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Research Topic: Factors contributing to a successful start-up and mistakes to avoid when opening a business of undergraduates in National Economics University.. The most popular definiti

Chapter I: INTRODUCTION

1 Research Topic:

Factors contributing to a successful start-up and mistakes to avoid when opening a business of undergraduates in National Economics University

2 Background:

Start-up is now a term of familiarity among modern citizens The most popular definition of the term is as follow: “A startup is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing or offering an innovative product, process or service A startup

is usually a company such as a small business, a partnership or an organization designed to rapidly develop scalable business model Often, startup companies deploy technologies, such as Internet, e-commerce, computers, telecommunications, or robotics These companies are generally involved in the design and implementation of the innovative processes of the development, validation and research for target markets While start-ups do not all operate in technology realms, the term became internationally widespread during the dot-com bubble in the late 1990s, when a great number of Internet-based companies were founded.” - Wikipedia So, the history of start-ups dates back to almost 20 years ago and it was a craze back then in the USA, but only now does it gain popularity and exposure all over the world (especially in Vietnam)

In recent years, the economy has witnessed a surge in the number of start-ups which attracts a huge proportion of the population (including economists, the labor force, passionate entrepreneurs, …); And there are reasons for that To begin with, entrepreneurship satisfies common human needs of becoming well-known and the urge to do something worthwhile Under the influence of mainstream media & social networks, the rare successful start-ups are being promoted while most failure has been ignored Inspirational speech, game shows for start-ups, society encouragements (Lower cost to start a company Much lower risk than before Lower barriers of entry) all molds up a culture where entrepreneurship is being popularize, respected and admired Consequently, start-ups have become a trend among millennials with many unable to “make it big” or even worse: losing money

in the process As finance majors it is in our best interest to find out more about the problem and gain a more analytical view on the subject

3 Rationale:

3.1 Starting-up is a new and fascinating topic:

Start-up trend has come into Vietnam in recent years and it is still a new, strange and fascinating subject Many people, or more specifically, students at university desire to do their own start-ups but they do not really know about it so it leads to some failures

3.2 Reasons why students do start-up:

Students from around 17 to 22 years old have time, youth, passion and especially creation, they want and are willing to embark on new things Moreover, for the group of students mentioned in the topic, students of National Economics University, they are economics students, so they are more likely to aspire to apply

their learning to reality It is easy to understand if they crave for jobs related to their studies

4 Purposes:

The study aims to indicate factors contributing to a successful start-up in order to help undergraduates in National Economics University who want to open a business to ensure successful startups in the future

The study also shows some problems that entrepreneurs usually have to deal with and points out some mistakes that most entrepreneurs make so that they can avoid and learn from it

5 Scope:

Nowadays, enterprise occupies very important role on Vietnam business development so the start-up is already promoted by the government However, start-ups have become a trend among millennials with many unable to “make it big” or even worse: losing money in the process The youths who head this vocation are lack of experiences so they are easily failed There has been research more general about this problem with their scope on the world as a whole or Western countries So, to provide a more practical perspective, this study mainly centralizes around the Vietnamese economy, especially undergraduates in National Economics University, since they are a focused group that is most likely to start a new business

6 Research Questions: (phải sửa 2-5 câu hỏi)

What are the factors contributing to a successful start-up?

What are the resources you need to launch a start-up?

What are the key features does your start-up have that will help your start-up stand out among others?

What is the range of the market that your start-up focus on?

Who are your potential customers?

Who are your competitors in the same field?

What are the common mistakes that proves to be detrimental to a new start-up? How have others attempted to solve the mistakes before, and why did their solutions succeed or fail?

7 Research methods:

- Online case study

Easy to collect data and analysis existing businesses through the internet Giving a more in-depth perspective on the reality of start-ups

- Unstructured Interview

Spontaneous and informal interview will be conducted with NEU undergraduates that have successfully established their own business Minimal guiding questions will be prepared in advance to make sure the interviewee stays on point

8 Tentative Report Outline:

I Introduction

1 Background

2 Scope

3 Purpose

II Methodology

1 Case study

a Selection of subject for case study and reasons

b Data of importance

2 Unstructured Interviews

a Meet the entrepreneurs

b Interview Records

III Findings

1 Factors of success

a Reasons behind these factors

b Execution of aforementioned factors

2 Common Mistakes

a Reasons behind mistakes

b Ways to avoid

IV Conclusion

V Reference and Appendix

Chapter II: LITERATURE REVIEW

1. Definition of start-up:

a Minimum viable product (MVP):

Minimum Viable Product (MVP) is a development technique in which a new product is introduced in the market with basic features, but enough to get the attention of the consumers The final product is released in the market only after getting sufficient feedback from the product's initial users Ash Maurya, author of Running lean, said that A Minimum Viable Product is the smallest thing you can build that delivers customer value (and as a bonus captures some of that value back i.e gets you paid) Marty Cagan, a partner at Silicon Valley Product group, supposed that it's the smallest possible product that is valuable, usable and feasible for the consumers In conclusion, an MVP is a product that has the minimum set of features to prove the most essential hypothesis for a product

b Founder:

Founder is one who establishes something or formulates the basis for something Startup founders are, quite simply, people who found startups They register a business (maybe) and create something that might turn into a business at some point, or even do turn it into a business successfully

c Angel Investor:

