September 2, 2014

For Entrepreneurs: How to Found a Successful Startup

Startup companies aregenerally newly created companies based on innovative business ideas with high growth potential.Every year numerous new startups are founded, following the dream to become the next Twitter, Skype or Instagram.The majority however fails; many do not even survive the first year. But many mistakes that lead to failing can be easily avoided.

From Idea to Business Plan – What you should consider

To avoid a similar fate of your business startup, you should consider your business model and research the markets in advance. A business plan offers both yourself as well as potential investors an overview of opportunities and risks. While developing your product, you should review and keep an eye on the market situation and the potential demand for your product. The Blue Ocean Strategy is a proven method used to find the right niche for your product.

If possible, try to avoid founding your start up alone, a team set up with at least one other person is recommended. Ideally, you complement each other in your skills. For example as a computer scientist you should go for a partner with business knowledge and vice versa. It is the same with choosing employees; make sure that they form a heterogeneousteam with interdisciplinary expertise.

Also question the scalability of your business model. Does it work with ten, one hundred or one million customers still just as well or will you face problems with a higher number of clients. This question may be very important if you want to expand your startup as abroad. You should also clarify the financing of your startup beforehand.

Start-Up business Tips

How to create the financial foundation for your startup

Every startup will sooner or later worry about financing. According to the “German Startup Monitor” the requited capital for half of the German Startups was € 50,000 or more at their founding date.

Only 19% startup companies declared banks as a major financing partner. The most common methods of funding are:

  • Venture Capital: Investors buy stakes in the company and therefore have a say in future decisions. In addition, venture investors bring their experience and economic expertise into the company. Since the investment involves risk, many investors require a rapid company growth.
  • Bootstrapping: describes a method of financing without borrowed capital. The startup is financed from the own cash flow. This method creates financial independence, but also requires efficient economies.
  • Business Angels: These are wealthy entrepreneurs with hopes of high returns by investing in a promising startup. In addition, they usually have a large network of contacts, business know-how and often personal experiences that can be helpful in the everyday business.
  • Crowdfunding: An increasingly and extremely popular method of financing startups is the so-called crowdfunding. The basic idea is financing by a large a mass of individuals. On corresponding websites you can present the idea behind your startup and determine financing needs. If the predetermined sum is reached with the help of individual donations, the donor get a consideration in tangible or intangible form.


To leave a good impression at potential investors, you should also have an elaborate business model presented in an attractive way, like a Business Model Canvas. Be sure to always honestly identify the opportunities and risks to your potential investors and remain realistic in your expectations.

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Equal/Uniform growth leads to success

According to the Startup Genome Project, a long-term study of 3,200 startups, the so-called Premature Scaling is the most common reason for the failure of startups.Premature Scaling describes artificially pushed growth, without possessing the appropriate demand or a finished product.The result is having individual parts of your startups develop faster than others, and thus lead to inconsistencies which then lead to inefficiency.So please, resist the temptation to accelerate your business growth artificially.

In the long run your startup will benefit from growing natural.Keep the product development flexible and adapt your ideas to the needs of your customers, even if this means you have to toss cherished ideas overboard.A matching method, that has established itself in the past, is called Lean Startup. By following the Build- Measure – Learn Principle, a business idea is being tested under real market conditions and adjusted according to customer feedback.This can be planned and realized by creating a Product Canvas.

Failure as an opportunity – Why you should not bury our heads in the sand after a flop

If you should fail despite good preparation, you should take this not necessarily as reason not to try it again with a new idea. In the United States we see the failure as an opportunity to make it better with the next try, while in Germany the failure is perceived much more negatively.

In the past, it has been shown that startups that flexibly adapted to changing market conditions and rely on the help of mentors are more successful than those who do not. Therefore do not be afraid to exchange with other founders. Why should you repeat mistakes that others have already committed?

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Join the conversation! 1 Comment

  1. Thanks for the great tips. I found your blog late but not too late. It’s a worthy article for all startups!


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