How To Start An Io T Startup

Updated: January 18th, 2023

How To Start An Io T Startup

If you ask any entrepreneur, starting a business comes with its fair share of challenges.

Starting an IoT startup requires a great deal of effort, dedication and most importantly passion.

If you're willing to put in the effort to build your own business, you're going to want to follow the critical steps to creating a successful brand.

We've created a guide that covers each step of the process - from making key financial decisions, to launching and marketing your business the right way, and tips/strategies on how to grow your business effectively.

market size
$761B
avg revenue (monthly)
$136K
starting costs
$16.8K
gross margin
95%
time to build
360 days
average product price
$1
growth channels
Direct sales
business model
E-Commerce
best tools
Shopify, Asana, Slack
time investment
Side project
pros & cons
37 Pros & Cons
tips
9 Tips

💡 Introduction To Starting An Io T Startup

Is Starting An Io T Startup Right For You?

There are many factors to consider when starting an IoT startup.

We put together the main pros and cons for you here:

Pros of starting an IoT startup

• Flexibility

You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.

• Ability to start your business from home

It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!

• Rewarding work

Starting a IoT startup can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.

• Scalable

With businesses and processes changing daily, there will always be demand for new features, products and services for your business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.

• Traffic to your website

A IoT startup gives people a reason to visit your website and to keep coming back to you!

• No overhead costs

To get your IoT startup started, there are no costs associated with overhead, storage, packaging, etc. This will save you a lot of time and money!

• High customer retention rates

Once a customer invests in your product, they've invested their time and energy to utilize your product/service which is highly valuable to them. Typically, your product or service becomes indispensable to your customer.

• High margins

The gross margins for your IoT startup are typically around 95%, which is considerably high and allows you to grow your business and manage costs easily.

• Control of workload

With starting an IoT startup, you have the unique ability to choose how little or how much you want to work. You also have the freedom to decide which projects you want to work on, and can turn down the ones that do not interest you.

• Unlimited income potential

With starting an IoT startup there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.

• You are your own boss!

With starting an IoT startup, you are the one to make decisions for almost all of the operations. Calling the shots can be empowering and liberating!

• Predictable income stream

Your businesses income stream tends to be predictable based on the number of customers you have signed up. This makes financial planning and outlooks much more seamless!

• Higher likelihood of getting referrals

This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.

• Simple business model

A IoT startup has the advantage of a simple business model, which makes launching and building the business more seamless.

• Greater Income Potential

With this business, the sky is the limit in regards to your income potential.

• You get to do something you truly love

With starting a IoT startup, you get to put your energy into something you are truly passionate about! You'll find yourself devoting as much time and energy as possible into the business to make it successful.

• You can work from anywhere!

Not only can you start your IoT startup from home, you can also run your business from anywhere in the world. This is the entrepreneur dream.

• Strong Demand & Relatively Recession Proof

The demand for IoT startup is increasing year over year and the business is known to be relatively recession proof.

• Various different ways to make money

With starting a IoT startup, there is not just one business model to choose from. This field is amazing in that there are various different ways to make money. Although this may complicate things, it's great to have different options and sources of revenue.

• Make money while you sleep

The advantage of starting a IoT startup is that you have the ability to have passive income and make money while you sleep. This is the dream for many entrepreneurs.

• Results and revenue happen quickly!

Unlike other businesses, it can be relatively quick to start seeing results and revenue. As long as you follow all the steps to validate your idea before launch, you are likely to see quick results and ROI.

Cons of starting an IoT startup

• Crowded Space

Competition is high when it comes to your IoT startup, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.

• Motivation of employees

If you plan to have a sales/content team on board, finding creative ways to motivate them can be a challenge. It's important that you're able to offer great incentives and a good work environment for your employees.

• Longer Sales Process

A IoT startup can be a big time and money investment for your customer, so it's important you plan and predict a longer conversion funnel and stay in communication with potential customers.

• Security Issues

With any Saas business, data loss and security issues may arise throughout your process of building your product. It's critical that you understand exactly what you're responsible for and how to avoid potential issues down the road.

• Isolation

Often times, as a IoT startup, you typically work alone and do not have much face-to-face interaction with other team members.

• Taxes

As a IoT startup, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.

• No safety net

Typically, as a IoT startup, you do not receive a consistent pay-check and instead earn money based on your transactions each month. During the slow periods, you typically take away less since the job is based on commission. It's important to budget accordingly for the slow times.

• Stressful work

This line of work can be stressful for both you and your clients. This type of transaction is a significant financial decision for your client, so expectations are very high for you. Although this career path can be very rewarding, it also comes with its challenges and stressful moments.

• You may need to charge sales tax

If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out this article

• Churn

In this business, customers can cancel their membership or subscription for your services - which can make revenue forecasting challenging and unpredictable. It's important to focus on your churn rates and trends so that you can prevent this as much as possible.

• Complex development process.

The development process for a IoT startup can be quite complex, which may cause delays and challenges when launching and growing your product.

• Complex maintenance

Your IoT startup will require a long-term investment due to the need for updates, bug fixes, and security vulnerabilities. It's important that you (or someone on your team) stays on top of this at all times.

• Be prepared to get out of your comfort zone!

Although this is exciting for some entrepreneurs, it can be a big challenge for others! You may find yourself in uncomfortable social and business situations, jumping into tasks and responsibilities you aren't familiar with, and pushing yourself as far as you can go!

• You might struggle financially (at first)!

If you bootstrap your business or choose not to pay yourself (or pay yourself less than you were making at your corporate job), this can be financially taxing. It's important to adjust your lifestyle and set a plan for yourself so you don't find yourself in a stressful situation.

• Minimal physical activity

A big part of starting a IoT startup is sitting at a desk for the majority of the day starting at your computer. Some may enjoy this, but others may struggle with sitting for the majority of your day without much physical activity.

• The job can be demanding

This is one of the major disadvantages starting a IoT startup. It's important to understand that you may need to make yourself available on a 24/7 basis.

Players

Big Players

Small Players

Search Interest

Let's take a look at the search trends for iot service over the last year:

How To Name Your Io T Startup

It's important to find a catchy name for your IoT startup so that you can stand out in your space.

Here are some general tips to consider when naming your IoT startup

  • Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
  • Conduct a search to see if others in the space have the same name
  • Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
  • As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!

Why is naming your IoT startup so important?

The name of your business will forever play a role in:

  • Your customers first impression
  • Your businesses identity
  • The power behind the type of customer your brand attracts
  • If you're memorable or not

It's important to verify that the domain name is available for your IoT startup.

You can search domain availability here:

Find a domain starting at $0.88

powered by Namecheap

Although .com names are the most common and easiest to remember, there are other options if your .com domain name is not available. Depending on your audience, it may not matter as much as you think.

It's also important to thoroughly check if social media handles are available.

As soon as you resonate with a name (or names), secure the domain and SM handles as soon as possible to ensure they don't get taken.

Here's some inspiration for naming your IoT startup:

