that’s great. But it’s just as possible to tweak someone else’s business idea. Your startup might offer an existing service or product.
While it’s not a must, we also recommend forming your startup around something you enjoy or are passionate about.
If you ask us about search engine optimization or forming a marketing plan, we’ll get right to work. On the other hand, ask us to build a spaceship, and we wouldn’t know where to start.
Forming a startup around what you love can help make those long hours fun.
2. Finding a target audience for your startup business
At this point, you should have a business idea or be kicking around a few business ideas. Now, it’s time to find a target audience for your small business.
Essentially, this is when your startup works on learning who its ideal customers are. Some of a startup’s potential customers could be businesses or consumers.
The best way to find who’s in your target audience is with some research. Here are the main ways of finding this very important audience.
Demographic
Many business owners start finding their audience by looking at demographic information. Demographics can cover a lot of things, including:
- Occupation
- Education level
- Marital status
- Age
Depending on your startup, some demographics will be more important than others. You don’t have to base your small business completely around demographic information. However, this information can be a good place to start.
Geographic
Looking at an audience from a geographic perspective is another important factor.
For instance, let’s say that you live in Germany and form a startup in this country. It’s safe to assume that your startup’s audience would be people who understand German.
Of course, the previous example is just the tip of the iceberg when it comes to looking at geographic factors.
Geographic factors become even more important if your startup targets a local audience. In this case, you might want to target people within close proximity to your startup.
Behavioral
One of the most interesting aspects of finding a target audience is by looking into behavioral information. This subject involves what your potential customers do online.
Since there are so many behaviors buyers can make, let’s break down a few common ways to understand potential customers when starting a startup from scratch.
Where customers go on your website
While working on market research, your startup’s website can give you a lot of valuable information. One factor worth looking into is where customers go on your website.
Are the majority of your readers buying or reading your blog? Neither option is bad, but this data can help you determine how the world views your startup.
Usage rates
Looking at usage rates is another viable tactic. These rates involve how much use someone gets from your website or other online platforms. Here’s a breakdown of how startups categorize usage rates:
- Heavy: You’ll find high-usage users throughout your marketing channels. These are the people who are major fans of your startup.
- Medium: Average users fall into the medium usage category of your target market.
- Light: Think of these people as acquaintances of your business.
Psychographic
Last but not least when learning how to start a startup from scratch is the psychographic factor when developing a startup’s audience. This research focuses on the why behind what your potential customers do.
You can begin forming a psychographic profile by asking the following questions as a business owner:
- What does your audience like?
- What motivates your audience (family, money, safety)?
- What fears does your audience have?
- What causes do they get behind?
3. Taking care of the boring (but very important) legal stuff
As someone who writes for startup companies in the legal industry, I personally find the legal world extremely interesting. But I also understand that legal-related topics might make your eyes roll back into your head from boredom.
Whether you like, dislike, or couldn’t care less about the legal world, you absolutely want to ensure your startup company is legally sound.
Depending on your exact country, the exact legal process for how to start a startup from scratch might look a little different. In this example, we’ll look at the main steps to take care of from a legal standpoint before you start a business.
Registering your business
One of the key steps to starting a startup from scratch involves registering your business. Registering your startup differs based on where you live. For instance, the process of starting a startup in Canada would be different from someone doing the same thing in Florida.
Registering your business keeps you on the legal side of things, which is always a plus! By doing this, your business can obtain an employer identification number. You’ll need this extremely important and unique identifier to file your startup’s taxes.
Also, getting a business license ensures that your startup’s name doesn’t get taken by another entrepreneur or company!
Filing trademarks and copyrights
The next step in your business plan is to take care of any trademarks, copyrights, and patents. By doing this, your startup is protecting its intellectual property.
While we can help you market your business, Content Marketing Life doesn’t consider ourselves to be copyright or patent experts.
That said, here’s a quick breakdown of whether or not you’ll need to spend any time copyrighting or trademarking any part of your startup.
