Financing the development of the company can be displayed according to the phases

of development. They distinguish five phases, namely: 1. experimental or seed; 2.

start-up; 3. expansion; 4. recapitalization, and 5. buyout - selling a majority stake of
the company. In the experimental phase, entrepreneurs often use their own funds or
funds received from family and friends. In the initial phase of the development
possible sources of financing are as follows: loans, business angels, and venture
capital funds. In the expansion phase, the most common sources of funds are venture
capital funds and loan funds. At the buyout stage, private equity funds play an
important role.
Internet start-up companies can be divided into three basic types. The first type of the
start-up companies is called "The Automizer" whose characteristics are being focused
on customers, attracting customers who show interest in a product, fast performance,
common automatization processes that were previously performed manually, a large
market, struggle on the existing market, use of new technologies, strong technology-
oriented developers, etc. A subtype of this type of Start-up Company is called "The
Social Transformer" to which belong the start-ups that are characterized by the
existence of a critical mass, increased subscriber growth, and networking. These start-
ups typically create new ways to connect people and therefore need more capital.
Business people and teams meet more frequently in this type of start-up than in an IT-
oriented one. Another type of start-up companies is "The Integrator" which belongs to
start-ups characterized by high security, early profit, targeting small and medium-
sized enterprises as well as smaller markets, high probability that it will keep small
teams even after scaling (growth and expansion), etc. The third type is called "The
Challenger", characterized by start-up companies having very high sales, as well as
customer dependence, and also by complex and rigid markets, repeatable sales
processes, more time in relation to the first and second type, in need of more capital,
business-oriented teams. This type also has a large number of users and needs large
teams in case of start-up scaling, etc. Cassar (2004) stated in his research that the
financing and collection of investments at the initial stage of development, as well in
the expansion phase will depend on the characteristics and features of each type of
enterprise.

Traditional methods represent a logical sequence for start-up companies to start

raising money, and most start-up companies enter the entrepreneurial world in this
way. If the start-up project founders do not have their own financial resources and
cannot independently raise the start-up without external investments they usually turn
to the traditional financing sources such as (Kovai, 2011): bank loans, 3F (i.e.
Friends, Family and Fools), seed investments, business angels and venture capital
investments. Bank loans are probably one of the oldest formal financial sources for
many entrepreneurs and genuinely mean that an individual or company can take a
loan from one or more banking institutions. Most start-up companies seek to avoid
bank loans as they are usually related to complex procedures and are given based on
company`s or individual`s credit history and property. Since start-ups are usually
founded by young people who, in many cases do not own property, it is hard to get a
bank loan. stebroa and Bernhardt`s research (2003) shows a very high and positive
correlation between bank loan and sustainability of the start-up company.
Nevertheless, an unconditional correlation between bank loan and sustainability is
negative. The reason for this negative correlation is a growing number of start-up
companies that have received some other form of investment and at the same time
successfully exist in the market. A recent research on a very large data panel (9,715
start-up companies over the period 2007-2009) shows that high-tech start-ups are
unlikely to use bank loan and it is much harder for them to get one compared to the
start-up companies in other industries

3F - Friends, Family and Fools before they turn to external formal financing sources
(business angels, different funds or banks) entrepreneurs should try to collect their
initial funds from those people who are closest and familiar to them such as friends
and family (informal sources of financing) before they turn to external investments
such as business angels, various funds or banks (Krishnan, 2010). This is the "first
line" of investors and it is often called "Fools" because they invest their money into
start-up companies although all data shows that a great number of start-up companies
fail within the first three years of doing business. However, before turning to larger
and more powerful investors, it is important that the start-up companies receive initial
investments. This shows that the entrepreneur believes in his idea and that his family
and closest friends are also ready to take the risk and invest in their business idea.
Potential risks of such a financing are disagreements that may occur in the families or
between friends if the project fails in the end

Seed investments are also known as initial investments that help start-up companies
in expanding their business. Start-up companies engaged in technology development
with rapid growth potential due to the nature of their business often explore seed
investments in order to accelerate their growth and the development of their products
(Brezak Brkan, 2010). A very popular way of funding start-up companies and
receiving seed investments are private investors who want to invest their capital into
potentially successful businesses (Brezak Brkan, 2010). It is rather common that seed
investments are collected at the earliest stage of fundraising and they usually include
personal savings and funds from family members and friends
(smallbusiness.chron.com, 2013).
Business angels are investors who help entrepreneurs to realize their business ideas.
In addition, business angels help by sharing their knowledge, experience and financial
resources not only with start-ups but also with established businesses that already
have a track record but are temporarily in financial difficulties. The greatest value of
business angels is the so-called "smart funding" that includes providing skills,
expertise and business contacts, while most common reasons for investing are
acquisition of profit, encouraging entrepreneurship, business activity and creating
new value4 . Before investing in a company takes place, a contract defines the
relationship between the start-up
founder and the business angel as an investor. The contract generally contains an
investment value, the investment time period, the investment price and an exit
strategy from the company

Venture Capital investments or risk capital investments can come from individuals,
companies or funds that invest in individual companies in order to help their
development. Venture Capital investments are not the same as bank loans because
after investing Venture funds seek for a corresponding part of the ownership in the
company, while banks enter into a financing for an exactly determined time period
and with precisely defined interest rates. Venture Capital (VC) is not affected by
company`s cash flow and it does not create any costs, while bank loans are always
time-limited and during the entire repayment time they burden the company`s cash
flow.

Seedcamp is an investment program for companies in their early stage of

development. Apart for the initial capital, it offers an opportunity of mentoring start-
ups by experts in the field of seed investments (initial investments) that help start-up
companies to expand their business.

