How to Build a Successful Startup (2024 Guide)

Launching a new startup, especially by first-time founders, can be a fuzzy and scary task—you have many ideas and tons of enthusiasm, but you don't have a clue where to start.

A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses, including self-employment and businesses that do not intend to go public, startups are new businesses that want to grow significantly beyond the solo founder.
(source: Wikipedia)

One key element in this definition is “scalable.” This means the business should be able to expand and grow rapidly after PMF is established. Self-employment and most service businesses are not startups.

Entrepreneurship is becoming more accessible to a broader group of people. Thanks to technological advances, creating a website may be all you need to start selling, and it can be made in a few hours with a budget of less than $100.

At the same time, the startup failure rate remains at a staggering 90%, which is offputting for many people. Icanpreneur’s mission is to break that 90% myth and create better opportunities for successful entrepreneurs. This article outlines how to build a startup company.

10 Steps to Building a Startup

Step 1: Find an Idea You Care About

Some misconceptions related to this step:

• You don’t have to have the perfect idea; it doesn’t even have to be a good idea. Your idea will be shaped later.

• You don’t have to see how your idea will be implemented. Again, this will be figured out at a later stage. Not knowing if solving the problem you care about is fine at this point.
• You don’t need a market analysis to determine whether your idea is profitable. Later, you will validate your business model.

All you need at this point is a problem you deeply care about solving. Why does that matter? Entrepreneurship is hard, and if you are not driven by strong intrinsic motivation and you are merely aiming to make money - at some point, you will lose your momentum. You will pivot to something that delivers money.

Many studies are showing the additional benefits of having a mission-driven company:

• Missing-driven companies outperform S&P500 by 10x over 15 years time span, according to HBR
• Employees are more engaged and retained for longer in mission-driven companies
• Customers also stick better to products with deep mission engraved in them

Step 2: Surround Yourself with the Right People

You Are the Average of the Five People You Spend the Most Time With

If you want to become a rockstar, surround yourself with rockstars. If you want to be a Michelin chef, go where other Michelin chefs go. If you want to be an entrepreneur … well, find a community of entrepreneurs to hang out with.

Being surrounded by like-minded people will help you with the following:

• Exchanging ideas and experience
• Giving and receiving support from others who went through the same path
• Finding investors, partners, and early adopters of your products or services
• Assembling the right team

You can join excellent online and local communities. Every social network, like LinkedIn, X, Reddit, and Facebook, has more than one group of widely popular entrepreneurs. You can also explore entrepreneurial communities outside the social networks like:

• IndieHackers
• Founders Network
• StartupGrind

Another option is to join the Icanpreneur community by starting a free trial. In addition to access to the Discord server where you can ask questions, promote your product, etc., we organize regular online sessions and onsite events where you can socialize with other members.

Step 3: Express Your Business Idea

Next, you need to express your idea by providing a complete overview. Many frameworks and tools exist for this.

One of the best options for startups is to use Lean Canvas. This tool, developed by Ash Maurya, breaks down a business idea into nine components, starting with customer segments and problems and progressing through revenue streams and traction channels.

By expressing your idea, you will quickly identify underlying assumptions and risks that must be addressed while validating it.

Step 4: Validate Idea with Potential Customers

This is another critical step in the process of launching a startup. Some of the most common pitfalls related to validating ideas are:

• Using other people’s validation.
  The fact that something worked somewhere else for somebody doesn’t speak much about whether your idea will succeed. Some changes in the customer segments, the problem you are addressing, the UVP, etc., lead to significant differences in the result. You need to do your validation.

• Using other people’s failure to discard your idea.
  This is the same pitfall as the previous one but in the opposite direction. If somebody else fails with a different customer segment or different solution, it doesn’t mean you will necessarily fail as well.

• Using market research and analysis for idea validation.
  Market analysis and research are helpful in providing a high-level framework for the market you will be in. However, such analyses are notoriously bad at predicting future development and innovation as they are more focused on past and current data. The key to production innovation is building something unimaginable before.

• Asking customers what they want.
  Asking customers for their opinions about your idea can give you false data about whether to proceed or discard it. Customers intentionally or unintentionally try to fool you for different reasons, so customers’ opinions should be used carefully.