- Trademarks: A trademark protects a startup’s name or logo.
- Copyrights: Copyrights protect literary and artistic-related ventures like a book or film.
- Patents: Your startup would need patents to protect original inventions.
Choosing a business structure
Another important step regarding how to start a startup is to choose a structure for your startup. While this term sounds building-related, it’s not. Instead, your business structure has more to do with how your startup will conduct business and file taxes.
Here are the main structures to choose from when starting a startup from scratch:
Sole proprietorship: With a “safe” enough business, you could choose to form a sole proprietorship. But keep in mind this structure also means that your business and personal income are treated as a singular income source. So, business liability also becomes your personal liability.
Partnership: Sometimes, people don’t want to start a business by themselves. In that case, this person might strike up a partnership with another individual or individuals.
A limited-liability company (LLC): The main benefit of an LLC is having your personal and business income treated separately. This business model is great if a startup owner doesn’t want to risk their personal finances if their business goes under.
C or S corporation: While less common, you might prefer the security that comes with forming a corporation. But, be aware corporations have higher startup costs.
4. Funding your new venture
While your startup might have a brilliant idea or solid plan, a business that isn’t open doesn’t have a lot of cash flow happening. So, how do you get the money to get your startup off the ground? In most cases, you’ll have a few options to secure funding.
Funding it yourself
There’s no rule or law in place that another person, company, or organization has to fund your startup. You might have enough money saved to self-fund a successful startup company.
According to Kabbage (a company recently acquired by American Express), about 33% of people successfully launch a company with less than $5,000. Whether or not that’s possible depends on what your startup needs to, well, get started!
Seeking funding from family or friends
You might also have one or a few family angel investors before starting your startup. If you take this route, be prepared to show proof of your business and how it intends to make money.
Getting funds from investors
Another popular route for people starting a startup from scratch is to get money from investors. However, most successful investors became this way for a reason — they make smart investments.
You might speak with or reach out to venture capitalists, who typically seek equity in your startup in exchange for funding it.
There are also angel investors, who are typically people with considerable wealth who donate their personal savings to companies seeking funding.
If you think that angel investors and venture capitalists sound like the same person, you’re not that far off.
The main difference between these two types of investors is that angel investors’ funds come out of their pockets. Working on behalf of venture capital companies, venture capitalists typically have stricter requirements for what they can fund.
Signing up for a business credit card
Another option regarding how to start a startup is funding a business is with a credit card. We won’t act like your parent and lecture you about the dangers of credit cards. If handled well, credit cards can be a great source of instant funding for relatively low amounts.
You might also set up a business credit card to simply have another line of funding available to cover things like supplies or business travel.
Obtaining a loan
Some startup founders obtain funding for the early stages of their companies through banks and other financial institutions. As is the case with venture capitalists, loan officers are also working on behalf of a company.
This is where things can get a little complicated, especially if you’re not a big fan of math or economics. Since we still have a bit to cover, we’ll offer the simplest possible explanation about loans.
Most financial lenders will do serious digging to make sure they’re not taking on a bad investment. What they’ll look at depends on the lender, but be prepared to present some or all of the following information:
- Your current income
- Your annual income
- Your company’s current cash flow, if any
- Current debt
- Potentially unused lines of credit
- Any available collateral
Accepting funding from microlenders
As technology changes and industry trends come and go, successful startups get funding in new ways. One of these newer ways involves microlenders. Microlender funding is great when startups fail to obtain loans through financial lenders.
As the name implies, most microlenders aren’t going to fund your entire business. But the smaller amounts they can loan your startup could prove incredibly beneficial.
5. Marketing your own business
It might be because I came from marketing backgrounds. But I feel that proper marketing is an extremely important part of launching a startup company. Consider utilizing some or all of the following methods as you continue learning how to start a startup from scratch.
Social media
No matter what industry your startup operates in, it’s always good to have a social media presence. Platforms such as Facebook, Twitter, TikTok, and others can be great for letting the world know about your startup.