Start-up bootcamp is an accelerator program for start-up companies and it is being

held at various European locations several times per year (Copenhagen, Madrid,
Dublin, Amsterdam and London). It gathers a wide network of mentors and partners
which help selected start-up companies with the implementation of their idea.
Fundable is an online platform for gathering investments into small companies7 , i.e.
a form of collecting development funds that are used for different purposes and in
various amounts; it is a form of collecting donations for charities and interesting
projects in general
Be Prepared to Fund Yourself

If you are unwilling to investment your money or resources into your venture,
regardless of whether you actually do it, dont expect investors to put in their
money either.

Because they wont.

Investors are smart people who know what they are doing. They are
interested in ensuring whether you know what youre doing, which is why
they tend to prefer entrepreneurs who reflect some confidence with cash and
are not content with sweat equity.

Master Your Business Plan

The business plan that you present to investors makes or breaks the deal.
Therefore, you may want to go beyond superficialities and make it evident
that you know your plan inside out. Not only that; demonstrate that you have
chalked out a measurable strategy to accomplish your goals.

Furnish insightful market information about your competitors and target

audience while extrapolating on financial metrics and the overall vision of
your startup. In case your venture entails launching a product, talk about a
specific date by which you intend to launch it.

Going the extra mile while sharing your business plan can make that elusive
difference in the end.

Dont Rule Out Other Sources

These sources of money include RFPs, grants, loan programs, etc. While they
are easy to overlook and may not work out for all companies, it is not a good
idea to say NO without thinking through it. For example, it makes a lot of
sense to seek a federal grant for some industries such as renewable power or
biotech.

Moreover, many states are initiating grant programs that offer loans at
reasonable interest rates to promising business ideas.

Bootstrap

For a startup, every penny counts, literally. Thus, it makes sense to pay while
you earn to manage your financial and other resources better. Bootstrapping
at every stage to attain a good market validation can make it much easier to
raise funds.

Here are some ideas to save costs:

Defer capital purchases

Co-locate with other offices

Use existing equipment like computers

Sharing office services

Striking a mutually beneficially deal with suppliers

Eliminating travel expenses by teleconferencing

Approaching interns from local business management schools

Networking and More of It

Often, the best mean to get funding or to access people who can help you get
the start-up capital is to network. Remember, networking is an ongoing
process and MUST NOT stop anytime.

Meet with like-minded professionals on LinkedIn who may want to know

more about your startup and take it from there.

Sharing office space with those who can help you connect with investors is
another great networking strategy.

Startups must maximize every dollar, especially when additional investor

funding is contingent on early success. Heres how to applythe Lean Startup
principlesto your marketing efforts.

1. Experiment, measure, repeat.The Lean Startup model emphasizes

experimentation.Gina Rau, a marketing and brand strategist, says she
follows a four-step process for applying the Lean Startup principles to
marketing: test, learn, iterate, repeat.

Raus primary focus iscontent marketing. For her clients, that means testing
out blog posts, email marketing messages, tweets, and other short
missivesto identify what resonates with their target audiences. This way, they
avoid investing time and money in webinars, e-books, or even a full-blown
content strategy based on an untested group of keywords with no guarantee
of success.

Testing makes success far more likely, although its still possible to fail during
the full-out implementation phase due to any number of reasons, from a fluke
testing result to a shift in consumer attitudes. Thats why the constant
experimentation mindset is so important you must be prepared to abandon
ship and change up your strategy at any time you find its not working.The
ability to be flexible and iterate allows marketers to tweak the focus until they
hit the sweet spot, Rau says.

2. Take advantage of low-cost initiatives.Digital marketing is one of the

approaches thats most compatible with the Lean Startup model. Greg
Stallkamp, CEO of the regional charterairlineLakeshore Express, says digital
marketing trumps traditional forms of advertising in several ways:

Its measurable.Many digital marketing initiatives, such associal mediaand

pay-per-click advertising, offer real-time analytics.

Its affordable.In some cases, such as do-it-yourself search engine

optimization and content marketing, the only investment required in digital
marketing efforts is your own time.

Its easily modified.Social media, pay-per-click advertising, and even re-

targeting campaigns can be changed within a matter of hours if youre not
getting the desired results.

In terms of timing, the effectiveness of a campaign can be measured within

the first few days. While this approach may seem premature, the first 10 to 15
percent of the audience is usually a good bellwether for the general market
you are going to reach, Stallkamp says. If it is resonating with that initial
crowd, weve found that it will be successful with the general population. If
not, the effort should be quickly abandoned.

3. Know when its time to switch gears.Theres no magic formula to figuring

out when its time to ditch a marketing tactic and move on. But Dmitri
Eroshenko, founder and CEO ofRelenta, a maker of CRM software, says you
should experiment just long enough to know whether its working or not.
Its a hunch, he says. The sense of timing cannot be taught or calculated. It
can be cultivated by a large number or experimental cycles. When you cant
measure, listen to your gut and your customers.Customer reactionsare
valuable predictors of success.

4. Navigate the waves of change.Youve heard the adage Failing to plan is

planning to fail. But theLean Startupasks you to throw planning out the
window to some extent. Planning in business is so 90s, Eroshenko says.
Have a goal, yes. Develop the means, yes. Then stay in the moment and do
what youve planned for the day or a week, tops. Like in [a] battle, the plan
goes kaput when the first shot is fired.

In other words, being in lean startup-marketing mode means you have to be

on your toes at all times. When youre always ready to tackle the next big
idea and adapt to change, youre better prepared to handle the ups and
downs that come with constant experimentation and to stretch your
marketing budget to the max.

1. Choosing a Market
Its easy for startup founders to believe the whole world will love their
products. After all, founders eat, sleep and breathe their products. The reality
is that only a small portion of the population is interested in your product.

If you try to market your startup to everyone, you waste both time and money.
The key is to identify a niche target market and go after market share
aggressively.

