The path to creating a startup can be filled with obstacles, from securing funding to forming the right team. Jesse Bardo, an executive director in Startup Banking at J.P. Morgan, also founded a fundraising app for higher education, and understands these challenges firsthand.
“As a founder, make sure you want to go down this path, which can be incredibly difficult,” he said. “What is the problem keeping you up at night? Are you unable to do what you need to because a solution doesn’t exist?”
“Why are you the one who has to create a solution? That’s the existential question that you need to answer,” he said.
Once you answer those questions, you can focus on 10 key steps for how to start a startup.
1. Identify a problem or need
Before you create a startup, you need to identify a problem that needs solving or a gap in the market.
For example, Grant Lee co-founded Gamma to fill the gap of traditional slides and presentations after spending significant time and effort designing slide presentations—something his tech and financial experience made him uniquely qualified to do.
Just because the potential founder faces an individual problem doesn’t mean it’s a widespread market concern. “There’s always somebody who can’t get a certain type of food delivered to their dorm or wants get their laundry folded,” Bardo said. “When you look deeper into that, the problem is very much solved or the potential founder is an outlier.”
2. Conduct market research
Conduct thorough market research to identify your potential customers and their preferences, and ways to differentiate your startup.
Market research often starts with the founder. “With market research, not only are you going out to talk to customers, but you’re also understanding the competitive landscape—who around you is already trying to fight this fight,” Bardo said. “It helps to be a domain expert, so that when you identify that problem, you recognize the landscape and you’ve got the network to go and conduct the research.”
Market research should also involve many potential clients. If you have a consumer product, talking to 100 potential clients is ideal, Bardo said. That’s not always practical for business-to-business (B2B) startups, which should aim for at least 15 potential clients. “People think of ‘traction’ as somebody who’s actually purchasing,” he said. “But it actually happens even earlier. It’s when you talk to people and you get signals from those people that there could be some buyer intent, depending on what you’re trying to sell.”
3. Develop a business plan
Your business plan acts as a roadmap for your startup and should outline your objectives, target market, products and services, and competitive landscape among other elements.
“Ultimately, your business plan is a thought exercise to show people that you know what you’re building and where you’re trying to take it,” Bardo said. “The business plan should articulate your directional path to others.”
“A lot of startups are great in the founder’s head,” he said. “Socializing the business plan is an important step to determining the product’s—and startup’s—viability.”
4. Establish a legal structure
Creating a startup may involve several legal steps, but one of the most important is incorporating your startup. Before your startup becomes an C corp or other legal entity, consider how the structure will impact your ability to raise capital, manage operations and protect personal assets. You should also determine where to incorporate your startup.
You should also establish a legal structure early in your startup journey. “You can’t effectively hire a team or secure significant funding if you don’t have a legal structure for your startup,” Bardo said.
5. Build a minimum viable product
Based on your market research, you can develop a prototype to test your concept. Be sure to prioritize efficiency, with a focus on building a basic version that can solve the core problem. From there, test the prototype with real users to gather feedback on usability and functionality. Use this feedback to refine the product’s design and functionality to better meet user needs and expectations. From there, you can develop your minimum viable product.