We recommend starting strong by claiming accounts on all popular social platforms. Next, get consistent with posting once a day or every other day on all social media platforms. With a little time, your startup should notice that it’s gaining more popularity on certain platforms over others. Stay consistent with those popular platforms.
Don’t overthink social media. Mix things up with content from your startup and other sources. Be consistent, and watch your startup form an even stronger brand identity.
Content marketing
Another relevant subject when learning how to start a startup involves using a content marketing strategy. With content being such a general term, it’s helpful to understand just how many types of content your startup can create.
Here are several examples of how to include content in your marketing campaign:
- Blog posts
- Videos
- Podcasts
- Webinars
- Social media accounts
There are so many ways to use content to your startup’s advantage. Create a system for creating and distributing content — your marketing efforts will pay off. A great content strategy can also help your startup appear in the results of search engines more often.
Attending events
You don’t have to do everything related to starting a startup from scratch on a computer. Your startup might also meet potential buyers and business partners by attending events in person. The exact events you’ll want to attend depend on what industry your startup is in.
But a quick search of your industry and the word events should bring up lists of events.
The subject of marketing a startup is worth an entire article. Fortunately, we’ve already made them for you! Here’s our guide on content marketing for startups. And a recent post I put together featuring startup branding tips.
Paid advertising
If you really want to get the word out about your startup, paid advertising can be a great idea. Many of the internet’s most popular platforms offer paid advertising, including Google, Facebook, Twitter, and many others.
The key to doing well with paid advertising is setting a budget. At first, it’s hard to know how well your ads will convert until you start spending a little money.
Here are a few tips to help you create high-converting paid ads:
- Create multiple versions of your ad, with each variation slightly changed. This is called split testing, and it’s a great way to use data to run ads that convert well.
- Having trouble coming up with ad ideas? Instead of creating a new ad creative or landing page, maybe it’s time to get more traffic to your company’s best content.
- Check out Facebook’s Ad Library, which is a search engine for Facebook’s massive library of ads companies are running.
6. Scaling a startup company
As you continue running your startup, we hope that you start experiencing lots of growth. But, with too much growth, startup owners can find themselves spread extremely thin. Here are a few quick tips to help you scale smartly.
Get feedback from your employees
Who knows better about your target market and startup than you? Your employees. As you continue conducting actual business, make sure you keep the opinions of your employees in mind.
It’s good to hold regular meetings with your employees purely for their feedback. No agenda. No taking over the meeting.
See what you can automate
In the beginning, it’s understandable to think of your startup as your baby. At first, it’s normal for parents to want to monitor their baby every second. For a startup owner, this might mean doing everything by yourself.
As your list of tasks grows, so does your need to automate them. Look at tasks that anyone could do, those requiring little to no expertise. There’s probably a tool to automate it.
Outsource tasks
One of the most notable challenges you’ll face regarding how to start a startup involves balancing a budget. It’s not uncommon to hear or see news of startups laying off employees due to unfortunate budget cuts. These cuts further shake up the work that current employees must take on.
Fortunately, one way to balance the needs of your startup with ever-changing workloads is by outsourcing. Tasks like content creation and social media management are two tasks that you can outsource.
Create a brand guide or something similar, and you’ll soon be successfully outsourcing. The best clients show patience with new writers. Give it a little time (or a few revisions), and outsourcing content creation can be a beautiful thing for a busy startup company.
In closing, we want to thank you for checking out our guide to starting a startup from scratch. If you’d like to learn more about how to market a startup, visit Content Marketing Life.
Alex Eagleton is a copywriter and digital marketer passionate about helping companies connect with customers. Throughout the past decade, he’s worked with companies including Referral Rock, Connecteam, and Ramsey Solutions. He’s a versatile writer who understands how to align with companies, truly matching their voices and tones.
When he’s not writing, he enjoys spending time with his dogs, reading, and playing guitar.
You can reach him by emailing alex@contentmarketinglife.com.