This page provides a summary of the main processes to consider when starting a business. As every business is not the same, these guidelines are not exhaustive.
If you are thinking of starting a business, there are things you need to consider to ensure the best chance of success. It is important to decide what you will call your business and your product or service. What sort of structure will it have, and how will you run it? Additionally, you must consider creating customers and where the money will come from for setting up while the business finds its feet. However, as a founder, you can only start with an idea of the kind of business you want to start. If you do not have an idea, you do not have a starting point, as nothing can be done without it.
The general understanding of a start-up is that it is just any new business that someone starts. But this is not so. Defining a startup is not that easy nowadays, as it is more than just launching a business. The most commonly cited definitions of a startup are those of Steve Blank, Eric Ries, and Paul Graham.
Steve Blank is a founding member at the Gordian Knot Centre, an Adjunct Professor at Stanford and Senior Fellow for Innovation at Columbia University. A Serial entrepreneur and creator of the customer development method that launched the renowned Lean Startup movement. He defines a startup as “an organisation formed to search for a repeatable and scalable business model“(Blank, 2010).
Eric Ries is an American entrepreneur and the creator of the Lean Startup method; He is the author of the New York Times bestseller The Lean Startup; The Leader’s Guide; and The Startup Way. He defines a startup as “a human institution designed to create a new product or service under conditions of extreme uncertainty” (Ries, 2011).
Paul Graham is a highly influential programmer, essayist, and investor who co-founded Y Combinator (YC), the world’s most prominent startup accelerator, in 2005. He defines a startup as “…a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth” (Graham, 2012).
Forbes defines a Startup as “a business designed for rapid growth. Unlike traditional companies built for predictable operations, startups focus on scalable models that can expand quickly without a proportional increase in costs. Startups prioritise innovation, speed and market disruption over long-term operations.” (Baldridge, 2024).
Main Characteristics of a Startup
The common features of these definitions of a startup can be summarised as follows:
Lean resources. If the founder finances the company themselves, there might be few resources and funding in the business to begin with. This could mean that the startup is volatile, sometimes having a lot of cash and other times having much less. Resources, money and time are typically controlled in a startup, and employees might spend time coming up with creative ideas to work around this. For example, employees could work from their homes instead of going into an office to save on rent.
Scalability. Scalability in business is the capacity to increase revenue significantly while costs rise at a much slower pace, allowing for expansion without compromising quality or operational performance. A scalable business utilises automation, technology, and efficient systems to handle growing demand (customers, data, or production) without a proportional increase in resources. Innovation: They often bring new, disruptive technology or business models to market.
High risk/high reward. Startups are considered high-risk/high-reward because they aim for rapid, exponential growth in new or disrupted markets, frequently resulting in total failure (high risk) or massive investment returns (high reward). This profile exists because startups operate with limited resources, unproven products, and high competition, yet they offer early access to potential unicorns like Uber or Airbnb.
External funding. Startups need external funding to accelerate growth, develop products, and gain a competitive edge, as revenue alone is usually insufficient to scale quickly. It bridges the gap between limited personal savings and profitability, providing the “runway” necessary to survive, hire talent, and capture market share before competitors do. Typically, they are funded by angel investors or venture capitalists, rather than just loans.
Growth mindset. A startup adopts a growth mindset to navigate extreme uncertainty and foster innovation, viewing challenges as learning opportunities rather than failures. This approach allows teams to adapt quickly, iterate on products, and persevere through obstacles, which is critical for survival and long-term success. The ultimate goal is to grow large or be acquired by a larger company, often aiming for valuation milestones like “billion” (unicorns)
The Main Differences between a Startup and a Small Business
Main Distinctions
Growth and scalability: Startups aim for exponential growth to dominate their market. Small businesses focus on stable, incremental revenue and local community reach.
Funding. Startups usually seek venture capital or angel investors. Small businesses typically rely on personal savings, bank loans, or family backing.
