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How much does it cost to set up a new company?

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The cost of setting up a startup can only cost a few thousand dollars. CB Insights, a US venture capital data company, says that today’s open source technologies and cloud tools enable every entrepreneur to start a company quickly and cost-effectively. Does this mean that anyone can design an application for just $3,000 to $5,000 to support startups through the initial stages of development? It’s not true.

Today, entrepreneurs develop applications that no longer require expensive software. Others like web servers and marketing management can cost as little as a few dollars a month, and startup costs are drastically reduced. However. Open-source technologies and tools do not build and manage products on their own. Depending on the product domain, specific skills are required to build, manage, and improve it. Therefore, considering that a good software engineer earns more than $100 an hour, and no matter how skilled the entrepreneur’s own application programming skills are, he or she always needs the skills of other engineers to complement each other. It is still expensive to start a company.

The fact is that the definition of entrepreneurship is different, and the cost of starting a business is also very different. For many entrepreneurs, a startup company is synonymous with a new application. They often think that if there is no application, the company is not established, until the product is released, the company is born.

Steve Blank is an entrepreneur and author who defines emerging companies as a temporary organization that seeks to find repeatable, scalable business models. This period is a period of exploration, and entrepreneurs need to go through multiple stages and build multiple versions of the application. One of the biggest mistakes of the founders was to build the product, but no one paid for it, or there were not enough people to pay for it. This mistake is costly, and it is easiest for entrepreneurs to make this mistake if they build an advanced and expensive application before fully verifying the application’s needs. Therefore, if you don’t skip some of the key stages of the early startup, it can definitely cost just a few thousand dollars to set up a startup.

Here are the most important stages before an entrepreneur can develop an application. Doing these things in stages can minimize costs and increase the likelihood of entrepreneurial success.

1. Confirmed that there are customers

Many entrepreneurs create products that they want and want to meet their needs. Others will find market gaps through observation and research. In both cases, the entrepreneur himself, his friends, family members, acquaintances, or online surveys cannot confirm whether the customer exists.

To verify that a product has a source of customers, data is needed, and the best way to collect it is through interviews. Experience has shown that if 60% or more of respondents intentionally and eagerly talk about the problem you are trying to solve and the pain it brings, there is enough evidence to prove that the problem exists and the buyer needs a solution. In addition to the 60% benchmark, if you have a clear customer portrait, then you have taken another step in discovering your customers. The customer portrait is to figure out which type of customer the customer is.

Interviews are key because they are the best or the only way to discover other issues that may not be clear at first. Another mistake made by many founders is not to do interviews but to solve the problem, but the target problem is a small matter that is not painful.

2. Build a solution

When there is a buyer and seller exchange value, it is business. The seller provides the solution in exchange for money. In startups, such solutions do not necessarily need to be 100% dependent on the application. Technology should be used to facilitate the delivery process, but not necessarily the only way for sellers to resolve customer issues at the outset. In other words, ask how to design a solution without an application.

For example, in the first few months of the takeaway logistics company DoorDash, although the founders had the technical ability to build applications, they started with a simple boot page, using existing applications such as Find My Friends app and Square. Deliver orders and get paid.

This is an example of a solution that does not require an application and does not require money or time to build. If you’re focused on building a solution, you can quickly verify that there is a business before investing in a scalable application.

3. Confirm that there is the business to do

After going through these two crucial stages, the easiest way to verify that there is no business to do is to provide solutions to the respondents who actively expressed their needs in the first phase. Those who spend time discussing their own problems may not want to pay for it, either because the solution is not feasible for them, or — usually, because the problem is not big.

Both of these situations are good news for entrepreneurs because understanding so many situations do not require significant investment in product development or marketing. If people don’t buy it, find out why and redesign the solution accordingly until they are willing to accept it. With customers, you will be able to collect quantitative and qualitative feedback that you can use to build a more confident and successful application.

There are many variables to consider when calculating the investment required for entrepreneurship. In short, the best way to wisely allocate early-stage investments is to leave the most significant expenses to the end, usually referring to application development. Instead, build a solution that will do the customer’s job in the first month or two, so that when you create the product, you can do it. You can also set up a customer advisory board to help you build the right product…

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