  • Trimming start check availability
  • Static sensor check availability
  • Single scanner check availability
  • Pro detector check availability
  • Delay start check availability
  • Technology check availability
  • Probe group check availability
  • Rental sensor check availability
  • Ito Pro operation check availability
  • Microbiology check availability
  • Small Startup check availability
  • Pro active batch check availability
  • Corn kernel location check availability
  • Additional interoperability check availability
  • Maximum activity check availability
  • Inertial Sensor check availability
  • Technical initialization check availability
  • Simple detection check availability
  • New check availability
  • Hot start check availability
  • Based on check availability
  • Sensitive secondary check availability
  • Suitable Sensor check availability
  • Electrochemical check availability
  • Aggregate implant converter check availability
  • Initial maximum receiver check availability
  • Parts check availability
  • Dimensional vibration group check availability
  • Best sensor check availability
  • Original transducer check availability
  • Smart servo check availability
  • Place temperature detector check availability
  • Ever sensor check availability
  • Unique sensor check availability
  • Rapid initialization check availability
  • Detector group check availability
  • Thermoelectric detector check availability
  • Volume meter detection check availability
  • Sound sensor check availability
  • Many places check availability
  • Outer world check availability
  • Initialization point check availability
  • Current sensor check availability
  • Solar solenoid check availability
  • Electricity check availability
  • Dimensions check availability
  • Ict Pro Activity check availability
  • Point d 'Quick Start check availability
  • Electrochemical Probe check availability
  • Ordered check availability
  • City Seed check availability
  • Correct Start check availability
  • Initial Score check availability
  • Next Launcher check availability
  • Original World Pro check availability
  • Static Tension Meter check availability
  • Sensitive Spy check availability
  • Solid Sensor check availability
  • Click Launcher Location run check availability
  • Maximum position check availability
  • Soft image check availability
  • Pro probe check availability
  • Resistive probe check availability
  • Additional group check availability
  • Initial maximum transaction probe check availability
  • Edge sensor picture check availability
  • Optical probe check availability
  • Le Select check availability
  • Quicker Startup check availability
  • Routine Startup check availability
  • Professional Optical Converter check availability
  • Spying Location check availability
  • Solar Servo Motor check availability
  • Cold Seed check availability
  • Spotting check availability
  • Active check availability
  • Selection select start check availability
  • Random launch group check availability
  • L'extra check availability
  • Add check availability
  • Next boot check availability
  • Cluster group check availability
  • Previous check availability
  • Classic start point check availability
  • Solar servo check availability
  • Proper servo check availability
  • Slow startup check availability
  • Initial correct check availability
  • Unique vibration check availability
  • Wireless check availability
  • Soft Detection Co check availability
  • The Char Lot check availability
  • The External check availability
  • Starbuck Startup check availability
  • Operational Republic Of Cyprus check availability
  • Firm Launch Trading Co check availability
  • Initial Interoperate check availability
  • Sensitive Transducer Group check availability
  • Denver Sensor check availability
  • Char Interoperability Collective check availability
  • Initial Iter check availability
  • The Operational Ict check availability
  • Reliable check availability
  • Pyroelectric Recognizer check availability
  • Sensa Sensor check availability
  • Operational Package Pro check availability
  • Extra Package Group check availability
  • Suitable Servo check availability
  • The Extra Ict check availability
  • The Successful check availability
  • Interoperability Pro check availability
  • NextStartup check availability
  • The Active Imager check availability
  • The Virtual Initialization check availability
  • The Ideal check availability
  • New Initialization Place check availability
  • Detector Sensor check availability
  • Single check availability
  • Successful Starting check availability
  • Initialization Group check availability
  • The Level check availability
  • Visual Detector Pro check availability
  • Render Sensor check availability
  • Smart Solenoid check availability
  • The Visual Yaw check availability
  • Slow check availability
  • Surrender Sensor check availability
  • Thermal Vibration Collective check availability
  • Standalone Start Up check availability
  • Detectors Collective check availability
  • Recognizer Spot check availability
  • Gender Sensor check availability
  • StandaloneStartup check availability
  • SafeStartup check availability
  • Correct check availability

Read our full guide on naming your IoT startup ➜

How To Create A Slogan For Your Io T Startup:

Slogans are a critical piece of your marketing and advertising strategy.

The role of your slogan is to help your customer understand the benefits of your product/service - so it's important to find a catchy and effective slogan name.

Often times, your slogan can even be more important than the name of your brand.

Here are 6 tips for creating a catchy slogan for your IoT startup:

1. Keep it short, simple and avoid difficult words

A great rule of thumb is that your slogan should be under 10 words. This will make it easy for your customer to understand and remember.

2. Tell what you do and focus on what makes you different

There are a few different ways you can incorporate what makes your business special in your slogan:

  • Explain the target customer you are catering your services towards
  • What problem do you solve?
  • How do you make other people, clients, or your employer look good?
  • Do you make people more successful? How?

3. Be consistent

Chances are, if you're coming up with a slogan, you may already have your business name, logo, mission, branding etc.

It's important to create a slogan that is consistent with all of the above.

4. Ensure the longevity of your slogan

Times are changing quickly, and so are businesses.

When coming up with your slogan, you may want to consider creating something that is timeless and won't just fade with new trends.

5. Consider your audience

When finding a catchy slogan name, you'll want to make sure that this resonates across your entire audience.

It's possible that your slogan could make complete sense to your audience in Europe, but may not resonate with your US audience.

6. Get feedback!

This is one of the easiest ways to know if your slogan will be perceived well, and a step that a lot of brands drop the ball on.

Ask friends, family, strangers, and most importantly, those that are considered to be in your target market.

Here's some inspiration for coming up with a slogan for your IoT startup:

  • Inspired By Sensor.
  • Refreshes The Startup Other Beers Cannot Reach.
  • Successful Jambools Are What We Do
  • Get Busy With The Startup.
  • Based And Chafed
  • Startups With Implementation
  • Iot Reaching For The Stars.
  • Iot Online.
  • Sensors With Spectra
  • Small Incubates Are What We Do
  • Mamma Mia, That'sa Spicy Sensor!
  • Good Honest Startup Since 1896.
  • Cold Launches Are What We Do
  • Seat Of The Initialize
  • Type Sensing, Infrared Vibration
  • Startup, Pure Lust.
  • The Startup Look.
  • Config Is What We Do
  • Startup Loaded For Bear.
  • I Like The Iot In You.
  • Light Transducers Are What We Do
  • Satai Is What We Do
  • Iot Is My Sport.
  • Range Of The Initial
  • Iot's Got It All!
  • Sensor Always The Right Choice
  • Firstclass Startup!
  • Let Your Startup Do The Walking.
  • Work Hard, Infrared Harder
  • Iot Makes Your Day.
  • Don't Live A Little, Live A Iot.
  • Espace Is What We Do
  • There Is No Sore It Will Not Heal, No Iot It Will Not Subdue.
  • Don't Leave Your Iot At Home.
  • Sensor, Where Success Is At Home.
  • Startups With Value
  • Sensors With Year
  • Sensors With Illusion
  • Made To Make Your Sensor Water.
  • You'll Look A Little Lovelier Each Day With Fabulous Pink Startup.
  • Iot Will Get You More Girls.
  • There's Lots Of Fun In Sensor.
  • Stop! This Sensor Is Not Ready Yet!
  • Captor Is What We Do
  • Gives A Meal Startup-Appeal.
  • Iot Reaching For The Stars.
  • Type Sensor, Take A Seat
  • Everyone Wants A Iot.
  • Initial Startup - A New You
  • I'd Walk A Mile For Startup.
  • The Iot People.
  • Current Secondaries Are What We Do
  • The President Buys Iot.
  • Char Ctis Are What We Do
  • I'd Walk A Mile For Startup.
  • Look, Ma, No Sensor!
  • The Startup People.
  • Work Hard, Detecting Harder
  • The Most Interesting Sensor In The World.
  • Work Hard, Initiate Harder
  • Sensors With Study
  • Extra Iot, We Take Care Of You!

The Software Business Model

Tiered Pricing Model

You may want to consider having different pricing tiers to meet the needs of your customers.

With this model, there are typically 2 or more packages for a specific price that offer a fixed amount of features.

Each package should reflect the needs of the buyer persona - for example, a customer looking for a beginner package may have a very different use case than a customer looking for an enterprise package.

By offering different packages, you're able to target different audiences which will lead to increased conversions and revenue. Additionally, your chances of "upselling" existing customers are much higher as you have establisished trust with your customer and they're left wanting more once their use case evolves.

Per-User Model

Many IoT startup businesses charge a fixed rate per user on the account (either monthly or yearly). This can be especially lucrative if you're targeting larger businesses where the user number will be much higher.

This model is not always preferred as it can be challenging to forecast revenue accurately when the user count within businesses is fluctuating constantly.

Flat Rate Model

If you decide to adopt a flat-rate model, this would mean that you offer only one price for every customer. All customers are treated equally and have access to the same amount of features.

This model is not as common as tiered pricing because it only meets the needs of one buyer persona and can limit growth and you're able to have multiple revenue streams.

Per Feature Model

This model charges customers based on the # of features they need. Customers add features "a-la-carte" which will determine the overall price of the product.

This can be a lucrative model, however, the number of different use-cases customers need can become overwhelming (making the sales process longer) and it can be challenging to find a price structure that works well.

The business model you choose depends entirely on your needs and goals as a company. To find what works well for you, you may want to consider testing several models and conducting market research to see what competition in the space is doing.

The Freemium Model

Offering free trials to your platform is a great way to gain exposure for your business and potentially get new customers!

Finding the right IoT startup is a big deal for most people, so it can be important for customers to try a free version with limited features prior to making a big investment.

Once your customer reaches the limits of their free account, they're much more likely to invest in the premium version so they can gain access to all of the features your product offers.

There are a few different ways you can limit certain aspects of your product:

  • Usage quotas: Storage limits or limiting the number of times they can utilize a feature
  • Limited features: Only allowing your free user to utilize certain features vs all features - this is also a great way to upsell during the user's experience
  • Limited support: Customer support can be time-consuming, by limiting the level of support to free users this is a great incentive for them to upgrade (and will save you a lot of time and money)!

Here's an example of SEO website, Sanity Check offering a free version to their website:

article

Learn more about starting an IoT startup:

Where to start?

-> How much does it cost to start an IoT startup?
-> Pros and cons of an IoT startup

Need inspiration?

-> Other IoT startup success stories
-> Examples of established IoT startup
-> Marketing ideas for an IoT startup
-> Iot startup names

Other resources

-> Iot startup tips

🎬 How To Start An Io T Startup

article

How Much Does It Cost To Start An Io T Startup

If you are planning to start an IoT startup, the costs are relatively low. This, of course, depends on if you decide to start the business with lean expenses or bringing in a large team and spending more money.

We’ve outlined two common scenarios for “pre-opening” costs of starting an IoT startup and outline the costs you should expect for each:

  • The estimated minimum starting cost = $12
  • The estimated maximum starting cost = $33,558
Startup Expenses: Average expenses incurred when starting a IoT startup. Min Startup Costs: You plan to execute on your own. You’re able to work from home with minimal costs. Max Startup Costs: You have started with 1+ other team members.
Office Space Expenses
Rent: This refers to the office space you use for your business and give money to the landlord. To minimize costs, you may want to consider starting your business from home or renting an office in a coworking space. $0 $5,750
Utility Costs For Office Space: Utility costs are the expense for all the services you use in your office, including electricity, gas, fuels, telephone, water, sewerage, etc. $0 $1,150
WiFi & Internet: Whether you work from home or in an office space, WiFi is essential. Although the cost is minimal in most cases, it should be appropriately budgeted for each month! $0 $100
Total Office Space Expenses $0 (min) $7,000 (max)
App Creation Costs
App Development: App development is the process of creating software intended to run on a mobile device.In addition to coding, there are other elements to consider:- design- back end development- security- architecture- testingMany businesses hire an expert that has the technical knowledge to design and develop an app.Depending on the scope of your project, the cost can vary. Some business owners learn to code on their own to minimize these costs, and others, hire a developer to work for them part-time or full-time. $1,000 $20,000
Apple Developer Program: To submit your app to the app store, you will need to enroll in the apple developer program. This costs $99/year. $99 $99
Total App Creation Costs $1,099 (min) $20,099 (max)
Software Expenses
Design Programs & Software: These programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others. This is typically a monthly subscription ranging from $10-$50/mo. $0 $50
Email marketing tool: If you plan to grow your email list and email marketing efforts, you may want to consider investing in an email marketing platform (ie. Klaviyo, MailChimp). We put together a detailed guide on all of the email marketing tools out there + the pricing models for each one here. $0 $100
IT Support: IT support installs and configures hardware and software and solves any technical issues that may arise.IT support can be used internally or for your customers experiencing issues with your product/service.There are a variety of tools and software you can use to help with any technical issues you or your customers are experiencing. This is a great option for businesses that do not have the means to hire a team of professionals. $150 $2,000
Accounting & Invoicing Software: It's important to have an accounting system and process in place to manage financials, reporting, planning and tax preparation. Here are the 30 best accounting tools for small businesses. $0 $50
CRM Software: CRM (customer relationship management) software system is used to track and analyze your company’s interactions with clients and prospects. Although this is not a necessary tool to have for your business, implementing this, in the beginning, may set your business up for success and save you valuable time. $12 $300
Project Management Software: You may want to consider using a project management and collaboration tool to organize your day-to-day. This can also be very beneficial if you have a larger team and want to keep track of everyones tasks and productivity. For a full list of project management tools, check out this full list here. $0 $25
Internal Communication Tool: If you plan to have multiple members on your team, you may want to consider an instant message tool such as Slack or Telegram. The cost is usually billed per month (approx $5/user/month) or there are freemium versions available on many platforms. $0 $20
Social Media Management Tools: If you plan to do social media marketing for your IoT startup, you should consider investing in a social media automation or publishing tool. This will save you time and allow you to track performance and engagement for your posts. Here is a list of 28 best social media tools for your small business. $0 $50
File Hosting Service: It's important to make sure the information for your IoT startup is stored and protected should something happen to your computer or hard drive. The cost for this is affordable and depends on how much data you need to store. To learn more about the different options and pricing on the market, check out this article. $0 $299
Total Software Expenses $162 (min) $2,894 (max)
Advertising & Marketing Costs
Business Cards: A IoT startup involves quite a bit of customer interaction, whether that is attending tradeshows, sales calls or simply having face to face interaction with prospective clients. Business cards are a great way to stay front of mind with your clients. $0 $50
Customer Research & Surveys: Many IoT startup's conduct industry and consumer research prior to starting their business. Often times, you need to pay for this data or hire a market research firm to help you in this process. $0 $300
Affiliate Marketing Commission & Fees: If you want to increase revenue for your IoT startup, affiliate marketing is a great way to promote your product to a new audience. When determining affiliate commission rates you will offer, you will want to take into account the price and margin for your product to ensure affiliate marketing is worth it for your business. According to Monitor Backlinks, the average affiliate commission rate should be somewhere between 5% to 30%. To learn more about how to set commission rates, check out this article.. $0 $250
Influencer Marketing: Partnering with like-minded influencers is one of the most effective ways to grow your social media presence. Many small businesses simply gift a free item in exchange for an influencer post, or pay the influencer directly. $0 $750
Press: If your business and story is unique enough, press and media attention may come to you, but odds are, you may need to do your own outreach and budget for this. We put together a guide here that discusses different press opportunities (both free and paid). $0 $500
Google Ads: With Google Ads you have the ability to control how much you spend by simply setting a monthly budget cap. Additionally, with these ads you only pay for results, such as clicks to your website or phone calls! It's okay to start with a small budget at first and make changes accordingly if you see valuable returns. $0 $300
Facebook & Instagram Ads: With Facebook and Instagram ads, you set your budget and pay for the actions you want (whether that be impressions, conversions, etc).You can learn more about pricing based on your impressions here. $0 $350
Total Advertising & Marketing Costs $0 (min) $2,500 (max)
Website Costs
Domain Name: Your domain name is the URL and name of your website - this is how internet users find you and your website.Domain names are extremely important and should match your company name and brand. This makes it easier for customers to remember you and return to your website. $12 $200
Business Email Hosting Service: An email hosting runs a dedicated email server. Once you have your domain name, you can set up email accounts for each user on your team. The most common email hosts are G Suite and Microsoft 365 Suite. The number of email accounts you set up will determine the monthly cost breakdown. $1 $15
Total Website Costs $13 (min) $215 (max)
Training & Education Expenses
Professional Training: If you plan to have employees for your IoT startup, training can be time consuming and take you away from growing your business. You may want to consider hiring a professional trainer to onboard your team and put together a training manual with all processes and procedures. $0 $850
Total Training & Education Expenses $0 (min) $850 (max)
Total Starting Costs $12 (min) $33,558 (max)

Raising Money For Your Io T Startup

Here are the most common ways to raise money for your IoT startup:

Bootstrapping

You may not need funding for your IoT startup.

In fact, many entrepreneurs take this approach when starting their own business, whether they have a little amount of cash or a substantial amount to get started.

So what exactly does the term "bootstrapping" mean?

This method essentially refers to self-funding your businesswithout external help or capital and reinvesting your earnings back into the business**

Bootstrapping means building your company from the ground up with your own, or your loved ones, personal savings and reinvesting all earnings back into the business

Here are some tips to consider when bootstrapping your business:

  • Use your savings as your capital - one of the best ways to bootstrap your business is to collect your savings and use them as startup capital. This will also help you avoid using your personal or business credit cards when getting started.
  • Determine exactly how much capital you need and how much capital you have to get your business off the ground. Generally, when bootstrapping your business, you may want to consider starting a business that involves less startup capital.
  • Consider starting a business that will generate immediate returns so you can put money back into the business
  • Be as lean as possible - this refers to cutting down expenses as much as possible, such as payroll, fancy software tools, unnecessary travel, renting an office, etc
  • Consider outsourcing instead of hiring - in the beginning, you may not need to hire someone permanently to help run your business. It tends to be much less expensive to outsource work to a freelancer and hire someone permanently down the road!

Want to learn more about bootstrapping your business? Check out this article

VC Funding

VC funding is a traditional and long process, but an effective way to raise money for your business.

The term "VC funding" refers to venture capital firms investing in businesses in exchange for equity.

The VC's (venture capitalists) are an individual or small group investing in your business and typically require substantial ownership of the business, with the hope of seeing a return on their investment.