• Not asking customers what they needed.
  The previous point doesn’t mean you don’t have to talk to customers. Quite to the contrary. You need to ask the right questions - asking questions so they can’t lie to you.

Customer feedback about previous behavior and how they currently address a problem leaves no room for opinions and interpretations. Such data is invaluable for the early validation of your idea.

If you need help getting started, check the blog post on the most common mistakes when talking to customers.

To avoid all these common pitfalls, conduct customer problem research. It could be a combination of surveys and interviews with potential customers, in which you are studying past experiences, existing alternatives for solving the problem, how important the problem is for them, how much they spend solving it, and so on.

Step 5: Create a Business Plan

The business plan is the next step in creating your startup. Once the idea is validated, having a detailed action plan will help with clarity, focus, and responsibilities. A business plan will also help with:

• Attracting venture capital or other types of financing
• Finding team members and key partners
• Identifying risks and opportunities
• Guiding decision making

Step 6: Build a Team

Once you have laid out your idea and got some initial validation, it’s time to bring the right people on board. How do you decide who to bring in?

Self Awareness

First, understand your strengths and weaknesses. Entrepreneurship is hard, and you will have to stretch and learn new things constantly. The more you can leverage your existing strengths, the better you will utilize your most valuable capital—you.

Key Skills Needed

Knowing your strengths, what are the key moments in your idea that you don’t have the skills, expertise, or experience for? Maybe you lack domain expertise for the problem you will be solving, or you need engineering innovation to deliver your product.

Differentiate key activities and competencies from supporting ones. You cannot go without accounting and legal support, but unless these disciplines are part of your unique value proposition, you probably don’t need those skills in-house in the early days. There are excellent service companies that can deliver that service to you.

Incentives and Motivation

Bringing the right people on board means ensuring the right incentives and motivations are in place for them. Ideally, those people care about the problem you are solving as much as you do. Many startups cannot offer larger organizations' remuneration and compensation packages, so they need to compensate with other motivational levers. In addition to aligning with the mission of the company, those might be:

• Acquiring valuable experience
• Equity in the company
• Ownership and autonomy
• Potential for impact

Step 7: Secure Funding

There are many strategies to fund your startup:

• Bootstrap using your resources.
• Self-sustained, where the product itself funds the growth and operations from the get-go.
• External investment from friends and family, angel investors, and funds. Startup funding rounds can be confusing, so we did a separate article on Demystifying the Startup Funding Rounds.
• Government grants and funds.

Picking the right strategy depends on many factors:

• Personal preferences and vision for the development of the company. Bootstrapping and self-sustaining ensure financial independence and full control over the company but will probably limit the growth rate.
• The type of product being built. Some products, especially physical products or those that require R&D and scientific research, are capital intensive and will be hard to fund by an individual entity or investment fund. Government funds often finance projects without a clear monetization path.

Step 8: Build an MVP

Building a minimally viable (or Lovable!) product is another critical step in your entrepreneurial journey. Build too little, and it won’t catch fire. Build too much, and you risk investing in something that people don’t need or use.

Defining the right scope comes from deeply understanding the customers' needs, which comes from the customer problem validation you need at Step X.

Understanding the customers' needs will tell you what are the absolute must-haves and what are bells and whistles that you can delay.

Step 9: Iterate Until Achieving PMF

So, you did your best but didn’t get it on the first attempt? Don’t worry; that’s kind of expected.

The right next steps are to learn from what isn’t working and adapt. You may often hear the advice “Fail fast.” It’s great advice that can also be misleading. The point is not to fail but to learn.

So, we say, “Learn Fast.” The real-world feedback may push you to revisit your Lean Canvas and make changes to some or all of its components. From there, you revisit the idea validation and make new customer interviews if needed.

Step 10: Scale

Once you nail the product-market fit, it’s time to scale. In the early stages, you should have realized your idea's growth levers—what happens when you invest resources, generate growth, and build to optimize those growth mechanisms.

Common Challenges When Building a Startup

Achieving long-term success takes work. Many things can go wrong, but some of them are repeated over and over again and cause startups to fail.

Lack of Adaptability

In the beginning, your idea is in the realm of your dreams. Gradually getting feedback from customers transfers it to the real world. This process only works when you are open-minded about what doesn’t work according to your initial expectations and needs to be adjusted.

