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28. June 2022
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23. August 2022Building a start-up: What founders need to bear in mind
Start-ups are characterised by individuality, an innovative idea and high agility. Nevertheless, nothing works without a well thought-out business plan.
Flat hierarchies, flexibility and innovation - these are just three of many buzzwords that are repeatedly mentioned in connection with start-ups. According to the US management and strategy consultancy McKinsey, 2900 new start-ups are founded in Germany every year
Revolutionise an entire industry with their own ideas, develop innovative products and services and make the world a little better. Many start-ups pursue these or similar ambitious goals. But what is a start-up in the first place and what distinguishes it?
What is a start-up?
Basically: A start-up is a newly founded and therefore not yet established company with a special dynamic and a disruptive business idea. This distinguishes a start-up from a new optician in a city, for example. Although this is also not yet established on the market, it serves a well-known business idea. Therefore, it is not only important for a start-up to find investors for its own idea, but especially the product-market fit. The idea is tested on the basis of the defined target group.
Container ship versus
Speedboat
But before we get to the founding phases, the question arises as to what distinguishes a start-up in the first place. This can be explained quite appropriately with the help of a comparison: If a large container ship wants to change course, it takes time for the adjustments to take effect. With a speedboat, on the other hand, every course correction is transmitted immediately. It is similar with corporations and start-ups. The latter are characterised by high agility, passion, flat hierarchies and authenticity. When it comes to changing things, start-ups move much faster than large corporations. Among other things, this enables short feedback cycles, as new ideas do not have to be promoted through different hierarchical levels. Clear communication and goal-oriented implementation are just as much a part of this as a kind of learing by doing - the courage to try things out in order to recognise mistakes and learn from them. This open "error culture" helps to better recognise weaknesses and strengths of one's own idea and of the employees.
From pre-seed and the product market fit
Before it is founded, a start-up goes through various phases. In the In the pre-seed phase , it must first be checked whether the business idea can be implemented at all. This is logically followed by the seed phase, in which all the preparations for the foundation have to be made. Potential founders draw up a business plan with which they go looking for investors. A first prototype, market analyses and a proof of concept are also part of the seed phase.
The so-called product-market fit is important here. On the basis of this, one's own product is continuously tested with early adopters - i.e. people who are enthusiastic about innovation. The feedback is collected and the product is adapted accordingly. This process is repeated several times and offers the decisive advantage that the developed product serves exactly the needs of the target group.
Short excursus: agile
software development
Agile software development, which follows a similar approach, should also be mentioned in this context. After a short development phase, users are consulted at short intervals. In this way, customer wishes can be quickly addressed and implemented. The focus is clearly on progress and development and the intermediate steps - the sprints.
From 1st Stage to the Break
Even
After the start-up phase with market launch, it goes into the 1st stage or build-up phase, in which production is started or the service is handled. Recruiting and leading the company into the profit zone follow in the growth phase.
The definition of "start-up" makes it difficult to determine when a start-up is no longer one. As a rule, start-ups show a negative cash flow at the beginning; when this is positive or the revenues are higher than the expenses (so-called break-even), one no longer speaks of a start-up. The same applies when the innovative idea has established itself on the market.
Tip from NeoCargo AG
NeoCargo AG is still a start-up itself and therefore we know what is involved in founding a company. Our co-founder and board member Larissa Eger therefore has a tip for people who want to start up: "Exchange a lot with the market and share your ideas early on in order to recognise the real benefits for potential customers. Be brave, try things out, correct them and keep going. And every now and then look at what you have already achieved and be a little proud."