How do you choose a market? There are four main factors to consider:
 1. Market Size Are you targeting a regional demographic? Male?
Children? Know exactly how many potential customers are in your
target market.
2. Market Wealth Does this market have the money to spend on your
product?
3. Market Competition Is the market saturated? As in, are their many
competitors?
4. Value Proposition Is your value proposition unique enough to cut thru
the noise?
2. Defining Keywords
With a clearly defined market, you can begin building a keyword list. Youll
use the keyword list primarily for blogging, social media and your main
marketing site. Essentially, you want to build a list of words or phrases that
are highly relevant to your brand. Ask yourself this: What would someone
type into Google to find your startups website?

Start with a core keyword list. This is a list of three to five keywords that
completely summarize what your startup does. For example,Onboardlys
core keyword list is: customer acquisition, content marketing and startup PR.
Your core keyword list should be based on your value proposition. What is it
that youre offering customers?

Tip:Your core keywords make excellent blog categories.

Now youll want to expand your core keyword list to include secondary
keywords. Secondary keywords are more specific. Take content marketing,
the core keyword from earlier, for example. Secondary keywords might
include: corporate blogging, blogging best practices, email marketing how to,
etc.
Use free tools to find the keywords already sending traffic to your website.
Then run your core keywords throughGoogles Keyword ToolandUber
Suggest. The best keywords found through those tools will be identified
bylow competition and high traffic. In other words, a lot of people are
searching for them, but few results are displayed.

3. Defining Success
Success is different for every startup. Maybe success is 500 new signups per
month for Startup A while Startup B thinks success is $50,000 in revenue per
month. Whatever your idea of success may be, define it early and define it
rigidly.Write it down or send it to the entire team. Just make sure
everyone youre working with knows your definition of success and is
prepared to work towards it.

Be sure to stay consistent. It doesnt matter if youre defining success by

signups, revenue, profit or anything else you can think of. What does matter
is that its tied to real growth (no vanity successes) and that its measured the
same way each month. For example, dont define success as 500 new
signups one month and then $50,000 in revenue the next. Pick one definition
and commit to it.

4. Setting Core Metrics

Just as you shouldnt indulge vanity success, you shouldnt indulge vanity
metrics.Eric Ries refersto working with vanity metrics as playing in success
theatre. While vanity metrics are appealing, if only to your ego, they are
useless. They are not tied to real growth, meaning you wont know if your
startup is a roaring success or total flop until its far too late.

Be sure your core metrics are accurately measurable and specific. For
example, lets assume youve defined success as 500 new signups per
month. You might measure the conversion rate of three calls to sign up. The
idea is to have a few highly valuable metrics based on actions taken
throughout the customer acquisition funnel (e.g. signups, newsletter
subscriptions, eBook downloads). Dont try to measure everything. Focus on
the key indicators of success.

Tip:Record baseline metrics right away so you can easily determine your
growth.

5. Estimating a Conversion Rate

The next step is to assign conversion rates and values. Consider newsletter
signups, for example. 100 new newsletter signups per month could be
incredible growth if your conversion rate is 20%. That is, if 20% of your
newsletter subscribers become paying customers. If your conversion rate is
closer to 1%, those 100 newsletter signups might be insignificant.

Estimate (based on historical data) your lead conversion rate. Now do the
same to estimate the lifetime value of a customer. If you know how many of
your leads convert and how much those conversions generate for your
startup, you can assign values to goal completions like newsletter signups.
$2,500 per month from your newsletter is a lot more indicative of success
than 100 new newsletter signups.

6. Setting a Budget
At the end of the day, it all comes down to the money. How much can you
afford to spend on your startup marketing strategy? Remember that
whileinbound marketing leads cost 61% lessthan outbound marketing leads,
they are not free. Set a budget early in the game and accept that limitation.

57% of startup marketing managers are not basing theirmarketing

budgetson any ROI analysis.
More importantly, carefully plan how you intend to divide that budget. Maybe
your blog has been your most powerful tool to date and you want to invest
40% of the budget on it. Or maybe you want to spend 35% of the budget to
develop a new eBook or online course. Just be sure you have the logistics
settled before you start spending (or you might just lose your hat).

Social media is one of themost popularways to promote your content and

reach influencers. Since a great content promotion plan brings potential
customers to your website and influencing the influencer can generate
thousands of new leads, social media is invaluable to startups. Of course,
there are a few tricks to get the most out of it.

PR:
Whens the right time to tell people about your startup? Is there value in
getting early coverage on industry blogs? What message is going to resonate
with writers? How can you maximize the press coverage you do get and
translate it into sales? Should I hire a PR firm to help me out?

The good news is it doesnt need to be such a mystery. Fundamentally, it all

boils down to this:

What to say.
When to say it.
Who to say it to.
1. Craft Meaningful Positioning Statements
Much like a great elevator pitch should lie in the mind of any entrepreneur, a
series of engaging positioning statements is vital. And while constructing two
sentences may seem easy, crafting effective statements is quite the
challenge.
Start by identifying what the product is and how it will affect others. Think of
the product as the solution created to solve a worldwide problem. This is an
important measure to remember when marketing and selling the product.
Dont think of it as selling a product. Think of it as solving a problem. Lastly,
who will care about your product?

What is your product?

How will it affect others?
Who will care?
Positioning statements combine these three key factors into two sentences
that are used to market the product and pitch it to the media. To ensure
success, it is important that these statements not only articulate what the
product is capable of, but that they clearly describe its value proposition as
well.

2. Define Your Startup Sensitivities

Keep your friends close and your enemies closer. Sun-tzu

By identifying competitors strengths and weaknesses, one can better

understand how to market ones product as better. Why is their solution to the
universal problem their product solves better than those before it?

Be creative. Use spreadsheets, visual imagery or lists. Harness all of the

information available on the product and its competitors, and study it. Look at
each closely and determine strengths and weaknesses. If there are others
who have an edge, then look at an angle where they are lacking.

Creating the next social network for penguins might be your ultimate
passion, but be conscious of the fact that youve got a remarkably short span
of time to engage writers when pitching them. Focus on the one (or two)
strongest aspects of your value proposition (what your customers love about
you most) and lean heavily on those hooks to gauge media interest.