VC's are typically the best approach for businesses with high startup costs - where it would be very difficult to raise the money on your own or through a loan.

When deciding whether to take this approach, it's important that you have a few things in place first, and know what you're getting yourself into:

Determine if your business is ready

Having an idea is not enough to get VC funding.

Typically, VC's will check to make sure you have these things in place prior to closing any deal:

  • An MVP (Minimal Viable Product)
  • A founding team with all proper documents in place (articles of organization, business formation)
  • A validated idea with actual customers buying your product/service

Get everything in place and build a pitch deck

A VC individual or firm will be expecting a fine-tuned presentation that gives an overview of your business.

Here's what you should consider including in your pitch deck:

  • Management team, their previous experience + current roles in the business
  • Market challenge and solution
  • Company financials - including a P&L statement, cash flow statement, and projections
  • Company progress
  • Investment amount - how much do you need and why?

Research the right VC to fund your business

Research the types of VC investors out there and what niche they focus on.

Then, put together a list of target VC's you want to approach and your strategy around setting up meetings.

Be sure you have everything in place (as discussed above) before setting up any meeting!

Make sure the terms and expectations are right for your business

Committing to VC funding is a big deal and a decision that should not be made lightly.

Although the money and experience from VC's can help your business quickly grow, you are also giving away a stake in the company, and the money comes with strings attached.

Be sure you do your due diligence in finding the right investor - one that truly believes in the growth and success of your business.

What Skills Do I Need To Succeed In Starting An Io T Startup?

As a IoT startup, there are several essential skills and characteristics that are important to identify prior to starting your business.

Let’s look at these skills in more detail so you can identify what you need to succeed in your day-to-day business operations:

Self Motivation Skills

Self motivation and discipline skills are critical in order to become successful in this field.

It's likely that you will find yourself starting and running your IoT startup from home, which could mean there are more distractions for you.

Here are the basic skills needed for self motivation & discipline:

  • Becoming a self starter: It's important that you are capable of independently completing a task without the help or direction of anyone else
  • Listening and following directions: When you are given direction by others, it's critical that you are able to follow directions and ask the right questions in order to get your job done
  • Taking the initiative in problem solving: Instead of taking the easy route, you'll need to learn to troubleshoot issues on your own as much as possible.

Customer Service Skills

Friendly communication with customers and the ability to address service issues is a critical part of the job.

Here are some customer service skills you may want to consider prior to starting an IoT startup:

  • Professionalism: The way you act, present yourself, and respond to situations all leave an impression on your customer. It's important to stay professional at all times when handling customer requests or issues.
  • Problem-solving: When issues arise, it's important that you are able to think quick on your feet and address the situation with a calm and clear solution
  • Friendly-manner: This is an obvious one, but customers truly appreciate someone that can respond in a quick, efficient, and friendly manner.
  • Proficient in writing: These skills include the ability to write well-crafted emails, service tickets, and any other programs used by the business (ie. chat functions, SMS texting)

Business Savvy Skills

When starting an IoT startup, there are a few fundamental business skills you will want to learn in order to be successful:

  • Leadership and training skills: A great team starts with YOU. Make sure you have all company policies and training procedures in place prior to hiring your team
  • Decisive and self-confident: Over the course of your career, you will need decisions that could impact your business significantly. It's important you are able to think clearly and rationally about these decisions.
  • Ability to understand the financials: You don't need to be an accountant, but it is important that you are able to clearly understand and define metrics such as expenses, revenue, profit, margins, COGS, etc.
  • Strategic Thinking: Setting clear goals and benchmarks, identifying opportunities, risks. Ability to effectively communicate these insights to your team.

These are a few of many business savvy skills you should have (or work on) when starting an IoT startup.

For a full list, check out this article here.

Design Skills

Whether you are the one designing the product or the decision-maker for the product, an eye for design is critical when starting an IoT startup. Here's what this looks like:

  • Creative Thinking - the ability to develop or design different products or ideas
  • Visualization - being able to imagine or visualize how the product will look
  • Articulation - the ability to communicate what the design will look like and how it will be executed
  • Detail-oriented - paying close attention to all of the small pieces when designing or working on a project
  • Some technical skills - knowledge of the design software you are using to create the product or build prototypes.

Other skills that may be valuable to have when starting an IoT startup include digital marketing skills, branding experience, and basic business knowledge.

Coding Skills

Here are some critical skills you will need to start your IoT startup:

  • Language acquisition: Common languages include Java, Ruby, Python, HTML)
  • Creative thinking: Ability to develop innovative solutions and think outside the box
  • Analytical skills: Ability to troubleshoot issues quickly and efficiently
  • Attention to detail: Precise and detailed in the approach so that little to no errors arise
  • Calm & Collective: Critical that you are able to stay patient when challenges arise
  • Communication skills: The ability to explain your approach in a clear and concise way that all team members can understand.

To see more skills and qualities people look for in a IoT startup, check out this article.

Advice For Starting An Io T Startup

We've interviewed thousands of successful founders at Starter Story and asked what advice they would give to entrepreneurs who are just getting started.

Here's the best advice we discovered for starting an IoT startup:

Craig Rabin, founder of The Airhook ($8K/month):

Expecting the unexpected simply was not good enough. Saying “it will be ok” was not good enough. The entire team and I had to think about our futures first, many with spouses and families, before we could even think about product innovation/growth/etc.

Read the full interview ➜

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Craig Rabin, founder of The Airhook ($8K/month):

Be your hero. The world needs leaders right now and that leader is you.

Read the full interview ➜

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Craig Rabin, founder of The Airhook ($8K/month):

If your only goal is a paycheck, being an inventor might not be the right fit for you. Not that it’s not profitable, but your focus needs to be on innovation. The money will come with the right solution to a problem everyone has.

Read the full interview ➜

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Sam Clay, founder of Turn Touch ($1K/month):

Email marketing is a great channel but without spending more time building new tech, it’s hard to clean out inventory supply.

Read the full interview ➜

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Sam Clay, founder of Turn Touch ($1K/month):

The market dictates everything. It places an upper limit on how much you can sell, how much you can raise, the amount of interest and hunger you’ll see from the press, and the likelihood of finding complements to your product that in turn boost your own product’s success.

Read the full interview ➜

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Scribit, founder of Scribit ($2.3M/month):

All things considered, the best way to validate your idea is to discuss it with everyone you can engage in a meaningful and constructive dialogue. People who tend to keep their ideas to themselves are normally not bound to success.

Read the full interview ➜

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Anthony Chow, founder of Igloohome ($400K/month):

Focus on solving one problem first. Do not try to solve too many problems at one time. Startups have limited resources, and to maximise your chances of success, you need to focus on only one thing.

Read the full interview ➜

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Write a Business Plan

Writing a business plan from the start is critical for the success of your IoT startup.

Why?

Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.

For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.

You may want to consider expanding upon these sections in your business plan:

  • Executive Summary: Brief outline of your product, the market, and growth opportunities
  • Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
  • Products and Services: Specifics on the products and services your business will provide
  • Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
  • Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
  • Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
  • Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
  • Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
  • Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.

Learn more about how to write a business plan here

Determine Which Business Bank Account You Need

There are hundreds of banks out there, and it can be overwhelming to find one that's right for your business.

Here are some factors you may want to consider:

  • Location - Is your bank close enough that you can easily make deposits or get cash?
  • Low Fees - Make sure to understand any and all fees associated with setting up and maintaining your bank account. Ask for a list - banks usually try to keep this hidden and in the fine print.
  • Online Banking Services - Make sure you can easily navigate through your online portal and you have easy access to everything you need.
  • Line of Credit - What do your options look like (even if you don't need this now, you may need this down the road).
  • Every bank has something that differentiates them from the rest, so make sure whatever that is applied to your needs and values.

Check out this list of the 13 Best Banks for Small Business in 2020 and what makes them so unique.

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

Need to start an LLC? Create an LLC in minutes with ZenBusiness.

How Do I Pay Myself As A Small Business Owner?

Most entrepreneurs start a business to do something they love- but at the end of the day, you still have bills to pay (maybe now more than ever).

But it's important to strike the right balance - if you pay yourself too much, you could be putting your business at risk.

There are two common ways to pay yourself as a business owner:

1. Owner's Draw

Many entrepreneurs pay themselves through an owner's draw. This means that you are technically sean as "self-employed" through the eyes of the IRS and are not paid through regular wages.

At the point that you collect money from the draw, taxes typically are not taken out - so make sure you are prepared to pay these taxes once you file your individual return.

As an owner who takes a draw, you can legally take out as much as you want from your equity.

