In our previous articles we described some key aspects to keep in mind when creating and launching a startup. Today we want to get in more details about another important part of that process – consulting.
Startup consulting is a set of activities focused on supporting a particular startup on each stage of development and making it more competitive and profitable.
The simplest approach can be divided into three big steps:
- Developing a business idea
- Preparing for investments
- Engaging investments
First step aimed at converting a startup idea into a value proposition and finding a competitive niche for it. The most important thing here is to find a viable business model based on several hypotheses to claim that a startup solves a particular problem for a target solvency audience. This is when consulting may be similar to business analysis, because sometimes the initial idea changes over time to fit a business model, so your consulting partners should continuously track changes on target market in order to make sure that your idea, as well as the whole business model are potentially profitable. This step also includes creation of a so-called minimum viable product (MVP) or a prototype that represents a working “instance” with minimum features to show how core product works. Once a MVP is finished, you should define which monetization models (e.g. one-time payments, monthly payments or basic-extended subscription models) will be applied to that MVP and test them altogether. When you are satisfied with the received results, think on attracting potential sectoral experts and mentors.
First step lasts approximately from one to two months.
Preparation for investments should be started from testing economic component, that is, defining whether your startup business idea is good enough to make money. As the result, you should receive a unit-economic model where you earn 3+ times as much money on customers as you spend on them. After that, it is recommended to test the final version of the unit-economic model on scaling.
Next thing is to prepare a financial model of the project and an investment presentation as a part of an investors pitch that is used to negotiate with potential investors and angels. Once finished, you are ready to create a list of suitable investors and organize participation in specialized events for startups.
Second step lasts approximately one month.
Third step is, actually, moving from theory to practice, when you can determine how efficient your startup consulting was at earlier stages. This includes attracting investments from venture capital funds, startup-accelerators, business angels and private investors. It means not only amount of investments that matters, but also how fast these investments will be attracted. We will cover this aspect in more details in our next articles. After that, you can start first brand identity campaigns to distinguish your startup among rivals. At this step, startup consulting will also help you in assisting for effective negotiations with investors and advising on both financial and legal terms of the partnership (e.g. term sheet, an agreement on investment, etc).
Third step lasts approximately from three to six months.
As you can see, consulting plays a vital role in giving your startup a tremendous boost to make it more competitive and cost-effective, thus helping rich the target markets. Consulting companies work is often based on individual approach to ensure that their clients receive the most comprehensive set of services. That’s why, if you want to drastically reduce the time and money required to get a startup up and running, take care of claimed and reliable consulting partners.
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