The lack of adaptability leads to a significant increase in the risk of delivering a product that doesn’t have a product-market fit. The later you realize you need to change the product, the more expensive these changes will be to implement.

Slow Growth and/or Low Demand

There might be multiple reasons for your product not growing up to your initial expectations:

• The customer segment you are targeting is not big enough
• The problem that customers have is not important enough for them to consider your solution
• The solution that you provide doesn’t address the needs of the potential customers
• You have a great solution for an important problem that nobody knows about due to using the wrong traction channels

All of these can be mitigated by conducting good customer problem research.

Failure to Scale

Scaling a startup effectively can be one of the hardest challenges for a founder. Many aspects should be aligned correctly and prepared well in advance to allow for scale like:

• A business model
• Ability to handle increased demand efficiently
• A growing and well-rounded team
• Focus on what matters to scale

Scaling or Thinking About Scaling Too Early

Premature scaling happens when a startup moves to scale before they have nailed product-market fit. There are multiple reasons for this problem to occur:

• The product team is delusional that the lack of positive results is due to needing to approach more people.
• The product team mixes positive and negative signals. While a thousand registered users within the first week may sound great if less than 1% of them even opened the product, that might be a sign of a bomb ready to explode when trying to scale.
• Pressure from investors can also push the startup team in the wrong direction if they want a return on their investment.

Timely Delivery and Feature Implementation

Sometimes, it all comes down to good timing. Great products existed 1-2 years earlier, and the market was still unprepared. Products come out after the market is saturated, and even if they are superior in some ways, there are not enough reasons for customers to switch.

Expert Tips

Consult with Legal and Accounting Specialists

Depending on which country you will be operating in, there might be different requirements for when and how to register your business. There is no hard and fast rule here, so you better consult with specialists who will advise you for your specific case. If appropriate, you can consider different locations. Some countries and states might provide better conditions for your specific business. Euronews recently published an article on the best countries in Europe for setting up a new business.

The startup community near you can recommend service companies that are aware of the specifics of startup businesses in your location.

Having a legal entity is often a prerequisite for having a company bank account, which on its own is a prerequisite for many other things like:

• Company credit card
• Setting up a payroll process
• Receiving revenue

Measure What Matters

Set up a metrics framework that will be a reliable indicator of whether you are on track and where you need to make changes. It doesn’t matter if you are working with OKRs, KPIs, or some other framework - knowing the numbers you want to move and the dependencies between different metrics is important for the health of your startup. To help you get started with that, we did an extensive article on defining robust key metrics.

Time Management and Focus

It’s very easy to get lost in multiple competing activities, especially in the early days. Having a clear system to set priorities and eliminate noise will be a huge time-saving productivity hack.

Here are a few more tips for creating a purpose-driven business by Icanpreneur’s founder, Vesko Kolev:

Costs of Starting a Startup

Initial Costs

1. Business Registration: Costs range from $100 to $2,000 in Europe and $40 to $1,500 or more in the USA.
2. Branding: Expenses can vary widely, from free DIY logos to over $5,000 for professional branding services.
3. Licenses and Permits: These can cost between $75 and $500 for online businesses, with physical locations potentially incurring several thousand dollars.
4. Equipment and Supplies: Depending on the industry, initial costs can vary significantly, from $1,000 to over $150,000.

Ongoing Operational Costs

1. Rent: Monthly costs can range from $0 to $50 per square meter.
2. Payroll: Monthly salaries can range from $0 to over $50,000 per employee.
3. Taxes: Businesses can expect to pay 13% to 30% of their income in taxes.
4. Software: Monthly expenses can range from $25 to $500, with custom solutions costing several thousand.
5. Marketing: Recommended marketing budgets are typically 3-5% of projected gross revenue.

How Icanpreneur Can Help You Build a Startup

Icanpreneur is a platform that helps entrepreneurs get from an idea to a product-market fit without relying on luck. Based on proven methodologies, the platform offers a structured approach with all the needed guidance, examples, and tooling to validate your ideas.

An integral part of the platform is the Icanpreneur community, where entrepreneurs and product leaders come together to support each other by sharing experiences, advice, contacts, and mental support.

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