3. Identifying the Right Writers for a Media List

The importance of identifying who will care about the product is not only
relevant in terms of crafting positioning statements, but in identifying the right
writers for a media list as well. Any media outlet employs a number of
qualified writers capable of telling the story, but you should be careful to pitch
only writers who will be the best fit for your product. Though time-consuming,
this simple step should never be overlooked.

Determine key media outlets of interest then search for stories with similar
themes or relevance to your own. Look at the writers whove covered those
stories.

Always pitch the right writer for your story. For example, if your product is
exclusively for iPhone, dont pitch a journalist who only reports on Android
products.

Build your network before you need them. ~Jeremiah Owyang, Partner and
Industry Analyst at Altimeter Group

Once you have identified the writers to connect with, utilize social media to
engage with them. Build relationships and ask of nothing. Set up private
Twitter lists of the writers of interest, and actively respond to them and
retweet their posts.Make friends with them!

Relationships with writers are not always easy to build, but the effort to
achieve them can mean great story coverage and the opportunity to be
covered again in the future. Even if you are not in a position to leverage
journalists or writers, you should still be connecting and making those
relationships. In due time, they will always benefit you and your startup.

4. Creating a Press Kit

The key to a successful media launch is rooted deep within a killer media kit.
Begin by identifying the items needed:

Media Advisory
Logos & Screenshots
Founder Bios & Photos
A media advisory should include all major points that are important to the
product, the company and its success. It should include how the product is
changing the world and why it is important. More importantly, it should be
written and directed towards who will care. The pitch should be included in
the headline and/or the first paragraph of the release. This is an excellent
opportunity to use your positioning statements from earlier.

Include brief and necessary background information on the company and its
founders. Enough to offer a taste of the team behind the product. By offering
quick stats at the end of the media advisory, writers are given a brief
snapshot of the company. Include:

Company Name
Website
Twitter Handle(s)
CEO & Co-Founders
Launch Date (if applicable)
Fees (if applicable)
Be conscious of time restrictions or sensitivities. Is there an embargo present
or a set launch date and time?
Remember, most writers will merely skim a media advisory. By ensuring that
a media advisory is tight and effective, youll increase the chances of story
coverage.

Always offer the media options to use as supplementary visuals to

accompany the story. Include company logo(s) and relevant screenshots of
the product. Anything that offers a glimpse of features and capabilities is
appreciated.

Provide a brief biography of each founder and respective photos. What is the
driving force behind the company and how have their beliefs shaped it to
become the success it is now? Include any tidbits of information that writers
could use.

An important takeaway is that your press kit can be your ultimate weapon in
securing great coverage. We recommend using a
personalizedDropboxfolder orGoogle Drivefor each journalist you approach
so that you can easily share by inviting them to the folder. Itll also confirm
when they join or view the folder confirming interest and hopefully that a
story is about to be written.

5. Reaching Out to Journalists

Engagement with journalists prior to reaching out is key. When interacting
with writers beforehand, you should request to send information on a story
that may interest them. As previously mentioned, by building a relationship
first, this request doesnt come off as insincere. Writers may still decline, but
by continuing to build on the relationship created, you could potentially
convince them to accept in the future.

Content Creation
With a blog setup and your PR in full swing, its time to kick content creation
into high-gear. Managing a blog and other forms of content can seem
daunting, especially to not-so-great writers. Fortunately, four little steps will
give startups the information they need to get serious.

1. Creating a Topic List

Youve got a good looking blog designed and a great content promotion
strategy, but somethings missing. Oh right! The content.

Before you dive right in and start writing, create a topic list. The perfect topic
list is based on your core keywords for SEO purposes. Using your core
keywords on your blog builds your startups credibility with search engines.
Start by brainstorming ten topic ideas around each of your core keywords.
Where possible, use your keywords in the titles, but not where it feels
unnatural.

With between thirty and fifty topics, you can start thinking about writing. But
first, put all of these ideas into a calendar. When will each be published? Who
will write them? Are any of them in progress? A blog calendar helps you track
your topics from conception to completion. Gantt charts are often shrugged
off, but for the purpose of properly managing an editorial schedule, they are
extremely helpful. Check out the multitude of templates and spreadsheets
available for free online like:90-day calendar, a Google Doc template, or
thesefree guidesfrom Bob Angus.

Tip:Be sure to add descriptions to your topic ideas. You might not remember
your main points when you go to write the post three months from now.

2. Knowing What Types of Content to Publish

There are four main types of content to be published (excluding blog content).
Like social networks, each one has unique advantages and disadvantages.
Consider your options carefully, always keeping your target market in mind.
And remember:dont try to do a little bit of everything right away.

eBook/Guides:Information products are huge. Offer a free eBook in

exchange for a name and email address. Just like that, you have a new
lead. You know theyre interested in your product because they were
interested in the eBook and now you have their contact information.
Now, follow up. Ask their opinion of the eBook and open the door for
conversation.
Information products have the best margins. If you can get them into a
subscription, then youll have monthly reoccurring revenue. ~Dan Martell,
Founder of Clarity

Webinar:Hearing your voice and engaging with you live gives your
customers (and potential customers) a sense of
ease.Webinarscapitalize on this! Cross promote your webinar on your
blog. Also, have someone on your team live tweet during the webinar
using a custom #hashtag. At the end of the webinar, after providing real
value to the attendees, post your contact information. Its a simple,
interactive way to generate new leads.
Newsletter:Email marketing is far from dead, despite what you might
have read. Make subscribing to your newsletter quick and easy. Dont
go overboard with your email blasts though because if you overuse the
connection, youll lose it. For the same reason, youll want to ensure
every newsletter offers real value and is not just an excuse to push a
new product. Try offering a discount, a promotion, industry news, or a
contest whatever!
Video:If a picture is worth a thousand words, imagine how much a
video is worth. Keep it simple by having an explainer video created or
by shooting an introduction video. Put the video on your startups
 homepage and/or blog. You might be camera shy, but statistics show
that most people would rather watch than read.
3. Guest Blogging
Guest blogging is vital for startups. First of all, guest posting on a popular
blog is a great way to build your reputation in the space. Second, having
someone influential guest blog on your startups blog is an easy way to drive
traffic.