This type of compensation is suited for Sole props, LLCs, and partnerships. If you’re an S corp, you can pay yourself through both a salary and draw if you choose.

2. Salary

If you decide to pay yourself a salary, you will receive a set and recurring amount. This will be taxed by the federal government and the state you reside in.

The reality is that it can be really complicated to set your own salary, so we have some tips for you to consider:

  • Take out a reasonable amount that allows you to live comfortably but also sets your business up for success
  • Consider the number of hours you are working weekly + the type of duties you are performing.
  • Set your salary based on your industry-standard, location, and profits (or projected profits)
  • Look at your P&L statement: Deduct your own pay from that amount. This is important so you can first tackle important business expenses, and then pay yourself from the amount leftover.
  • Pick a payroll schedule (and stick to it)! In the US, it's most common to pay yourself and employees twice a month.

https://media.giphy.com/media/xT0xeLTRncS90ptpfi/giphy.gif

To learn more about how to pay yourself and what is a reasonable amount, check out this article.

How To Price Your Iot Service

One of the most challenging aspects to starting an IoT startup is determining how much to charge for your iot service.

When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.

Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.

On the other hand, when businesses over-price, this tends to be just as damaging to the business.

When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.

Here are some factors to consider when pricing your product:

Understand your customer

It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:

  • Customer demographic: Age, gender, location, etc.
  • Buying habits of your customer: What they buy + when they buy
  • Level of price sensitivity with your customer

All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.

Understand your costs

When pricing your iot service, it's critical that you first identify all of your costs and consequently mark up your iot service so you can factor in a profit.

The actual cost of your iot service may include things like:

  • The actual cost to make the product (ie. raw materials, supplies, manufacturer).
  • Shipping + overhead fees
  • Rent
  • Operating costs to run your business

You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.

Create revenue goals

When determining the price of your iot service, you'll want to create goals for revenue + how much profit you want your IoT startup to make.

This process is simpler than you may think:

  1. Think about your breakeven cost (by completing the above step).
  2. Create a revenue goal based on your break-even cost
  3. Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
  4. Divide your revenue goal by the number of items you plan to sell

This figure will help determine your estimated price per product in order to meet your revenue goals.

Evaluate your competition

The last piece in determining how to price your iot service is by simply looking at your competition.

The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your iot service fits best in the marketplace.

All of these factors play an equal part in pricing your iot service, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.

Gross Margin Calculator: How to Calculate The Gross Margin For Your Iot Service

Our calculator is designed to be simple and easy to use.

The goal is to help you set realistic expectations and understand what is considered a healthy gross margin for your IoT startup.

Calculate your gross margin and profit margin here.

What Type Of Clients Will Buy Your Iot Service

It's important to first establish who you will be selling to, whether it's to businesses or consumers.

Typically, in this industry, products are sold to B2B markets (business-to-business).

Let's take a look at what this means for your IoT startup:

B2B (or business to business) is a transaction where your IoT startup sell's your product or service to other businesses to help them grow.

Business-to business industries typically includes SaaS products, B2B marketing firms, and other business supply companies.

Unlike B2C markets, the audience is not a consumer at all, but instead a business - so it's important to understand how to best market your product/services to that target audience.

With B2B, driving leads means understanding another company's business processes and creating a business strategy that will help their operation scale and grow.

Here are some tips to consider:

  • Your main focus when selling to other businesses is showing value to their business and overall return on investment
  • Focus on building relationships, rather than extending your brand awareness through social networks.
  • Marketing approach should include things like attending conventions, conferences, and optimizing your online presence (SEO, email outreach, etc)
  • Understand that the sales process may mean more effort educating your client, so it's important that you have a well-trained sales team that is knowledgable about the product

Building an MVP (Minimal Viable Product)

When building a IoT startup, it's critical that you first validate your product/service rather than rushing to build it right away.

This could save you months, if not years of building the wrong product/service.

If you're hoping to decrease any sort of risk that comes with launching your IoT startup, designing a prototype can be a great way to de-risk your situation.

The point of your iot service prototype is that it doesn't have to be perfect.

In the beginning stages, it doesn't matter how rough V1 of your prototype is, it's more important to just get started and you can always refine from there based on feedback from your network and most importantly your customers.

How To Build A MVP

Here are several different ways of building a prototype/MVP:

  • Start by building a landing page to see if customers actually need your product and if they are willing to pay for it
  • Build a very basic version of your idea and ask for immediate feedback from potential customers
  • Present a problem and solution via Facebook/Instagram Ads and see what the response is like

Sam Clay, founder of Turn Touch dives deep into the process of designing and prototyping their product:

Case Study

In order to make Turn Touch I had to go through two manufacturing processes.

Prototyping

The first was the prototyping stage, which took place at TechShop in San Francisco. Since I knew I wanted to build a remote out of wood, I determined that there were basically four components that I had to learn how to design and build: the circuit board with wireless connectivity, the tactile buttons, the wood case, and the subassembly that mated the wood to the circuit board.

Each of these took about 6-12 months of prototyping and education. I have bins full of circuit boards with different wireless modules (the final circuit board that shipped is revision number 40), imperfect wood cases, and plastic subassemblies that didn’t pass muster.

I split each of these (as well as the mother of pearl inlay on the bottom of each remote) into a four-part DIY guide, complete with source code and documentation, which you can read in full on Medium.

Manufacturing

The second stage after prototyping was production manufacturing and it took a huge time commitment to find the factory that eventually machined the wood cases.

At first, I assumed that I would have to do all my manufacturing in China because that’s just how things are done. So, I traveled to China and set up meetings with six factories of various capabilities in terms of machining wood. I went through a now defunct company that hooked up product designers with manufacturing partners.

For each factory, I met with them and shared my design files and we went over how they thought the parts should be machined. Needless to say, none of them had any experience working with wood designs on such a small scale.

My tolerances during prototyping were accurate to +/- 0.005” and while most CNC machines are capable of meeting that tolerance, the amount of constant maintenance required would mean that my remotes would come out imperfect and not up to my demanding standards.

This experimental approach is the opposite of the conceptual approach that many people assume great products are built with. The assumption is that a great website or great design comes from careful but precise thinking. The truth is that I push out a functional but flawed concept first and then refine it into the shape I want.

Furthermore, after paying each Chinese factory around $250 each for a manufacturing sample, the samples I received were of various qualities and finishes and not a single one perfectly matched my design files.

I knew that in order to push the factories to build to my standard, it would require an immense amount of hands-on labor and time spent in the factory. So I looked elsewhere.

At a craft faire in San Francisco, I spotted a pair of wooden sunglasses that I knew could only be produced on a CNC machine. I inquired and met with the founder of Wood Thumb, a San Francisco based company that produced their own line of wood products for sale in various stores like Williams Sonoma and Crate & Barrel.

We partnered, and I then spent the next year after the Kickstarter campaign successfully funded working on getting the tolerances right and the fixtures to reliably carve out the remotes. They are running the machines as I write this and producing another batch of 1,000 remotes.

It’s not cheap, but considering the cost of getting this right in China, the cost difference is less than you’d think. If I were making something more off-the-shelf the cost difference would be much greater, but due to the unique nature of Turn Touch, it generally cost a great deal no matter where I went.

In the future I would consider making fewer custom components to bring costs down, but that brings its own risks.

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Sam Clay, on starting Turn Touch ($1,000/month) full story ➜

How To Find The Right Developer For Your Io T Startup

If you (or others on your team) don't have the necessary coding/design skills to build the product on your own, finding the right developer for your IoT startup is a critical piece to bringing your idea to life.

Prior to hiring someone, you'll want to:

  • Have a very clear understanding of what your product (or MVP) will look like
  • Understand what the details of the user experience will look like (pages, how users sign up, backend administrative details, billing, reports etc). It may help to draw out the prototype and UX experience on a design platform such as Sketch
  • Understand what features you want to implement now and even those in the future
  • Understand the costs and time associated with hiring a developer and set a budget (more on that below)

Here are some ways you can find a developer:

Case Study

Arielle Frank, founder of Clout Collective talks about her experiences and lessons learned when hiring a developer as a non-technical founder:

My first attempt to find a developer was a massive failure. I was basically screaming to be taken advantage of with my lack of technical knowledge and a heart full of hope. I signed an extremely unfavorable contract with a developer based in Morocco who claimed to offer “discounted” development services in exchange for equity in the company. By “discounted” I mean that it would cost only $40K to build the MVP. At the time I had no frame of reference for whether or not this was normal and justified it to myself.

Luckily, after a lot more internet sleuthing, I found my current developer, Adeva. Working with Adeva was the opposite experience of my initial encounter in every way. At $8K, Adeva’s quote for my MVP was literally 1/5th the cost of the original developer! I decided to save money on a front-end designer for V1 by using a template and designing things where I could in Figma.

I was forced to figure out many of the details and features of the platform upfront since Adeva couldn’t give me a quote without detailed user stories.

When building out the prospective features, I tried to focus on the end result and work backward from there.

For example, the end goal was for a content creator to be able to read a review and know whether or not they want to collaborate with a specific brand. I used this goal to inform the questions I collected for the reviews and the best way to display this info. During this phase, I also relied heavily on my beta testers for feedback about which info would be the most useful for them.

It’s tempting to add a bunch of cool, slick features when you’re building your product, but my brilliant mentor encouraged me to focus on doing one thing extremely well.

article

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Wilson Hung, on starting ARPU (/month) full story ➜

🚀 How To Launch Your Io T Startup

article

Build A Website

Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).

  1. Pick a domain name that's easy to remember and easy to type
  2. Choose a Web Hosting Plan (ie. Shopify, Squarespace)
  3. Make sure you choose the right theme and design
  4. Implement the proper page structure (ie. about page, contact page, pricing etc)

To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.

Web Design

Once you have chosen the domain, web hosting, and platform, it's time to get started with the design phase.

Themes are a great way to produce the fundamental style and identity of your website - this includes everything from your font design to your blog post styles.

One of the best ways to get started is to simply explore the various themes (free or paid depending on what you're looking for) and test them on your site.

If web-design really isn't in the cards for you, you may want to consider outsourcing a web designer to help bring your vision and brand to life.

Launch Strategies For Your Io T Startup

There are various different ways you can launch your IoT startup successfully.

Here are a few different strategies to get customers excited about your IoT startup.

  • Build hype with a landing page: you can effectively do this through waiting lists, discounts, countdown timer etc
  • Create a teaser video: even just a 30 second video is a great way to exposure for your IoT startup, and possibly even go viral
  • Reach out to influencers: The right influencer for your product has the ability to reach your audience with just one post, and because of their loyal following, this could lead to a big return for you.
  • Get Press: Whether you plan a PR stunt or get exposure through a popular news outlet, this is a great way to attract initial customers
  • Launch on popular sites: A great way to get buzz about your IoT startup is to submit your launch to popular startup sites.

Here are a few popular sites to launch on:

Learn more about how to launch your business successfully ➜ here

Sam Clay, founder of Turn Touch dives deep into the process of launching the business:

Case Study

The truth is that I still haven’t seen a lot of customers. A thousand remotes sold at $59-$99 each is not a profitable business. I hope to bring those sales figures up, but to do that I have to learn more about marketing and making it clearer how useful a remote like Turn Touch is.

The market dictates everything. It places an upper limit on how much you can sell, how much you can raise, the amount of interest and hunger you’ll see from the press, and the likelihood of finding complements to your product that in turn boost your own product’s success.

Creating the website was straight-forward, as I used a Shopify template and modified it to fit the story I wanted to tell. It also helped that I designed a website before I moved to Shopify and had a better idea of how to tell the story.

This iterative approach shows up a lot in my work, where I start with a flimsy prototype that barely gets the job done and refine it, going through multiple top-to-bottom revisions until I end up in a place where I’m satisfied.

This experimental approach is the opposite of the conceptual approach that many people assume great products are built with. The assumption is that a great website or great design comes from careful but precise thinking. The truth is that I push out a functional but flawed concept first and then refine it into the shape I want.

The launch for the Turn Touch Kickstarter went well considering I was being stretched thin between setting up production and continuing to run my news reader.

I collected a list of publications that covered similar campaigns in the past. Before and during the first week after I launched, I emailed each of about 100 publications a 3 sentence description of the campaign, along with a link to the campaign and the press page, where I collected photos and bullet points that the publications could then easily reuse when writing about Turn Touch.

For the Kickstarter campaign, that was a successful strategy. About a quarter of the publications I reached out to wrote about the remote, such as The Verge, Macstories, The Gadgeteer, 9To5Toys, SlashGear, PSFK, InsideHook, and Digital Trends.

But once a publication wrote about Turn Touch I found that they were unlikely to write about it again once I launched general availability, which hurt my sales figures once I was done fulfilling all of my campaign rewards. I’m still trying to figure out how to get attention again.

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Sam Clay, on starting Turn Touch ($1,000/month) full story ➜

Get Press Coverage For Your Io T Startup

The more buzz around your brand - the more the phones ring, the more traffic to your website, and the more customers as a result.

Here are a few ways you can get press for your business:

Press releases:

Press releases are a great way to share big announcements or news, but in order to get any traction, you'll need to find a way to make your press release stand out amongst others.

Try to convey a story that really matters, not just to you, but to the reporter and to their audience.

Here are some things to consider when submitting a press release:

  • Craft a catchy subject (keep it short and sweet).
  • Acknowledge the journalist's past work and interests - this is key!
  • Include the main point of the story in the first paragraph, heck, even the first sentence. Reporters want to hear the juice first and foremost.
  • Focus on the facts and try to limit the amount of jargon used.
  • Pitch yourself! Help them put a face to the story.
  • Make sure your topic is newsworthy. If it's not, find a way to!
  • Try not to include any attachments of your release!

Email is one of the most effective and preferred way to send your press release, so as long as you keep your pitch brief, interesting and personalized (no cold emails), you should stand a chance!

Get Press Using HARO

HARO, otherwise known as "Help a Reporter Out" is an outlet for journalists to source upcoming stories and opportunities for media coverage.

The best part is, HARO is free to use! There are, of course, premium versions you can purchase, but the free version is still an accessible way to get press.

Once you set up an account, HARO essentially will email you based on stories (that are relevant to you) that need to be covered where you will then have a chance to essentially "bid on the story."

Here are some tips when crafting your pitch:

  • Discuss your experience and expertise in the space. Make sure it's obvious why you're relevant to this story.
  • Answer the question in 3-4 sentences. Try and be as direct as possible
  • Offer to provide the reporter with more information and make sure to give them your contact info

Plan a Publicity Stunt

Planning a publicity stunt is an effective and quick way to raise awareness for your brand and gain some traction from the press.

If you're looking to plan a stunt, the objective should be to be bold and create something memorable

However, being bold has a fine line - it's important that you consider the timing of your stunt to ensure you don't come off insensitive or unethical. For example, timing may not be in your favor if you plan something during the general election, or in most recent cases, a global pandemic.

In order to measure the success of your stunt, it's important that you first determine your end goal, for example:

  • Is the stunt aimed to raise money for your business or a particular organization?
  • Is the stunt aimed to drive more traffic to your website?
  • Is the stunt aimed to get more followers and engagement on Instagram?

Here are a few tips for creating a great publicity stunt:

  • Research to ensure that there haven't been similar stunts done in the past by other businesses - this could easily turn off journalists and your audience.
  • Make sure you can explain the stunt in one headline - this will help grab the media's attention. In other words, simplify!
  • The stunt should be related to the product you are promoting. Even if the stunt is a success in terms of viewers, but it doesn't tie back to your original goal, then it's not useful.
  • Keep the stunt visual with videos/images.
  • Leverage the internet and social media platforms for your stunt by sharing your message across a variety of audiences. This will help with word of mouth and the overall success of your event.

To learn other strategies on how to get press, check out our full guide here.

🌱 How To Grow Your Io T Startup

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Improve your SEO

SEO is not just about driving traffic to your site, it's about driving the RIGHT traffic to your site, and ultimately, converting leads into customers.

One of the most important aspects of SEO is understanding what your customers are searching for, otherwise known as "keyword research."

Here are some tools that can help you choose the right keywords for your IoT startup.

Publish Great Content

Finding keywords is an important piece of the puzzle, but Google also ranks your site based on the actual content you produce, as this is what your customers are reading and engaging with.

There are various different "forms" of content that you may want to consider diversifying on your sites, such as blog posts, articles, studies, and videos.

So let's discuss what google considers "good content:"

  • Length - This will vary depending on the page, however, generally having a sufficient amount of content helps search engines recognize that your site is a good source for a specific topic
  • Engagement - The longer people stay on your website to read your content, the higher Google will rank your website. It's important to have informative and "thick" content that keeps people reading
  • Avoid Duplicating Content - Google will recognize this and may consider your content to have low value
  • Ensure pages load quickly - This will also help with engagement and time spent on your website
  • Shareability - Create content that people want to share, and is easy for them to share, especially to their social media accounts (ie. "click to tweet" is a great example of this).

Another element of creating good content is creating consistent content.

If (and hopefully you are) publishing content frequently, it's important to stick to a schedule - this helps build brand trust and easy user experience with your customers.

Planning out your content with a content calendar is key to staying consistent.

Here are a few great content calendar tools that can help you:

  • Trello
  • Airtable
  • If you prefer to keep it simple, your average spreadsheet is just as useful!

Backlinks

Backlinks are an important piece to SEO, as they allow for other websites to link to your content.

Search engines recognize that other sites are essentially "verifying" your content and essentially rank you higher because of this.

Of course, some links are more valuable than others and can affect your site in different ways.

For example, if a highly valuable and credible site like the New York Times links to a page on your website, this could be remarkable from an SEO perspective.

Aside from organically getting mentioned from other sites, there are other ways that you can increase and earn backlinks:

  • Create infographics with relevant data that people want to share
  • Promote your content on different sites/look into "guest blogging"
  • Contact influencers/journalists/bloggers and ask them to mention you!
  • Write testimonials for other sites in exchange for a backlink
  • Leverage existing business relationships

Learn more about the fundamentals of SEO ➜ here and check out Neil Patel's 3 Powerful SEO Tips below

Build A Blog

One of the most effective ways to build brand awareness and grow your business is through consistently blogging.

We've outlined some useful tips for you to consider when creating content:

Consistency and Quantity

Quality is important, but it should be the standard for any content you publish.

What’s more important is consistency and quantity.

Consistency is as simple as committing to publishing and sharing a certain number of posts per week. For me, that’s three per week right now.

This kind of commitment is key, because one day, a random post will blow up, and you will have never expected it.

Oversaturation

The easiest mind trap is to think "I’m posting too much", and “I need to give my readers/audience/this platform a break”.

This is nonsense.

There is no such thing as oversaturation. Well, there is, but it is just someone else’s opinion.

For every person that tells you you are posting too much, there is another person that wants even more of your content.

You should ignore people’s opinions on how much you post.

Patience & Persistence

Keep posting, keep trying, and keep putting out good content on the regular. Your time will come, and when it does, it will change everything.

The only thing you have control over is your content.

You can’t control how people will react to it. You can’t control pageviews, likes, or shares.

So the only metric you should focus on is how much content you can put out in a week, month, etc.

Where to share your blog content

Mailing List

I know it sounds obvious, but the best places to share your content is on your mailing list. It is guaranteed traffic and it is a great way to get rapid feedback from your most loyal readers.

Send newsletters often. I have done once a week since starting, and I’m moving to twice a week soon.

Work on increasing your mailing list as well. Look into ways to increase your conversion rate to your mailing list. I added a flyout popup thing to my site and now I’m collecting ~30 emails per day.

An email newsletter is one of the most powerful assets you can have and it is worth its weight in gold.

Reddit

Reddit is one of my favorite places to promote content.

It is a very scary place because you will often get banned or heckled, but it can really pay off.

Create social media accounts for your blog, the main ones I use:

Twitter Facebook Instagram LinkedIn

Set up Buffer and share all of your blog posts to all of your accounts. All of these little shares really do add up.

Automate this as much as possible. I automated all of my social media for Starter Story.

Facebook Groups

When I started out, I put together a spreadsheet of relevant Facebook groups for my niche, and I would post to these groups whenever I had a big story I wanted to share.

Grow Your Email List

The more engaged list of emails, the more engaged customers, which ultimately leads to more sales.

One of the best ways to start growing your list is by providing your customer with something free (or discounted) in return.

This could also be anything from:

  • Ebook
  • Fascinating case study
  • Video series
  • Free week of the product
  • Discount on the product

Learn more about how to grow your email list and improve email marketing ➜ here.

Case Study

Dylan Jacob, founder of Brumate states their email collection tactic that is proven to work:

We use Spin-a-Sale for this (you spin a wheel for a discount code in exchange for subscribing to our email list). This has been the best email-collecting tool we have found because the customer truly feels like they won a prize rather than just a coupon code.

Even if a customer doesn’t convert right away, if we have their email we have a 19% chance of converting them into a future customer whether that is through future promotions, new releases, or simply just sending an email at the right time for a purchase to finally make sense for them.

We also have a return customer rate of over 14%, so one out of every 6 people we convert will end up buying from us again with an average order value of over $60.00.

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Dylan Jacob, on starting BrüMate ($12,000,000/month) full story ➜

Add an exit-intent popup to your online store

A great way to double, or even triple, your email opt-in rate and to grow your list is to add an exit-intent popup to your site, and offering a discount or content upgrade for subscribers.

Here's an example of what that might look like:

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Case Study

One thing that I spent years NOT doing, that I now kick myself about, is adding an "exit intent pop-up" to our site, which lets people enter a sweepstakes to win a Xero Shoes gift certificate.

That one idea has added over 100,000 subscribers to our email list, which is one of our most effective marketing channels.

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Steven Sashen, on starting Xero Shoes ($4,000,000/month) full story ➜

Improve Your Email Marketing

Different types of emails

Here are the most common types of email campaigns you can send to your customers and their benefits:

  • Welcome emails - the perfect way to provide information from the start with a clear CTA. Make sure to tell your customer everything they need to know about your product or service.
  • Newsletters - a great way to give customers updates or send out your latest content
  • Product launch emails - the quickest (and easiest) way to increase sales is by selling to current customers. Make sure they're the first on the list to know about your new product
  • Promotional emails - promote discounts, deals coupons etc. Try and make this feel exclusive and for a limited time only
  • Abandoned cart emails - give your customers a reason to complete their purchase!

Here's a great resource for finding curated email designs, for all types of email campaigns!

Abandonded Cart Flow

The abandoned cart workflow is one of the most effective strategies for turning your lead into a customer, and a powerful tool to have if you're an e-commerce business.

Think about all the times that you went on a shopping frenzy only to add items to your cart and then either forget or realize nows not the right time to pull the trigger.

Then, minutes later you receive an email saying "Hurry up! Your cart is waiting - and we want to provide you with 20% off your order."

Maybe that's the special touch (and discount) you needed to pull that trigger.

Implementing this workflow can automatically trigger this for your business every time a customer abandons their cart.

Here's a great example of an abandoned cart email from Brooklinen:

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Things they do well:

  • Showcase 5-star reviews from other customers
  • Offer a small discount + free shipping
  • Great design + clear call to actions!

Experiment With Pay Per Click Ads (PPC)

Pay-per-click (PPC) is a performance-based marketing method that allows you to show specific ads for services or products oriented to a very defined target, with the goal that the user visits your website or landing page.

Here are some tips to consider:

  • Consider connecting the ad to your corresponding landing page so that the audience receives the necessary information after clicking on the ad.
  • Conversion Tracking: When running PPC campaigns, be sure to run the ads with conversion tracking.
  • Focus on quality keywords, even if there are few as this will save you time and money. When assessing the performance of a keyword, it's important to track the expense, conversion, and cost per conversion, as well as the ROI.

PPC advertising can be a very important lead generator as long as it's done properly. Your PPC campaign is intended to drive traffic to your website and help the business scale.

Additionally, if the campaign is not having the desired results, you can make the necessary changes immediately to improve them.

Case Study

Ryan Schortmann, founder of Display Pros talks about their investment in PPC Ads:

My name is Ryan Schortmann and I’m the founder of Display Pros. We are a custom trade show display booth company offering easy to use portable display “kits” for small and medium businesses wanting to get into the trade show game.

It did not take long to come to the realization that to compete at any reasonable level, we were going to need to take the plunge and invest in Pay Per Click ads and display.

From experience, I know that it is important to give Google’s hivemind some time to settle in before each campaign starts seeing consistent results (this is largely dependent on budget).

A certain amount of PPC budget must be viewed as a “marketing research” expense and then you can look at the analytics data and make informed decisions on where to refine, tweak or plain scrap an idea.

Google Shopping was an entirely new concept for me. You can’t assign keywords to products so at first, I was asking myself “How the hell do you refine these?”. Then I found some good reading material and courses and learned of some advanced methods that the pros are using. It turns out you can utilize negative keyword lists combined with the priority setting on each shopping campaign to “shape” the keywords that are coming in and how much you are spending on them.

To learn more about PPC Ads and Google Shopping, check out this video to learn everything you need to know!

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Ryan Schortmann, on starting Display Pros ($30,000/month) full story ➜

Social Media Advertising

Social Media Advertising is one of the leading ways to get the word out when it comes to IoT startup.

