Whenever someone comes up with an idea for some sort of business or an innovation, they usually don’t know where to start. How can they approach this idea and transform it into an actual business - a useful product or service? Solopreneurs, or startups in their early stages, usually struggle to follow the right path in order to turn their dream into reality.
In this blog, we chose some of the most basic, yet most crucial keywords, alongside their meanings and technicalities, which entrepreneurs who are beginners must know about and follow.
A business plan outlines a company's goals and the details of how it intends to reach them. The plan involves a detailed roadmap for the company's financial, operational, and marketing objectives.
Business plans are used by both new businesses/startups and by established companies; however, a business plan is considered an essential document for startups in specific. That’s because, before a business has developed a track record that can be relied upon, a business plan is used to entice investments. Obtaining loans from financial institutions might also be aided by it.
Moreover, a business plan keeps the executive team of a company focused on achieving set objectives and allows them to stay on the same page about the company’s strategies. The team should also ideally review and revise the plan on a regular basis to account for goals that have changed or have already been attained.
Startup Accelerator & Incubator
Startup accelerators - or seed accelerators - are fixed-term programs which have mentorship and educational purposes, usually ending with a public pitch event or a demo day. Such programs are cohort based, which means that the learning process is based on a syllabus and is taken by a class or a group of entrepreneurs rather than individually. However, accelerators usually take equity stake in the startups that they are hosting.
Similarly, a business incubator is an organization or institution that offers a comprehensive range of services, including management training, office space and a venture capital investment. Such services assist new businesses and solopreneurs in developing their startups or business ideas, as well as in validating them.
Any startup that comes along with the intention of achieving its business goals requires financing. For startups, fundraising is crucial to help a startup thrive and flourish. However, fundraising strategies or plans differ according to the kind of outcome that is expected from the startup.
The reason why fundraising is vital for any startup is because the funds raised are needed in order to achieve the goals set up in their business plan.
Scalability is concerned with capability and capacity. Does your company have the potential to expand? Will your business infrastructure and workforce be able to handle growth?
You're in trouble if your company's development produces problems like confusion, orders that get lost in the shuffle, lack of staff, poor communication, or inadequate manufacturing or delivery capabilities.
For that, scaling a firm means creating the conditions that will allow for and foster expansion inside your enterprise; it signifies having the capacity to advance in an unhindered way. It needs preparation, funding, and the appropriate employees, systems, procedures, partners, and technology.
The phrase “original works of authorship” refers to things like works of art or architecture; however, it of course also refers to inventions and ideas. The copyright holder is the only person with the authority to display, distribute, or license the material for as long as the copyright is not null.
The “fair use” doctrine is the only significant exemption, which permits some distribution of copyrighted material for academic, instructional, or news reporting reasons.
Technically, you don't need to apply for a copyright to protect your work or your creations. Once your ideas are embodied in physical form, it is regarded as solely yours.
A patent is a right given for a brand-new and groundbreaking innovation. The authority to commercially exploit an innovation solely belongs to its owner through a registered patent. However, the owner has the power to provide licenses to others, so that they can produce and market the invention or any products derived from it.
Unfortunately though, patent protection is not automatically or easily granted, in contrast to copyright. It is necessary to file a formal patent application, and it is required that the innovation not be made public beforehand; moreover, patents are usually an expensive investment.
A recognizable phrase, word, emblem, or symbol that identifies a particular product and legally distinguishes it from all other products of its sort is referred to as a trademark. A trademark recognizes the company's ownership of the brand and is capable of distinguishing a product as being its own. Generally speaking, trademarks are regarded as a type of intellectual property, whether or not they are registered.
Not only can trademarks aid in product differentiation within the business world, but they also play a crucial role with customers. Words and design features that identify the creator, owner, or developer of a good or service are identified and protected using these trademarks. They may take the form of company logos, slogans, or product brand names.
An idea for a project or a business is briefly presented in a speech known as a “pitch”; during competitions, a pitch usually takes up to 3 minutes, but it can be longer if you're presenting to potential investors.
An entrepreneur's attempt to persuade a venture capitalist that their business idea is worth investing in is known as a pitch in the business world. In most cases, a compelling pitch is sufficient enough to catch an investor's interest and prepare the ground for a follow-up meeting. However, in order to secure seed funding, the entrepreneur will have to make a more formal presentation to the investor during the follow-up meeting.
