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BUSINESS STRATEGIES

How to start a tech business in 6 steps

Rachel Bistricer

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how to start a tech business

If you're passionate about innovation and managing a range of technological services, starting a tech business could be an exciting venture for you. If yes, this guide will walk you through the steps of initiating and operating a successful tech business, including the advantages and challenges involved in starting a business, how to go about creating a business website to support your tech business and how to generate revenue in the tech industry.



What is a tech business?


A tech business is a service-oriented business that offers technological solutions, products and services to clients. Tech businesses typically provide services such as:


  • Software development and programming

  • IT consulting and support services

  • Cloud computing and storage solutions

  • Web development and design

  • Cybersecurity services



Why start a tech business?


The technology industry is experiencing significant growth and is expected to expand at a rate of 6.55% annually until 2028. Starting a business in this sector could be highly profitable. The tech industry is a major revenue generator, with annual spending by businesses and individuals in the billions on software, hardware, and related services.



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How to start a tech business in 6 steps




01. Conduct market research


The market research process involves studying industry trends, technologies, regulations, customer demographics, behaviors, and competitors to identify strengths, weaknesses, and market gaps. Understanding these elements helps define your target audience and unique selling proposition, providing a competitive advantage and a clear strategy for success.



02. Create a business plan


Develop a comprehensive business plan that covers key aspects of your business planning such as your target market, executive summary, marketing strategy and financial projections. This plan serves as a roadmap for your business and aids in conveying your vision to potential investors when seeking funding. It should also include other important business information such as the type of business you plan to start and your choice of a business name


Here’s a tech business plan template to get you started:


Tech business plan template


Executive Summary


Business Name: [Your Tech Company Name]

Business Structure: [Sole Proprietorship/Partnership/LLC/Corporation]

Location: [City, State]

Founding Date: [Month, Year]

Founders/Owners: [Names]

Mission Statement: [Concise statement of the company’s purpose]


Business Description


Overview: Briefly describe your tech company, including its key features, amenities and services.

Unique Selling Proposition (USP): Clearly define what sets your tech business apart from competitors.

Target Market: Identify your primary customer demographic and market segment.


Services and Amenities


List and describe the tech services and solutions your company will offer.  Include software development, IT consulting, cloud services, cybersecurity, etc.


Market Analysis


Industry Overview: Provide an overview of the tech industry, including trends and growth projections.

Competitor Analysis: Identify key competitors, and analyze their strengths and weaknesses.

Target Audience: Define your target customer profile and their preferences.


Marketing and Sales Strategy


Marketing Plan: Outline your strategies for promoting the tech company, including online and offline channels.

Pricing Strategy: Detail your pricing structure and any promotional pricing.

Sales Tactics: Describe how you will attract clients and increase revenue.


Operational Plan


Location and Facilities: Describe the physical location and facilities of your tech company.

Suppliers: List and describe key suppliers for technology and services.

Staffing: Outline your staffing plan, including roles and responsibilities.


Financial Plan


Startup Costs: Detail initial investment requirements and startup expenses.

Revenue Projections: Provide realistic revenue projections for the first 3-5 years.

Operating Costs: Outline ongoing operating expenses, including utilities, maintenance and staff salaries.

Funding Requirements: Specify any funding needed and potential sources (loans, investors).


Funding Proposal


Purpose of Funding: Clearly state how the funds will be utilized.

Amount Needed: Specify the amount of funding required.

Repayment Plan: Outline the proposed repayment plan for loans or investments.


Risk Analysis


Identify potential risks and challenges that may impact the success of your tech business.

Develop strategies to mitigate and manage these risks.


Appendices


Include any additional documents or information relevant to your business plan.

Examples: Market research data, resumes of key team members, mock-ups of marketing materials.


Conclusion


Summarize the key points of your business plan and highlight the potential success of your tech company.

Conclude with a call to action or next steps.


Note: This template serves as a general guide. Adjust and expand sections based on your specific business model and goals.



03. Secure funding


Starting a tech business involves substantial initial costs. You’ll need to secure considerable financing through methods like bank loans, grants or stakeholder investment to launch and sustain your business.


Costs that you’ll need to factor in when securing financing for your business include:


  • Research and development costs for software and technology solutions

  • Acquisition of necessary hardware and equipment

  • Fees for obtaining licenses and permits for tech operations

  • Recruitment and training costs for tech professionals

  • Marketing and advertising campaigns to promote the tech business

  • Making a website and its maintenance

  • Installation of necessary software and technology infrastructure

  • Initial inventory of tech supplies and materials

  • Legal fees for assistance with contracts, permits and compliance

  • Fees for consultants, programmers and other professionals

  • Costs associated with pre-launch marketing events or promotions

  • A reserve fund for unforeseen expenses or cost overruns

  • Contingency budget for the initial months of operation

  • Payment of applicable taxes, including business taxes



04. Assemble a team


Build a diverse team of skilled, passionate individuals who share your vision. Prioritize hiring professionals in software development, IT consulting, marketing, and sales. Strong leadership is crucial, and legal and financial experts ensure compliance. Consider outsourcing to save costs while maintaining quality. Focus on a core team ready to propel your business forward.



05. Develop a product and MVP


A minimum viable product (MVP) is a simplified version of your final product, allowing you to test and refine features while gathering user feedback. This process helps reduce costs by identifying potential issues early on and enables you to make necessary improvements before launching the final product.



06. Register your tech business



Select a business structure


Choose an appropriate business entity or structure for your tech business, such as a sole proprietorship, partnership, limited liability company (LLC) or corporation. Each structure has its own advantages and disadvantages, so select the one that best aligns with your business goals.




Set up accounting and bookkeeping systems


Establish robust accounting and bookkeeping systems from the outset to track income, expenses and ensure financial viability. This includes managing corporate tax obligations if applicable.



Source tech equipment


Acquire the necessary equipment for your tech business, ranging from computers and servers to software and development tools, based on the services you plan to offer. Some more specific examples of this include:


  • Computers and servers for software development

  • Programming tools and software licenses

  • Cybersecurity software and hardware

  • Cloud computing infrastructure

  • Networking equipment for IT services

  • Website development and design tools

  • Communication and collaboration software

  • Data storage solutions



Ensure legal compliance


Register your tech business in compliance with local regulations, obtain the required licenses and secure appropriate insurance coverage.




07. Determine a launch strategy


To launch a tech product successfully, develop a clear go-to-market strategy by identifying target market segments and creating buyer personas to tailor messaging. Select effective marketing channels, partner with influencers, and set a competitive pricing strategy. Use KPIs like customer acquisition cost to track success and refine the approach for long-term growth.


Use this checklist for starting a business to cover all steps before launching your business.


08. Promote your business


Marketing and promotion are essential to the success of any business, particularly in the tech industry where competition is high. Some effective marketing tactics for a tech business include:


  • Creating a strong brand identity through logo design, website design, and marketing materials

  • Utilizing SEO strategies to improve your online visibility and drive traffic to your website

  • Launching targeted advertising campaigns on social media platforms like Facebook, Instagram, LinkedIn, or Twitter

  • Collaborating with influencers or partnering with other businesses in the industry for cross-promotion opportunities

  • Implementing content marketing by creating valuable and informative content to attract potential clients and build trust with your audience



Tips for managing your tech business for profitability


Once you’ve got your tech business off the ground, you’ll need to understand how to properly run and manage it to ensure profitability. Here are some general tips on how to achieve that.


Research your industry and gain a deep understanding of the tech industry, including market competition, target demographics and financial requirements. If you lack experience in the tech industry, consider working for an established tech company or collaborating with experienced professionals.


Develop a robust marketing strategy from the beginning to proactively promote your tech business. Creating a business website is essential for online visibility, customer engagement and promotions.


Exceptional customer service is crucial for success in the tech industry. Ensure a positive experience for clients from initial inquiry to service delivery.



Tech businesses to inspire (all built on Wix)


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Valr Tech


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Benefits of starting a tech business


Operating a tech business allows you to be your own boss, set your own hours and make independent decisions. At the same time, the demand for tech services is consistently high, particularly in areas with a substantial business presence. For business owners who enjoy working with cutting-edge technology, a tech business can be rewarding on many levels.


Read more: Tech business ideas for beginners that will help you turn profit. Also, learn how to make a tech logo for your business.



Challenges of running a tech business


Tech management requires diverse skills in areas such as software development, IT consulting and cybersecurity. You’ll either need to become an expert quickly in all of these areas or invest in professionals who can excel in them.


Coordinating projects, managing client expectations and ensuring timely service delivery can be challenging. Working with project management tools and collaborative software is crucial for managing this effectively.


Tech industry competition is fierce and standing out requires a unique value proposition and effective marketing.



How profitable is a tech business?


The profitability of a tech business depends on factors such as location, market demand, competition, pricing strategies and operational efficiency. For example, tech hubs and business-centric areas often offer more potential clients but may also mean increased competition from other tech companies. Streamlining business processes can contribute to higher profitability by reducing costs and enhancing service delivery.



How to start a tech business FAQ


What legal requirements should I consider when starting a tech business?

As with any business, you will need to comply with local and federal laws and regulations related to starting and operating a business. This may include obtaining necessary licenses, registering your business, paying applicable taxes and securing insurance coverage. It is important to research the specific legal requirements for your industry and location.

What marketing strategies are effective for a tech startup?

How can I build a strong tech business website?

How can I generate revenue in the tech industry?



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