Arguably the most prominent problem developers run into when creating a project is lack of funding. The second most common reason start-up companies fail is running out of money. About 29% of start-up companies in the U.S. are going out of business because of a lack of funds. Luckily, there are ways to maneuver around ludicrous finances and spending plans in the world of software development.
Money is always tight when starting a new company, and what little funds you have must be spent wisely. We’ve compiled a list of tips for getting your idea off the ground with as little capital as possible, and how to build revenue over time.
Single-feature MVP
An MVP is a minimum viable product. Before you rush to perfect every feature of your program, you need to draw up some simple designs to have a framework from which you can get more detailed later. As long as there is a basis for the main features, you can show this to prospective team members and validate your idea with their reassurance. Once you are more secure in committing to the project, you can build from there.
Start with a niche market
Before you start trying to sell your idea to the entire world, you need to find a small audience of dedicated users you know need this program, use it regularly, and recommend it to friends and colleagues. A focused audience in the early stages will help you later on in designing features specifically tailored for these people’s needs. You need to know that you can succeed at this level before you start expanding to a broader audience which will inevitably cost you more time, energy, and valuable resources.
Work closely with customers
The most critical stage in any project is the revision process. Once your program is used regularly by a small group of dedicated users, you can get more specific feedback about the areas that need improvement.
Build an online community to generate promotion
Find out where your users congregate online and join those channels. Other ways to network include attending online seminars and forums and talking with people one-on-one. This helps to understand people’s personality types, what kind of experience they have, and what their most basic needs are in terms of looking for new software tools to help their projects/businesses grow.
Measure activity
Once you have a select group of people using your application, it’s time to measure more specific behaviors, i.e., age groups, geographical regions, level of experience, etc. Some useful tools for measuring audience metrics are Google Analytics, Amplitude, and Mixpanel. One essential feature to measure is the retention rate. This means finding out how many people are committed to your program and using it regularly. Note that it is seven times cheaper to keep an existing user than to find new ones.
An agile work environment
The early stages of any new start-up company are always the most grueling. You’re all starting from the bottom, it is unclear when you will launch, and the chances are that everyone is working pro bono. However, there’s no chance of getting paid if the application is unsuccessful. One way to combat fatigue is to work in sprints. This means powering through, let’s say, two weeks to write up all the code for specific features, then cooling down, reviewing the work, and noting what parts need improvement.
Another important reminder is to not waste time with features/campaigns that aren’t working. It should be clear early on whether or not a specific practice method isn’t working. When this happens, cut your losses and formulate another idea.
Partner with other companies
A practical method of gaining new followers is to team up with a company that has a similar ethos to yours. Your programs don’t need to have similar functions. Still, if the same demographics are using them for varying purposes, it might be mutually beneficial to create a partnership and promote one another. Now you’re expanding, gaining a business ally, and growing your audience.
Crowdfunding
Showcase your prototype on Kickstarter or other platforms for investment. This is an effective way to take the temperature of any potential investors in the future. You need to know if your idea is successful or if people would pay to see it brought to reality.
You can also sell accounts early on and tell people that the price offered at the moment is a discount compared to post-launch prices.
Angel investors
These are former founders/CEOs who have some leftover spending money from their last big payoff who are looking for new ways to make even more money. They probably won’t give you that big boost you need to get off the ground, but they are known to give out smaller sums of money and to give more often.
Accelerators
These investors are called ‘accelerators’ for a good reason. Aside from providing funds, they can connect you with mentors, new connections, and help you build a more effective business model. However, keep in mind that when you collaborate with accelerators, they will usually take about 10% of your company’s equity, but in return, you can receive over $100,000 in funds. Some great examples of accelerators include MassChallenge, Y Combinator, 500 Start-ups, and Techstars.
For more information:
https://masschallenge.org/article/how-to-start-a-tech-company
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