In the section above we mentioned a venture capitalist (VC), but what exactly is a VC? A venture capitalist is a private equity investor who provides funds to new businesses with a strong development and growth potential in exchange for a share of their company known as an equity stake. This means that a VC will support startup ventures or small companies that wish to expand but do not have access to equities markets - but of course, in return for a share of the startup.
However, contrary to popular beliefs, startups are not typically funded by VCs right away. Usually, they try to target businesses that are in the process of trying to commercialize their idea. Nonetheless, there are different types of VCs who invest in different stages of startups. Some are specialized in pre-seed rounds, while others tend to invest in the more advanced stages of startups.
Overall, a venture capitalist aims to invest in startups, support their development, and seek to exit with a large return on investment (ROI).
Venture capitalists care a lot about their ROI, but why is it so important? Return on Investment (ROI) is a performance metric used to assess an investment's effectiveness or profitability. ROI aims to quantify the amount of return on a specific investment in relation to the cost of the investment.
To calculate ROI, the benefit of an investment is divided by the cost of the investment. The result comes out as a percentage or a ratio.
High net-worth individuals who financially support small businesses or entrepreneurs are referred to as angel investors or seed investors. These individuals often do so in exchange for ownership stock in the startup. Angel investors may contribute through a one-time investment to help any new firm get off the ground or to help a small business get through its challenging early phases.
Instead of concentrating on the potential wealth or profits that they might make from the business, angel investors simply want to help businesses take their first steps. That is why most angel investors are frequently found among an entrepreneur's family, friends and connections. Angel investors are essentially the antithesis of venture capitalists, because their main purpose behind investing isn't their ROI.
As mentioned previously, when an entrepreneur is pitching their idea to a bunch of VCs, their goal is to secure seed funding; the type of investment utilized to launch a company.
Private investors, known as venture capitalists, give this funding and in exchange, expect an equity stake in the business, a cut of the product's revenues or both. However, seed funding can also be acquired from friends, family, and other acquaintances of the founders - known as angel investors.
Because seed funding is money that was raised by a business in its infancy or early stages, it does not need to be a significant sum/amount of money. Also, because such funding often comes from personal sources or angel investors instead of VCs, it's usually a relatively modest sum.
People typically join networking events based on a single shared interest among all of the members. For professionals, trade exhibitions, seminars, and conferences - that draw a large crowd of people with similar interests - may offer the finest networking possibilities.
Needless to say, networking provides opportunities to make connections and keep up with all the updates that are happening in any field.
For that, networking is crucial for startups and new entrepreneurs to build up their business relationships. They can attend networking events through either participating in entrepreneurship competitions, that provide a basis for networking, or by attending relevant conferences in their area.
Minimum Viable Product (MVP)
A minimal viable product is the prototype of a product that has the bare minimum of functionality necessary for early adopters to use it and then provide feedback for any further development that the product needs. By concentrating on providing an MVP, developers may avoid time-consuming and pointless work.
However, one of the main mistakes that new entrepreneurs make is waiting too long to release their MVP. When this happens, they allow their competition to beat them to the market and claim a sizable portion of their Total Addressable Market.
Business Model Canvas
A business model canvas is a strategic management tool used for creating new business models, as well as cataloging current ones. With parts of it detailing a company or a product's value proposition, infrastructure, consumers, and finances - it provides a visual chart that allows the startup to clearly identify who their customers, suppliers, and competition are. In addition, this model highlights the cost of running the business and the revenue stream. By focusing on potential trade-offs, a business model canvas helps firms align their work properly and put together the best strategy for their business.
Value proposition is the value that a business guarantees to provide to clients should they decide to purchase its goods. Any marketing plan of any corporation must include a value proposition. Consumers are introduced to the company's brand through the value proposition, which explains to them what the firm stands for, how it functions, and why it merits their business.
A value proposition is crucial because its sole purpose is to convey the idea that consumers will obtain the highest value from buying the company's products - greater value or benefit than they can obtain from the products of the competitors.
It takes a lot of commitment and hard work to choose the path of entrepreneurship. It may not be an easy road, but it is definitely a rewarding one. To be an entrepreneur, a lot of research needs to be conducted and familiarity with the above keywords is necessary, since they are widely used within the ecosystem.
It’s also important to note that all solopreneurs and startups in their early stages should participate in as many entrepreneurship competitions as possible, as well as to try and participate in training and workshops in order to advance their businesses and ideas. These are also the environments where most of the entrepreneurs will meet with their potential customers, partners or even investors.