Launch a startup: Understand risks and learn how to plan costs

Do you think about open a startup? If so, it is a sign that you are an innovative person, willing to grow, undertake and cause positive change in the world, either by launching a disruptive product or by providing a different service.

However, opening a startup is not a simple task. It is true that the Economic Freedom MP facilitated the lives of entrepreneurs (and the Innovate Simple it's also a hand in hand for startups), but that doesn't mean the rest of the work is easy.

On the contrary: starting a startup requires a lot of dedication, problem-solving skills and serious work to prevent it from being closed in its first year.

If you want to understand the risks of this endeavor and how to prepare for them, read the following article very carefully!

How can knowing if starting a startup is right for me?

It's very easy to get excited about the idea of ​​starting a startup and starting to innovate. After all, companies of this type are among the most popular in the market today, which stirs the wishes of all professionals.

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However, opening a startup is not for everyone. You must have a very specific profile to succeed in this business. It is not just a good idea, but the ability to solve problems and innovate.

In addition, the entrepreneur must be someone who knows very well how to deal with the inherent risks of entrepreneurship and is very good with the numbers (or else hires someone with that profile). After all, starting such a business involves many financial risks and it is important to know how to control them until your business becomes profitable.

But what are the risks of starting a startup anyway? What kind of challenges await on this journey? We will see next!

What are the risks of opening a startup?

You are in the mood to create a startup, whatever your segment or niche is. What kind of obstacle should you expect on your way? What are the risks you take? See below:

Unable to develop your prototype

The first risk is in the prototype development of your service or product. Most startups are born of very specific professionals, so they do not understand what is needed to develop a prototype if it involves an area where they are not specialists.

For example, imagine a group of programmers coming together to develop a prototype of equipment that has a hardware part. The programming part, of course, they dominate. But they are not necessarily hardware experts. And that's where the danger lies.

For this reason, start your planning by listing everything needed to be able to create the initial prototype of your product and stick to these requirements, even if they involve other professionals. Without a prototype, you will not be able to open your startup.

Failing Market Test Validation

The biggest risk any startup faces at the start of its business is not getting the necessary validation in the market test. This is because the insight that generated the prototype idea may have been creative, but it was not necessarily effective.

Not every idea that looks good is really good. Therefore it is important to test and test your prototype. If the result does not validate the idea, then we should go back to the conceptualization part.

Not having enough time to become profitable

Many startups fail because they cannot equalize the operating cost graph with the moment they become profitable. A recent example was Moviepass, a startup that sold a monthly fee service that offered free movie goings to users. The company's costs soared, and it didn't have time to become profitable, failing early enough to start making money.

Unable to legalize or formalize work

A startup is by nature disruptive. This means she works with ideas and products that have not had time to be evaluated by the government. Therefore, there are no laws on that concept yet. This means that there may be some difficulty legalizing or formalizing the work done within the company.

At these times, it is good to have the support of a team of consulting specialized in the subject to help convey to the government what that company is about and formalize the startup in the right way.

How to plan the costs of this action

Now that we understand the risks of starting a startup, the big question left is how to plan the costs of this venture? What to consider to know how much we will spend on the project? See below:

Have a business model

Um business plan with a structured and clear model it is essential to know how to plan your startup costs. Recall the case of Moviepass: the company probably had not yet established a business model when it started operating. If it did, it did not think of solutions to address the entry of new customers and the increase in costs.

Search the market

Remember that the data are the entrepreneur's best friends. They set aside the subjectivity of entrepreneurship and facilitate decision making, if well used, of course. That is why, do research to find out how much you will spend developing your prototype, its usefulness, the prospect of adoption, and more.

See how long it will take

How soon will your prototype be ready? After that, how long will you validate your theory? Then how long to produce the commercial version of the product? How long to start selling? And how long until the balance tilts and you start making more money than you spend?

You have to answer all these questions before you can calculate your costs when starting a startup. Without knowing about these demands, you may close yourself like the Moviepass: lost in a tide of spending.

Calculate taxes and commitments

Remember that your startup will have to shoulder taxes and financial commitments until your product hits the market and starts generating revenue. Therefore, enter this information into your planning, including the taxation of angel investments.

As you can see, starting a startup involves a lot of work and planning to ensure that the venture's risks will not materialize and the business will have a bright future ahead.

All of this is made easier with a team of accounting consultancy specializing in startups. If you are seriously considering starting a startup, contact RR Consulting and learn how we can help you with this endeavor!

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