Start by looking for outgoingguest blogging opportunitieson the top blogs

that are writing for your target market. Most blogs will accept guest posts
openly, so look for a writers page or contributors page. If youre having
trouble, track down the blog owner or editor on social media. Ask to email him
a first draft of your blog post idea. Just make sure its high-quality and 100%
original.

Once youve built a reputation, it will be easier to find influencers willing to

contribute to your startups blog. Create a writers page of your own or reach
out to select influencers individually via social media or email. When the
guest post is published, be sure to ping the contributor so she can promote
the post to her whole network.

4. Capturing Emails
Email subscription has been mentioned a few times already. Capturing emails
can be divided into three categories: email submits, newsletter subscriptions
and blog subscriptions. Email submits could come from eBook downloads or
similar offers. Newsletter subscriptions are just that: people interested in
reading regular updates and content from your startup. Blog subscriptions are
straightforward as well.
Email submits and newsletter subscriptions are best managed by tools
likeMailChimp, which allows you to easily send well-designed custom emails
to leads. Blog subscriptions, on the other hand, are best managed by tools
likeFeedburner, which allows you to automatically notify leads when you
published new blog content.

Test and Iterate

By now, your marketing strategy is in full motion. Of course, no one gets it

perfect on the first try and theres always room for improvement. Thats where
testing and iteration comes into play. Remember back to the core metrics and
definition of success from earlier. Keep those two things in mind here.

1. Setting Up Analytics Tools

The key to measuring success is a great analytics tool. If you need a no-frills
solution, check out Google Analytics. Itll give you the basics and, over time,
you will learn to master the somewhat complicated behind-the-scenes
mechanics of it. If you want something more user-friendly and advanced,
tools likeKISSmetricsare always available.

Your experience setting up your analytics tool will be different depending on

the solution you choose. However, all analytics tools will have you insert a
snippet of code on your webpages, which allows them to track visits and
events. Be sure to look for analytics tools that are committed to preserving
fast load times, likeMeasurely. Some codes leave visitors waiting for the
website to load, which can increase bounce rate dramatically.

2. Measuring Against Benchmarks

Earlier, you recorded your baseline metrics, which youll use as benchmarks
going forward. Ideally, youre measuring week over week and month over
month growth. If you make the mistake of waiting for solely month over month
data, you could be too late. Each week, compare your core metrics to the
week before. Some give and take is normal. Each month, do the same. Here,
you should look for consistent growth.

If you cant measure it, you cant manage it. ~Peter Drucker, Management
Consultant

When you see significant growth or decline, be sure to attribute it to some

event(s). For example, a tweet that went viral or a newsletter that was a huge
disaster. Isolate what you did differently and either replicate it or avoid it going
forward. Dont just measure your data act on it!

3. Brainstorming Creative New Ideas

While tweaking what youre already doing is great, coming up with brand new
ideas is even better. Its not enough to only iterate and optimize what youve
been doing. The most successful startups are always trying creative new
things. Maybe a social contest, a funny video, a new online course, a clever
PR angle the list is endless.

Many of your new and innovative ideas can easily fail, but the few that
succeed will be well worth it. Never get complacent! As a startup, the name of
the game is agility, flexibility and thinking forward.

Best Practices

What are the industry experts saying? What are the top startups doing? Here
are three startup marketing best practices.

1. Sell the Solution

Too many startups focus on the problem instead of the solution. It makes
sense, of course. Founders design a solution for the problem, which makes
the problem a founders first love. Unfortunately, its the solution that appeals
to potential customers. Realistically, there are hundreds of products that could
solve the problem of, for example, low productivity. What makes your solution
the perfect choice?

2. Have a Compelling Story

Storytelling is a powerful sales tool. Just askSeth Godin! If you have a
compelling story, use it. How did you come up with your solution? Did you
struggle in the beginning? Are you still struggling? Use your story to
differentiate yourself from the competition. Startup marketing is all about the
customer and establishing an authentic relationship. Having a relatable story
to tell is a fast-track.

3. Use All Your Resources

Your team is arguably one of your biggest marketing tools. Their passion for
what your startup is doing is called evangelism. Use it to your advantage.
Send them out into the world excited to tell your startups story to anyone they
meet. But dont stop there. Ride the buzz from a trending topic by writing a
blog post on it or creating a video about it. Run a contest around a major
holiday to drum up some hype. Be sure youre not overlooking any marketing
resources, big or small.

Conclusion

Startup marketing is a complex science. Some great ideas have failed due to
a lack of media attention and customer awareness. Others have gone under
thanks to a poor strategy. Still, other great ideas have spiraled to billion dollar
fame! Well, founders everywhere can stop searching for that elusive secret to
startup marketing success. Its simply the sweet spot between content
marketing and PR.
About the Author:Rene Warren is the Co-Founder ofOnboardly, a
company focused on helping funded technology startups be more visible and
acquire more customers. They do this through Content Marketing, startup PR
and Social Media. Subscribe to their bloghere!

1.4. Different types of startups and markets

Before we delve into the basic concepts of lean startups, we need to
emphasize the factthat not all startups are the same, and neither are
the markets that they address, which means that lean launch methods
arent suitable for all newly created companies.

The type of market and startup changes the suitability of using different
business tools and approaches for company launch, making it necessary
for the business team to first exactly define which market type they are
addressing and which company type they wish to build.

1.4.1. Five market types

Steve Blank divides markets, addressed by startups, into the following five
types:

1. New product for an existing market

2. New product for a completely new market
3. Resegmentation of the existing market with a low-price product
4. Resegmentation of the existing market with a niche entrance
5. Cloning a business model that is successful in another country
When a startup launches a product to an already known existing market,
traditional planning methods and preparing a business plan work just fine.
The problem appears when a startup targets a new or resegmented
market,where customers, channels and markets arent well-known
yet or are an unknown.

And most startups with a potential for rapid growth address such a market.
Addressing a new market means that a startups solution will enable the
customers to do something that couldnt be done by now, and that the
startup wishes to create something completely new, yet unknown, meaning
that there are that much more unknowns and risks, connected to launching
a new solution.

2. Basics of the lean startup concept

Lean startup(wiki) is a term introduced byEric Riesand similarly to what
the vehicle production system Toyota does, it connects customer
development, methods of agile product development, and lean business
practices.

In this, an important starting point is Ries' definition of a lean startup,

which says that a lean startup is nothing other thanan institution of
people, organized with the purpose of making a new product or
service in incredibly uncertain circumstances.

The definition clearly shows that the lean startup includes the launch of a
new product in uncertain circumstances, which means that lean startup
methodologies are suitable for newly created companies as well as for big
companies, and we shouldn't forget about government institutions, non-
profit organizations and other examples where new products or services
are developed in such uncertain circumstances.

The lean startup methodology is based on the fact thata business plan is
nothing but a collection of assumptions.The document includes only
assumptions about the strategy that the company should probably follow to
achieve its vision.

The main goal of the business team in lean startup is thus to first organize
its activities in a way to check these assumptions without losing the
company's vision with it.

Startups do not exist solely for the purpose of creating new products,
becoming profitable and taking care of their customers, rather their
mission is tolearn how to build a long-term sustainable
businessaround their idea.

Lean startup is a temporary form of an organization developed with the

purpose of using suitable systematic learning about the market to find a
repeatable and scalable business model with the potential for rapid
growth.
Achieving a repeatable and scalable business model means that a startup
has a developed sales team with a clearly defined price policy that
regularly sells the solution to a known segment of customers.

A long-term sustainable model with the potential for rapid growth means
thata startup can obtain a large number of customers, not only some,
and that every additional customer increases the profitability of the
company. The path to this point isnt easy and simple, and it demands a lot
of learning.

This means that the business model in the lean startup is still a complete
unknown and it has to be discovered. We can consequently differentiate
between two types of activities.

The first type of activities focuses on finding a suitable business model,

which is the lean startups task, and the second type on implementing an
already discovered business model, wherein traditional methods of
business planning, organizing and leading the company are an option (for
established companies).

In the early stages of company growth, focusing on implementation based

on wrong assumptions is what usually leads to a quick collapse of a newly
created company.

This is why it is necessary tofocus on learning and discovering insights

into customers and the marketthrough a carefully designed process that
clearly shows what exactly needs to be implemented for the company to
become successful and profitable.
Looking for the right business model is divided intoseveral stages of the
process called customer developmentand includes:

1. Customer discovery
2. Customer validation
3. Customer creation
4. A transition from a lean startup to a mature company that focuses on
growing and implementing an already discovered business model.
In the stage of searching, it is necessary tomaintain complete flexibility
and high tolerance for failure, in the foreground are mostly learning
about the market and customers.

Three stages of a lean startup

Every startup goes through three exactly defined stages, namely these are:

1. stage of the problem/solution fit,

2. stage of product/market fit, and
3. growth stage.
The second stage, so the stage ofthe product/market fit, is the most
important milestone for every startup.Reaching this milestone strongly
affects the strategy and method of leading the company.

This is why it makes sense for the startup to divide building the company
into a period before product/market fit and period after product/market
fit.

In the stage before product/market fit, its important for a startup to

focus its activities on learning and pivoting the business model canvas.
After the completed product/market fit stage, it makes sense for the
startup to start focusing mostly on growth of the company and
optimization of business processes.

The following are the three stages of the startup, amongst which the
second stage is the first important milestone:
 Problem/solution fit:The first stage of a startup is called the
problem/solution fit. In this stage, the startup decides whether it is
trying to solve a problem thats even worth solving. By doing this,
the startup avoids the trap of spending months or even years
developing something that nobody wants. Even though business
ideas are cheap and there are a lot of them, their implementation can
be rather expensive. Thats why concrete facts need to be chosen,
showing that the right problem is being solved and that the business
idea is reasonable. In the problem/solution fit stage, the startup
should have a clear answer to three questions, namely whether the
solution is something that customers need and want, are they
prepared to pay for the solution and, of course, is the problem
technically solvable. In this stage, the startup makes the minimum
viable product.
Product/market fit:The second stage is called product/market fit, in
which the startup tests the reliability of the product and the
attractiveness of the product for sales. In this stage, the startup goes
from testing different business models to a plan that works, meaning
that the startup is regularly acquiring customers that make repeated
purchases and are prepared to pay for the solution regularly. In this
stage, the lean startup thoroughly knows the key functionalities of the
product that the market is prepared to pay for and that solve key
problems for customers.
Growth:The third stage is the stage of increasing the scope of
business operations or the so-called growth. In this stage, the startup
focuses its attention on increasing the scope of the business model.
The lean startup increases the scope of the business model by using
suitable mechanisms of marketing, sales and sales channels, and by
choosing a suitable engine of growth.
The end of the problem/solution fit can be called business idea
confirmation, the end of the product/market fit can be called value
hypothesisconfirmation.

And for rapid growth, confirmation of marketing, sales and engines of

growth are needed (growth hypothesis). In this, it is crucial thatthe lean
startup systematically establishes the collection of feedback
(metrics)from the market or customers in every stage.
Vision of the lean startup
Even though the lean startup represents a new business methodology and
approach,at the beginning the business team (or startup team) needs a
big vision(as it is written in the business plan) that defines any type of a
blooming business that entrepreneurs wish to build.

To achieve that vision, the startup team needs a starting vision that
includes a business model (devised on a lean or business model canvas),
plan of product development, strategic look into potential partners and
competition, and a rough idea of who the potential customers could be.

Examples of questions that help to define company's vision:

How will the company contribute to the industry?

How will the company change people lives?
How big could the company become?
How big the teamwants the company to become?
How many products there will be?
What will be the core competence of the company?
Building a product is the final result of the vision and strategy. But in
doing this, the startup team constantly supplements, upgrades and changes
the product through optimization.

The startup team changes the strategy with a pivot if that is needed based
on the feedback by customers and market, but the vision of the team rarely
changes significantly or only parts of it change.

The lean startups vision stays more or less the same final goal, but the
path to it is flexible. In some way, the task of the startup team is tofind
synthesis between the business vision and what customers are
prepared to buy.

So the goal of the lean startup is to use scientifically devised experiments

to discover and learn how to build a long-term business around the vision
of the business team. Considering that the vision of the lean startup is very
viable, it is often called theminimum viable vision.
On the one hand, the business team must always have a pragmatic and
practical approach rooted in the reality of metrics, but on the other hand it
needs a vision that is exciting, daring, unshakable and attractive for
founders.
The minimum viable vision is what provides an exciting explanation of
why the lean startup will become the dominant and disruptive player on
the market. It often includes a lot more than only empty illusions of the
business team.

The minimum viable vision reflects concrete exciting facts, for example
that a new business ecosystem is being built around the company or that
there are several options for monetizing the idea, marginal costs that lean
towards zero, trends support the vision, it isnt hard to set a pricing
strategy, and otherconcrete facts that show a business opportunity.

After defining the vision and consequently the type of company and the
type of market, there is the step of writing down hypotheses (assumptions)
in the lean canvas, followed by verifying hypotheses on the market with
actual customers, first by focusing on the size of the problem and
suitability of the solution.

Start with why

The big vision must also includea clear answer to why the vision is
importantto founders. According to Simon Sinek, every great company
must start with why.

The general idea is that a startup teamtofind powerful why that gives
their worka deeper meaningand makes everything else secondary. A
powerful why gets teammotivated and enthusiastic, and an enthusiastic
teamis always personally invested and stays like that much longer.

The more clearly an organization describes and communicates their why,

the more people will like it, and that goes for all stakeholders, especially
customers. The truth is that people dont buy what people make,they buy
things for why people make them.
The founders should have a clear answer on the questions like:

1. Why are we making this?

2. Why doesnt this exist already?
3. Why us?
4. Why now?
5. Why do people need this product?
6. Why will people want this product?
7. Why will people pay for this?
8. Why will this make people do/feel/be, what they want to do/feel/be?
9. Why would people buy from our competitors?
10. Why will people cross the street to buy from us?
11. Why does this idea matter?

Lean canvas and business model canvas

An alternative method of business planning inside the concept of the lean
startup, enabling the team toregularly verify assumptions and quickly
adapt the business idea to the market, is called using a business model
or lean canvas.

Because the business model needs to be turned on its head several times, it
makes a lot more sense to use the lean canvas or business model canvas
instead of traditional business planning. The use of the lean canvas is what
enables the transition from a static business plan into dynamic adjustment
of the business model.

The main idea behind using a canvas instead of a business plan is the
option ofdisplaying the business model in a portable single-page
schematic.Two main canvases are most in use, namely the business model
canvas, designed by Alexander Osterwalder in the bookBusiness Model
Generation, and the lean canvas, which Ash Maurya derived from the
business model canvas.

By using the canvas, the startup team can very quickly and efficiently find
potential business models, set priorities, and follow continuous learning
based on thebuild measure learnfeedback cycle.
The business model canvas allows the business team to avoid many
weaknesses of business planning, such as time-consuming long texts,
unclearly written assumptions, long-term planning etc.

The key advantages of using the canvas instead of the business plan are
mostly the following:

Speed Compared to the business plan, which the startup team can
spend several months writing, it is possible to sketch several business
models on the canvas in a single afternoon.
Succinctness The way that the canvas is designed allows the
startup team to focus on the key elements of business operations and
extract the essence of its product. Succinctness is achieved with clear
visualization of the business model by using a frame (in lean
manufacturing, this visualization is known as the Kanban
philosophy).
Portability The business model thats presented on one page in the
scope of the canvas is a lot easier to share with other stakeholders of
the lean startup. That means that more people read it and that the
frame is easier to update than a business plan.
The lean or business model canvas dont only represent a record of the
currently planned business model of the company in a certain moment.
Using them also enables the team tomonitor the progress in finding a
working business model, and to keep an eye on the state of confirmation
or rejection of assumptions.

This is why its incredibly important that the team of the lean startup
refreshes the lean or business model canvas at least weekly. It is necessary
to regularly write down assumptions, confirm or reject them, write down
new assumptions, and clearly show the adaptation of the strategy.

Business model canvas

Thebusiness model canvaswas devised by Alexander Osterwalder. Using
the frame allows you to present how the company will generate money
with a diagram structure and clear visualization.
The diagram structure, which can be used by all types of organizations for
writing down key hypotheses and rapidly designing business models,
including lean startups, encompasses nine frames:

