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Making the Decision to Form A Startup

Are you prepared to be an entrepreneur?

Starting a company is one way to further develop and commercialize technologies created at UNL. You will need to evaluate several factors when deciding to form a startup. These considerations comprise a feasibility checklist that is divided between business and personal factors.  

Identifying the market need is critical to the success of your startup. If your innovation meets an unmet need that people value or solves a problem, your startup is significantly more likely to succeed. One of the most powerful activities in market research is to interview potential customers. The guide will dive deeper into this process, called "Customer Discovery,"  in the next section of the guide. 

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Additional ways to expand your market knowledge include reading professional market research, government data, and trade publications. The decision to form a startup should be made only after acquiring a thorough understanding of the market and how your innovation fits into that market.  

Business considerations include:

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  • The product(s)/service(s) the startup will offer 

    • What is the product/service?  

    • Does this product/service meet a demonstrated market need?  

      • What need does this product/service meet? 

      • How is this need currently being met?  

  • Are people willing to pay for this product/service? 

  • How much?  

  • How do you know?

  • Competitors  

    • Who are the key competitors?  

    • Are they direct competitors or substitutes? 

  • The market 

    • How big is the market?  

    • What is the regulatory landscape (if any)?  

    • How profitable will this venture be given the market conditions?  

Personal Considerations Include:  

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Availability to commit to your startup  

  • Do you have the time?  

  • Will you be working for another organization while you form your startup? 

  • Does forming a startup align with your personal goals? 

  • Do you have the business acumen to be the CEO? If you are a researcher whose expertise is in STEM, you may want to consider who will take over the CEO position once the startup takes off. It can be difficult to hand over the reins of your startup, so you need to consider how that transition may look.

  • How long can you commit to your startup?  

  • Are you resilient and flexible?  

 

Personal Resources  

  • Funding, equipment, real estate; what are you willing to use of your personal resources to create your startup, including personal capital?

 

Risk tolerance  

  • Experts estimate that between 75% - 90% of startups fail. 

    • How comfortable are you with the uncertainty and potential volatility that comes with entrepreneurship?

    • What's your reaction to setbacks or failures in your entrepreneurial endeavors? 

    • How do you typically approach decision-making when faced with high-risk/high-reward scenarios?

    • What safeguards or contingency plans do you have in place to mitigate potential risks to your business?

    • What is your approach to assessing and managing financial risks within your business?

    • How do you handle pressure and stress when facing uncertain situations or tough decisions?

 

Managerial support  

  • Do you have the people you need on your team to get the job done?  

  • Do you have trust and confidence in your team?  

  • How do you see your team developing as the startup takes off? What is each team member’s role/contribution?  

  • Is your team in alignment regarding goals and expectations? (Ex. When to sell, when to abandon, ownership and corporate structures, etc.) 

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Starting a business usually requires a large time commitment, and it is common for entrepreneurs to underestimate the time needed. Due to the demanding nature of startups, you should consider if forming a startup aligns with your lifestyle, and if you are willing to commit your time and personal resources to your startup if the need arises. Managing startups is no easy task, and to be successful, your startup must have the right management. Often, people who become entrepreneurs because of their innovations are experts in their field but are not well equipped to run an organization; considering early in the startup process whether you are willing to hire a qualified CEO to help you run the business may help you create reasonable expectations for your contributions and ensure the future success and profitability of your startup.

While starting a business can sometimes lead to wealth creation, it often comes with significant risk. Evaluate your financial capacity early and continuously develop your financial models and plans to fit the needs of your startup as it changes and develops. There will be unforeseen changes as you create your business, so a high risk tolerance and ability to quickly adapt and pivot will be very beneficial to ensure you can meet the changing conditions of your startup and remain committed to the endeavor or recognize when to stop.  

Having the right team can be the ultimate competitive advantage for your startup; evaluate your support, skills, and shortcomings to ensure you know your strengths and weaknesses. Knowing your team is aligned with their goals, expectations, and communication will strengthen your ability to adapt and pivot.  

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