Business model. Startups operate in extreme uncertainty, experimenting to find a repeatable, scalable business model. Small businesses use proven, established models from day one.
Exit strategy. Startups often plan for an “exit” event, such as an acquisition or Initial Public Offering (IPO). Small businesses are built for long-term ownership and operation.
The Stages and Processes
The stages and processes of a startup typically include the following:
Market research. Validating your idea by analysing your target audience and studying competitors to ensure genuine market demand exists for your product or service.
Writing a business plan. Creating a formal blueprint outlining your business model, target market, revenue streams, and financial projections.
Choosing a legal structure. Deciding whether to operate as a Sole Trader, Partnership, or Limited Company.
Registering the business. Registering with the appropriate authorities or institutions. In the UK, this is done through GOV.UK.
Building your brand. Creating a marketing strategy and establishing your online and physical presence to attract customers.
Launching. Introduce your minimum viable product (MVP) or service to the market and adapt based on early user feedback.
Business Plan
For agile startups, the most appropriate business plan is a dynamic, iterative model rather than a static, 50-page document. The Lean Canvas and the Lean Startup Methodology are the industry standards, designed specifically for rapid testing, learning, and pivoting.
The main characteristics of an agile business plan include:
One-page format. The Lean Canvas (pioneered by Ash Maurya) fits your entire business model on a single page. It replaces traditional sections with actionable metrics like Problem, Solution, Key Metrics, Unfair Advantage, and Channels.
Hypothesis-driven. Instead of treating business projections as facts, it treats them as assumptions to be tested. You build a Minimum Viable Product (MVP) to validate your core ideas in the market.
Build-Measure-Learn Loop. The strategy focuses on a continuous cycle of creating a feature, measuring users’ interaction with it, and learning from the data to refine the product.
Focus on customer discovery. Prioritising direct customer feedback and market validation over extensive desk research and financial forecasting.
Market Research
For an agile startup, the most appropriate market research is lean, iterative, and behavioural. Instead of relying on traditional, large-scale focus groups or static reports, agile startups use fast-paced qualitative and quantitative methods to test assumptions, gather direct customer feedback, and validate ideas in real time.
The main methodologies include:
Customer development interviews. Conducting 15-to-20-minute exploratory interviews to uncover real user pain points and behaviours, rather than just asking what they “might” buy.
Landing page tests.Creating simple, targeted web pages that pitch a proposed product or feature to measure actual user interest, sign-ups, or pre-orders.
Prototype testing.Utilising wireframes, mock-ups, or low-code environments (like those built with Figma) to observe how users interact with your solution before writing extensive code.
Concierge and Wizard of Oz MVPs.Manually delivering the core value of your product behind the scenes (Concierge) or simulating an automated backend (Wizard of Oz) to validate demand with minimal upfront build time.
A/B testing. Launching micro-features or different variations of messaging to live audiences to see mathematically which version performs better.
Social listening and analytics.Monitoring platforms like Reddit, niche forums, and competitor reviews to identify unaddressed customer complaints and feature requests.
This approach prioritises actionable metrics (like conversion and retention) over vanity metrics, allowing founders to pivot or persevere based on actual user data.
Customer Development
Customer development is a framework that helps organisations validate product ideas with real users to ensure they solve actual problems. Popularised by Steve Blank as a core pillar of the Lean Startup methodology, it operates on the principle that “there are no facts inside your building; go outside to test them”.
The concept is typically broken down into four distinct phases:
Customer discovery. Interviewing target users to understand their pain points and validate whether a genuine problem exists.
Customer validation. Testing your proposed solution (like a prototype or MVP) to confirm that users are willing to pay for it.
Customer creation. Scaling the product, launching marketing campaigns, and driving market demand to build a larger user base.
Company building. Transitioning from a search-focused startup to a scalable organisation with dedicated departments and corporate roles.
By prioritising direct feedback over internal assumptions, the approach helps businesses avoid building products that no one actually wants.