Angel investor is an individual who invests his or her own money in an

start-up company A Harvard report by William R Kerr, Josh Lerner, and Antoinette Schoar provides evidence that angel-funded startups are more likely to succeed than companies that rely on other forms of initial financing The paper by Kerr et al., found that angel funding is positively correlated with higher survival, additional fundraising outside the angel group, and faster growth measured through growth in web site traffic

d Incubators/ Accelerators:

They are accelerated start-up organizations that provide legal, professional, space and startup advice All for the purpose of helping startups get customers early, investors

* Startup Incubators:

Incubators bring in early-stage companies to develop their idea with assistance in the form of office space, resources and access to experts in the startup ecosystem In exchange for this assistance, the investor or investing group will receive a percentage of equity in each company There is usually

no time limit for participating; each company is brought along at its own pace, usually until it becomes self-sufficient enough to begin operating independently

* Startup Accelerators:

Accelerators imply a more expedited process, and that is what you get Companies that gain acceptance into an accelerator program are looking for resources and guidance to catapult them to their next milestone Programs last just a few months (usually three) before companies are set off on their own again, and investors will offer up investment capital and act as mentors

in exchange for a percentage of equity in the company This percentage is generally less than what would be requested from an incubator

e Technology adoption life cycle:

The technology adoption lifecycle is a sociological model that describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups The process of adoption over time is typically illustrated as a classical normal distribution or "bell curve" The model indicates that the first group of people

to use a new product is called "innovators", followed by "early adopters" Next come the early majority and late majority, and the last group to eventually adopt a product are called "Laggards" or "phobics." For example,

a phobic may only use a cloud service when it is the only remaining method

of performing a required task, but the phobic may not have an in-depth technical knowledge of how to use the service

2. Role of start-up:

It’s well known that startups play an important role in the economy As pointed out

by the Kauffman Foundation : “Without startups, there would be no net job growth

in the U.S.”

In the past, when there is no definition of startups, the economies were dependent more on natural resources than human resources

After the appearance of startups, they change the economy Especially over the past decades, the role of startups in economic development has become the primary factor in the growth of economies

1 Creating wealth and sharing :

When starting-up, entrepreneurs invest their own resources and attract

capital from investors This mobilizes public wealth and allows people to benefit from the success of the businesses It results in wealth creation and distribution which is one of the basic imperatives and goals of economic development

2 Creating jobs :

When a person set up a business, it means that there’s one less job-seeker, and it also provides more job opportunities for others

3 Balanced regional development :

If a new business that locates in a less developed area, it can creates both direct and indirect jobs It also can leads to infrastructure improvements and services improvementsto the area

4 GDP and per capita income :

A business can contributes to increasing the GDP and income per resident, which helps the economic growth

5 Standard of living :

They do not only creating jobs but also developing and adopting innovations that lead to improvements in the quality of life of their employees,

customers, and other stakeholders in the community Entrpreneurs always try

to offer better goods and services at a lower cost

6 Exports :

Any growing business will eventually want to get started with exports to expand their business to foreign markets This is an important ingredient of economic development since it provides access to bigger markets, and leads

to currency inflows and access to the latest cutting-edge technologies and processes being used in more developed foreign markets It also helps

balancing the trade of a country

3. Phases of start-up:

Startup Phases is a concept that serves a crucial role in providing the entrepreneurs with a sense of direction when navigating a new business; And since startup phases

is a relatively untouched field of research, it is being conceptualized differently among experts, scholars and entrepreneurs These variations of meaning often lead

to some overlap in qualities and characteristics of the phases In order to resolve this problem, having a more in-depth description can bring more clarity to these tangled concepts These are the detailed definition/characteristics of startup phases:

Phase 1: Ideating

Forming and theorizing a scalable product or a service idea with initial revenue models for how it would make money This is usually done by one person or only a vague team; no confirm commitment or no right balance of the skills in the team structure yet

Phase 2: Concepting

Defining mission and vision with initial strategy and key milestones Establishing a team of two or more core founding people with balanced ownership or having an extended team compared to the original one with more commitment (stock options and/or cash compensation)

Phase 3: Committing

Committed and skills balanced team with shared vision, values and attitude that has the ability to develop MVP without dependency on uncommitted external resources; or have already experiencing and successfully developed an initial

product/service Have an existing signed shareholder agreement between founders, with milestones, committed time and money usage

Phase 4: Validating

Acquired the ability to demonstrate initial user growth and/or revenue (initial traction) Has the potential to continue attracting additional resources (money or work equity) for future prospect of revenue In the process of looking a clear market validation to move into scaling

Phase 5: Scaling

Transitioning the leading model into a more heavily growth-centric one Can and want to grow fast Putting a heavy emphasis on KPI based statistics, closely monitoring these stats and expand business by improving in quality and implementing processes Have the ability/potential to attract significant funding

Phase 6: Establishing

Achieved great growth, expectation to continue strong is high Attain financial and labor resources easily Continues to grow and often tries to culturally continue

“like a startup” Founder/Investor either exit(s) or continue business as usual

While these definitions are codified specifics to guide and help forming an overall persective on the subject, startup phases are ambiguous in nature and if necessary can be redefined to suit ones’ situation

4. External & Internal factors affects to a successful start-up:

a. External factors: