Starting a business
Launching a business involves testing ideas, planning, choosing a legal structure, and finding money, while keeping risk under control.
The lean startup
Eric Ries's lean startup approach (2011) encourages founders to build a minimum viable product (MVP), the simplest version that can test whether customers want it, measure results, and learn: the build-measure-learn loop. Founders then persevere or pivot, changing direction based on evidence.
Customer discovery
Before building much, founders should talk to potential customers to understand their problems, current solutions, and willingness to pay. Steve Blank's customer development method emphasises 'getting out of the building' to test assumptions rather than relying on guesses.
The business model canvas
Alexander Osterwalder's business model canvas summarises a business on one page in nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. It helps founders see how parts fit together.
The business plan
A business plan describes the business, its market and competitors, marketing and operations plans, management team, and financial projections (sales forecasts, cash flow, break-even). It helps founders think through their idea and is often required by lenders and investors, although many startups now begin with leaner one-page plans.
Legal structure and registration
Founders choose a legal structure: a sole proprietorship, partnership, LLC, or corporation, balancing liability protection, taxes, and paperwork. They may need to register a business name, obtain licences and permits, get a tax ID, and understand local regulations. Professional advice helps with these choices.
Funding a startup
Startups are funded by founders' savings ('bootstrapping'), friends and family, bank loans, government-backed loans (such as US SBA loans), crowdfunding (rewards-based platforms such as Kickstarter or equity crowdfunding), angel investors, and venture capital for high-growth firms. Each brings different costs, control trade-offs, and expectations.
Protecting ideas
Intellectual property protections include patents (for inventions, typically 20 years from filing), trademarks (for brand names and logos), copyrights (for creative works), and trade secrets (such as recipes, protected by confidentiality). Choosing the right protection depends on the idea and the cost of enforcing it.
Worked example
A founder wants to build a dog-walking app. Instead of spending a year building it, she creates a simple website and a group chat to match walkers with owners in one neighbourhood (an MVP). After a month, 60 owners have booked walks and most rebook, evidence of demand. She uses this data to raise a small angel investment to build the full app.
Key takeaways
The lean startup uses an MVP and the build-measure-learn loop to test ideas, then perseveres or pivots. Customer discovery tests assumptions by talking to customers. The business model canvas summarises a business in nine blocks; business plans add detail and projections. Founders choose legal structures and complete registrations. Funding ranges from bootstrapping and loans to crowdfunding, angels, and venture capital. Patents, trademarks, copyrights, and trade secrets protect ideas.
Flashcard
Build, measure, learn
Check your understanding
What is a minimum viable product (MVP)?