The United States, along with other “developed” nations are in an economic transitory period: We are slowing moving from a Skills or Manufacturing based economy, into a Knowledge-based one. In fact, our last post covered in detail how to be successful in this new economy, so feel free to read more about how software ownership might be the ticket to future financial success.

But there’s a difference between owning a software license and launching an entire tech startup. Owning a piece of software, while financially enriching isn’t as labor intensive as running an entirely new business. This is especially true in today’s economy, where the competition is fierce and plentiful.

Financing, launching, and running a startup is necessarily hard. With over 20 years of experience in the tech sphere, we’ve heard every scheme there is about how to make it easy. Here’s the simple truth – it’s never going to be easy. This is true at least until you’ve established yourself through years of hard work, and possibly beyond that.

Startups of all types require passion, dedication, and, perhaps most of all, dead presidents (i.e. cold hard cash). It’s never a simple proposition. But let’s be honest here – for those who possess the entrepreneurial spirit, simplicity is damned mundane. We do this because we’re passionate and dedicated people. Unfortunately, while we possess the previous two traits in spades, for those of us just getting started, the cold hard cash is harder to come by.

However, funding and running a startup doesn’t have to wind up with you in the Looney Bin – or make you feel like you’re dealing with the devil. There are plenty of ways to mitigate potential risks, to guide your tech startup without the stress and hair pulling. Let’s talk about a few ways to help preserve your sanity while making your venture the next SnapChat like success.

It’s All About the Business Plan

Yea, it’s like the least sexy thing ever. Creating a successful startup doesn’t begin with the cool things, like a CodeIgniter platform. Like all winning ventures, you have to start with the foundations. You need to establish the following:

a. The service and/or solution you offer. You need to make this explicit and extraordinarily clear. You want to get this to the point where you can walk up to a random person on the street and be able to explain to them what you do in 30 seconds or less.

b. The hierarchy of your business. Even if you’re currently the only person who works for your startup, eventually you will need more staff. Figure out short and long term plans for staffing, including who reports to whom. This is important because it improves communication and can help prevent personnel conflicts.

c. Long term goals and growth stages. Be clear about what you need goals you have for the future, as well as what indicates when you have completed said goal.

d. The Launch. Probably the single most stressful time in the life of any fledgling startup is when it moves from beta to actual launch. It’s the time of 18 hour days and hungry bellies. It’s the time when you either make it – or you don’t.

e. Metrics. We live in a world of data. It’s like The Matrix, but without all of the cool “I know kung fu” parts. More than one compnay has been sunked by not understanding the best way to measure that data. So research the nest metrics to use. Keep in mind this can range from very general metrics to something as specific as your sector, or even just your own business. Think on this long and hard, because it might be the best way to sustain and grow your startup.

Creating a decent Business Plan isn’t only about establishing a clear path for your startup to follow. It may very well be the single best way to attract the attention of potential funders. Venture Capitalist Firms and Angel Investors aren’t usually looking for some revolutionary idea. While disruptive businesses are doing well right now, it’s far more important to potential funders to know that you’re in it for the long haul.

Creating a solid business plan shows investors that you have thought about this long and hard. It shows that you’ve done your research, that you’ve thought about how to progress in both the near and far future. Not only does it show strategic planning, but VCs love established metrics. It makes it easy to see how well a startup is doing – judged by the founders own standards.

An excellent business plan is only part of the story though. Entrepreneurs must also plan how to market your product (that’s a whole other can of worms); they must plan how to grow their business, how to eventually get to an IPO (or sell the company), and so on. There are a lot of pitfalls that the newcomer can fall into; maybe it’s better to hire a guide!

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