Featured Story September-October 2015
Steps needed to establish a Start-Up

by Ms. Niki Gotsi Koroni, Doctoral Candidate


The financial crisis that began in late 2009 led to a dramatic increase of public debt in Greece. The economy has shrunk and the unemployment rate was the highest in Europe for the month of June 2015 with 25.6% of its potential workforce unemployed as showed the latest figures released by Eurostat.

In spite of the fact that Greece confronts more budget austerity and wrenching regulatory changes, some Greek entrepreneurs are trying to prosper, giving a slight hope for the economy and mainly for the youth. There are young people who try to create their own business, mainly start-ups, regardless of all the barriers. Start-ups play a critical role in innovation, contribute to job creation and they are very important in national economies as a dynamic and fast growing sector. These firms conduct often more productive research than larger firms and thus they play a unique role in innovative process. They have a critical role in the economic development by exploring and innovating in new technological fields. Schumpeter was one of the first researchers who explore the role of new technology-based firm which leads to economic growth and development.

Moreover, by using and spreading knowledge start-ups help maintain and establish regional knowledge networks. Innovation by start-ups affects industry dynamics. As Gans J. et al, refer (2002) "They can compete with incumbents through the product market, or they can cooperate with established businesses by selling their technologies through the market for ideas".

However, start-ups have not been supported sufficiently, although these firms are more susceptible to failure than larger, well-established firms. Greece has a long and difficult way to go and governments have to do a lot more than just talk about entrepreneurship. The country requires clear and simple legal frameworks in order to facilitate and help the new entrepreneurs to build their own business. Many people never start their own firm, simply because they are discouraged by the process. Thus, it is very important to define the first steps as carefully as possible, with the purpose to better organize a business. The main and most important of these steps to achieve the target are described below.

1. Personal analysis: There are many things you need to consider before starting your start-up. Firstly, it is essential to think why you want to start a business and for which reason. You must meditate whether you have the skills and qualifications to run a business, how much capital you have to risk and if it is feasible to make your idea profitable. You must to plan, set goals and first of all know your strengths and your weaknesses. The passion alone isn't the vehicle for a successful business.

2. Research your potential market: Before you even consider starting a business, you should search the industry you'd like to get into. You have to search if the people need what you are offering and if the market is saturated or not for your product or service. Also, which are your ideal customers, is a question that should be answered. You must find out if there exist enough market shares to capture. You must take into account about your competitors, the products or the services they provide to their customers, in order to be sure that your business will be viable. Your product or service must differ from competitors', and must have good price and be of good quality. You can get all these informations by a number of ways, like searches in the net, speaking to persons that work in this industry etc. If you don't have the time to make this research you can also take the advice from relevant people and institutions.

3. Design a business plan: This is a crucial step. The business plan can help you materialize your idea about the product or service you want to offer. Many questions can be answered if you have a good business plan. It helps you to fulfill your goal, to find your target market, your marketing strategy and tactics, business structure, finances and how you can act. It also may help you to organize and manage your firm, control the difficulties you confront and find out as well, how much money you will need to start your own business. Generally, the business plan must delineate the business aims and the incentive behind them. Attention, the plan is not a goal in itself! It is a flexible roadmap that supports the experimentation the venture is going through in its search of a viable business model.

4. Find the money: Every potential entrepreneur must have or find enough money in order to start a business. His business success depends on how well he manages his finances. He needs to determine the costs and how much money he will need to sustain himself in the beginning before having a profit. Some startups have been self-funding but the majority needs to be funded. Also, the entrepreneur may need to look for financing from an "angel" or from a venture capital firm, that depends on the size of the start-up, it is very useful the in-depth information about the funding options. If you aim to look for financial support from investors you must have a formal business plan, in order to be clear how you design to achieve your purpose.

5. Have legal help: It's not necessary for a start-up to hire a lawyer, but a good one can give useful advices about the structure of your business in a way that will benefit you. A good professional will notice the details, in order that nothing goes wrong. There are lots of energies that must be done to make real the creation of a firm. Very often you may need extra licenses depending on the type of business and the local laws. Business licenses and permits, the right business structures and other need an experienced attorney to help you get started.

6. Hire an experienced accountant: An accountant can help at each step of establishing your own firm. From the business plan to start-up formation and tax planning, an accountant can facilitate you in all the procedures. It is very important for the accountant to be familiar with startup ventures, in order to be capable to explain the individual legal structures of these firms and give the advices that best suits you.

7. Choose the right name for your start-up, design a logo, find a domain name and construct a website:  A unique and easy to remember business name should reflect the type of business and characterize the products and services you sell. But you must be sure that you are legally permitted to have the use of it. Furthermore, a logo is the first thing that a customer observes and is known for all that the first positive impression counts a lot. The registration of a web site is very important, in order that customers have the opportunity to find out more about your products or your services. First of all you must register a domain name and then build your own website carefully.

8. Hire and manage employees and build a team: The selection of employees is very crucial for the success of the company. First, you must decide about the number of persons you need and which are the qualifications required. Determine what skills are the most significant for turning your dream into reality. After that, you must recruit the best skilled staff and create the ideal working environment that everyone desire to be part of it.


References

Almeida P., 1999, Are Small Firms Important? Their Role and Impact, Springer.

Chien C., 2012, Startups and Patent Trolls, Stanford Technology Law Review, Forthcoming Santa Clara Univ. Legal Studies Research Paper No. 09-12. Eurostat.

Gurin J., Open Data Now: The Secret to Hot Startups, Smart Investing, Savvy Marketing, and Fast Innovation, McGraw-Hill, 2014,USA.

Gans J., Hsu D., Stern S., 2002, "When Does Start-Up Innovation Spur the Gale of Creative Destruction?",The RAND Journal of Economics, Vol. 33, No. 4, pp. 571-586.

Kouretas, G.P. & Vlamis, P., 2010, The Greek Debt Crisis: Origins and Implications, Panoeconomicus, 4, pp. 391-404. National Statistical Service of Greece.

Spencer A., Kirchhoff B., 2006, Schumpeter and new technology based firms: Towards a framework for how NTBFs cause creative destruction, International Entrepreneurship and Management Journal, Volume 2, Issue 2, pp 145-156, Springer.
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