Value proposition Value proposition defines the way in which the

organization solves the problem and satisfies customers' needs. Value
proposition is what defines the reason why customers decide to buy
from a specific company.
Customer segments The organization offers its products or
services to one or more customer segments. In this segment, there is
the important decision to be made about which segments take
priority and which are not important.
Sales channel Customers access the value proposition through
communication, distribution and sales channels. This part of the
business model includes all activities, from increasing the awareness
about the product on the market to planned use of different
distribution channels.
Customer relationships An organization has to implement certain
activities with which it establishes and maintains customer
relationships. This includes activities like retaining customers, after-
sales activities, additional sales, and other activities for building a
strong customer relationship.
Revenue streams Successful value proposition for potential
customers through sales channels is seen in successfully created
revenue streams. Revenue streams can be one-time, in case there is a
single purchase, or repeatable, if the customer makes a purchase with
the provider several times.
Key resources The part of canvas that includes key resources deals
with assumptions about which resources are vital for serving
customers and other business activities. Key resources can be
physical resources (such as machines, facilities), they can be
intellectual property (such as patents, brands etc.), and amongst them
are also human resources and the need for capital resources.
Key activities The organization achieves all desired goals through
implementing a certain number of key activities that lead to the goal
step-by-step. Key activities have to be defined mostly on the basis of
all other parts of the business model.
 Key partners Some of the activities are carried out by other
partners or the organization leases certain resources and services on
the market, meaning it needs reliable key partners. Key partners
mostly include strategic partners, subcontractors, suppliers and joint
investments.
Cost structure Business operations of an organization create costs
that need to be thoroughly defined and compared to the revenue
streams. With costs, it is important to define fixed and variable costs
as well as the potential positive impact of the economies of scale.

The purpose of the lean frame is that it helps the startupdissect the
business model to nine components that can be systematically tested,
starting with the most and ending with the least risky one. An important
fact is that not only is the startups product a product for the market, but
rather the entire business model is a product for the market.

The nine components of the lean canvas are:

Problem The startup team lists the three biggest problems that
customers face and that need to be solved for the chosen customer
segment. The problems can be imagined as the tasks and effort that
the customer should make or does have to make without the solution.
Its also important that under problems, the startup team writes how
the customers are currently solving them.
Solution In the solution segment of the canvas, the startup team
writes every thought on what is the easiest way to start solving every
problem written down.
Unique value proposition The field of unique value proposition
defines how the startups solution is different from the competition
and why it is worth the attention. In the starting stages of building the
company, grabbing the attention of the customer is highlighted more
than sales. By defining the unique value proposition, the startup
extracts the essence of the product and has to describe it in a few
words that clearly show how it will attract customers. A well-defined
unfair advantage answers two key questions, namely what the
startups product is and who the product customer is.
 Unfair advantage An unfair advantage is defined as something
that can't easily be copied by the competition. Unfair advantages can
include everything from internal information and personal authority
to the community and existing customers. Usually certain unfair
advantages start as the basic values of the company and become the
company's differentiators, so what the customers use to differ the
company from the competition.
Channels Channels are paths to customers. In the learning stage, it
makes sense for the startup to use all channels to potential customers
and find those that lead to a sufficient number of customers as soon
as possible. In this, the startup needs to realize that free channels
don't exist. Even those that seem free (social media, search
enginesetc.), have costs in the form of human capital. It is also
sensible for the startup to give priority to inbound channels, namely
those where customers find you on their own (the so-called pull
messaging), rather than outbound channels. Examples of inbound
channels areblogs, e-books etc. It is also advisable that at the
beginning, the startup focuses on channels that are as direct as
possible, because that enables maximum learning.
Segments In the field of segments, the startup recognizes all
potential users and puts them into segments (groups that are as
homogenous as possible). Inside every segment, it is crucial that a
startup creates a picture of a idealcustomer (personas), whereby it
makes sense to follow the goal of finding the early adopters, not
aiming at all customers and the mainstream market from the very
beginning.
Key metrics In the canvas, the startup defines its key metrics.
These include certain key numbers based on which the startup can
measure progress and how well it is doing. In this, the recommended
model is to use Dave McClure's pirate metrics, which include the
whole picture from raising awareness of the brand and creating
demand to recommendations.
Revenue streams Revenue streams, together with the cost
structure, help the startup evaluate the lucrativeness of the idea. In
this, it is important that the startup doesn't think about long-term
three- to five-year predictions, but more about the short term. It is
also incredibly important that the startup thinks about potential
streams from the beginning, because the way of pricing is an
 important part of the product. There is a rule (with certain
exceptions) that if the entrepreneur is intending to charge for the
product, they should do so from the first day. Beside this, the price
determines which customer segment the company is in, and payment
is the first form of validating the business idea. Revenue streams,
pricing strategy, and earliest possible charging are thus important
aspects of the business model.
Cost structure With costs, it's important that the startup knows the
necessary amount of capital needed to launch the minimum viable
product. Afterwards, it constantly renews and supplements this
amount based on the feedback from the market. At the beginning,
this amount of capital includes covering the costs for doing 30 50
interviews with customers, and for creating and launching the
minimum viable product. The startup simply lists all operative costs
that will grow until product launch.

Recommended steps in making a lean or business model

canvas
It is recommendable that the startup (entrepreneur)starts thinking about
who the potential customers for their product could be, and make a
list. In this, they must strictly distinguish between customers (those who
pay) and product users.

In the next step, its advisable that they divide wide segments of users into
smaller ones, because in entrepreneurship there is the general rule that it
isnt possible to create, design and position a product for everyone. When
the startup is preparing a list of potential customers, it has to keep very
specific customers in mind.

In the next step, the startup starts preparing the lean (or business model)
canvas. It is recommendable to start with one canvas, with two to three
customer segments that are most promising, and using different colours
and labels for different segments in the same canvas.
During preparation, it is important that the startup sketches the canvas in
one go (in less than 15 minutes), becausethe point of the first sketch is
for the startup to write a short summary of its current thoughts and
assumptions.

Theres nothing wrong with a few fields staying empty, its more important
that the startup is succinct with the first sketch, thinks about the present,
focuses on the customers, then goes out of the building as soon as possible
to test its model with other stakeholders.

When the startup team goes out of the building and starts doing interviews,
itupgrades the lean canvas based on the feedback.

Validated learning
When customers use a product, they create feedback and with it
important information.Feedback can be qualitative as well as
quantitative.

Information from the first customers is significantly more important for a

startup than an investment, victories at various competitions or media
releases, because they are the input element for further development of
product functionalities and ranking the importance of business ideas.