There are various different Social Media platforms available to you. Some may be more critical for your marketing efforts than others, however, it's important to have an understanding of what's out there and available to you.

Let's talk about a few of the main platforms and what makes them unique:

  • Facebook Advertising - more than 2 billion monthly users. Facebook is the best for lead generation + capturing email addresses for e-commerce businesses.
  • Instagram Advertising - approximately 500 million monthly users and has a higher audience engagement rate than any other platform. Instagram ads are best for linking to a product page or landing page and reaches the 18-29 age group most effectively.
  • Twitter Advertising- Small businesses typically use twitter ads to drive brand awareness, but the platform is meant more for organic engagement (and is not as heavily used for paid advertising)
  • Pinterest Advertising - 175 million monthly users and most effectively reaches the female audience. Pinterest is great for promoting products without "promoted". The promoted pins have a way of blending right in.
  • LinkedIn Advertising - 227 million monthly users and is geared towards the B2B market and generates the highest quality leads. Great platform for recruiters, high-end products and services that will help businesses

It's important to first define your goal/objective so that you don't waste time and money into the wrong platform:

Here are some different questions to ask yourself as it relates to your goals:

  • Do I want to simply drive brand awareness?
  • Do I want to drive users to my website to gather information?
  • Do I want to increase sales and get my customer to take action?

From there, choose the platform that targets your audience best and start experimenting!

Learn more about social media advertising ➜ here.

Case Study

Founder Andy Hayes talks about mastering FB ads and the pixel:

The biggest bang for your buck will likely be mastering Facebook and it’s platform - which we all know is pay for play, so you’ll have to come up with a small amount of budget to start for marketing.

We’ve spent countless hours (and paid numerous coaches) before we cracked the code that works for us on Facebook, but it is working really well for us now.

Some of the most important things to know when it comes to FB Ads:

  • Start with retargeting (that’s showing ads to people who already know you but did not purchase). Master this - and start building information on your Facebook Pixel - before you do anything else
  • Once you have that down, try working with the 1% “Lookalike” audience to prospect for new customers. This may take awhile because your pixel audience is small, so try layering on interests - 1% Lookalike and your largest competitor, for example. Don’t use interest-only targeting until you master this.
  • Great photography and videography is key, as is smart copy. Research what’s out there in your industry and constantly test - what works for one company may not work for other people.
  • Make sure you have good offers. For example, we have a $5 trial for our subscription, which converts affordably - if we promoted our subscription with the standard $30 front charge, it wouldn’t be as cost-effective.
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Andy Hayes, on starting Plum Deluxe Tea ($75,000/month) full story ➜

🏃🏼‍♀️ How To Run Your Io T Startup

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How To Retain Customers For Your Io T Startup

Retaining customers is one of the most effective ways to grow your IoT startup.

Oftentimes, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.

Look at it this way - you are 60-70% more likely to sell a new product to an existing customer than you are a new customer.

That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.

Here are some ways you can retain customers for your IoT startup:

  • Responding to comments on social media
  • Send discounts (or freebies) to loyal customers
  • Provide valuable content, for free
  • Write a hand written thank you note
  • Provide awesome customer service and build relationships with customers

To find out more tips and tricks on retaining customers, check out this article ➜ here

Craig Rabin, founder of The Airhook dives deep into the process of attracting and retaining customers:

Case Study

The best thing that has worked for us has been to listen to our target market. In fact, we’ve done a handful of consumer research studies to do just that, ask what they think of the product! It was crucial to our success to adapt to what the market was asking for, not just what we thought would be neat to design.

From there, it was all about increasing our reach through creative… often grassroots-esque… marketing strategies. I’ll focus the majority on a few noteworthy ones:

The Power Of PR:

This has been SUPER important for us, BUT not necessarily by using a publicist. We often found that media preferred to be contacted directly by us vs. an agency that pitches story after story. So… how do you get those contacts… RESEARCH!

For us, we started by looking for the top ~50 news articles concerning travel or travel-related goods. We then broke down each news outlet and either a) contacted them directly by simply using their web page contact form – we got a surprising number of responses, or b) the news outlet was owned by a larger conglomerate [these are the real biggies] and contact information was seldom found.

So… USE LINKEDIN! Think about it, you now know the company name, you know which department you need to speak with, you can probably even determine the job title… you see where I’m going here :)

Then – pitch, pitch, PITCH! Figure 1 in 10 responses is a good ratio. The Airhook has been in roughly 100 publications since 2015, I’m confident I’ve pitched at least 1,000 times – typically ~5 daily based on current events and HARO (Help A Reporter Out – further explained under recommended tools). Once the PR train starts, keep it on track! Make time everyday for media outreach.

Celebrities/Endorsers:

This continues on from the PR piece, it’s all about telling a story. For some, their source of information is from celebrity or social media folks they follow. Now all options aside about the right/wrong of this approach… it happens. And your business needs to use whatever the world has to offer you. So instead of calling them celebrities, I’ll refer to this group simply as Influencers.

How to find them? Google it! Really, go search “top travel influencers” and look at the top few hits – that was our list. It’s that simple. From there reach out them individually, AFTER [and only after] you see what type of posts they have. Get to know their work so when you reach out asking for a favor, it feels more like a friend who knows something about them and appreciates their craft.

Then, pitch, pitch, PITCH! Expect a 1 in 20 response, but we promise the longshots have the biggest gains. Here is The Airhook being represented at 2019 The Oscars!

Networking

Which also continues from above. Outside of press and others who can push the story – YOU can. Get out here! Go to networking events, find ground on meetup.com, or freakin’ go door to door! If you don’t feel comfortable talking to a complete stranger about your business – how can you expect someone else to?

Facebook Ads

Mehhhh – these have never worked well for us. Even with all the fancy targeting that you can do – the conversion rates are not there. Facebook is for birthday reminders and baby pictures – not where they buy travel products so it was an easy pass for us.

Other Digital Strategies:

The digital landscape itself is vast and always changing. From setting us your shop with proper SEO, optimizing your conversion funnels with analytics, or your retargeting methods – it’s a class that never ends. If you can’t immerse yourself in this world – DON’T – but hire a fire/friend/college who can on your companies behalf. Special note, also very important to monitor social media for customer issues and addressing their needs.

Outside of the above, our company culture is one of openness and communication. When we experienced challenges with our manufacturing that delayed deliveries by ~4 months, I broke down crying. I told our customers this in a long drawn out update and promised that no matter how upset they were their pre-orders wouldn’t arrive soon – it was to no degree of how crushed I was. It was simply the truth. It worked and instead of complaints… we were praised for owning up to the responsibility.

Would you do business with you? Make sure the answer to this question is always a resounding, YES!

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Craig Rabin, on starting The Airhook ($8,000/month) full story ➜

Diversify Your Product Line

Adding new products to your business is a great way to expand into new markets and grow your business.

It's important to note that adding new products and diversifying may not be in the cards for you right this moment, and that's okay. You can always consider it down the road.

Here are some reasons you may want to considering adding/diversifying your product

  • Meeting the needs of your customers
  • Establish yourself as a top provider in your industry and stay ahead of the game with competition
  • Resistance to downturns/trends fading
  • Create new revenue streams

Provide Great Customer Service

Providing exceptional care and creating relationships with clients is a great way to build your reputation and retain customers.

Whether you are an online business or a physical business, it's highly important to communicate with customers and make them feel like they are the priority.

Just remember: customer service represents your brand, values, vision and YOU as a person.

Authenticity

As a brand, you want to deliver an experience that authentic, honest and transparent.

Don't make the mistake of giving your audience less credit than they deserve.

Case Study

Be Authentic

If you go around chasing every trend and only focused on yourself and money, you’re going to lose very quickly.

There have been many times where we have been tempted to do this but stayed true.

Sure we sacrificed sales, but we kept our integrity, played the long game and people saw and appreciated that, and really began emotionally investing in the brand.

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Valentin Ozich, on starting I Love Ugly ($300,000/month) full story ➜

Build a Referral Program

Word of mouth is one of the best ways to get the word out about your business and acquire new customers. Especially when you are starting out, it’s important to build a solid referral program to encourage existing customers to help you find new ones.

A great way to do that is by offering a reward (ie. credit on your service or cash) to customers that refer you to their friends and family.

A fantastic referral program will help with clout, credibility, and establishing yourself in the space.

Word of Mouth

The most tried and true way to grow a IoT startup is through word of mouth - some entrepreneurs would say it's more important than all social media.

Why you should focus on word of mouth:

  • Consumers trust word of mouth above all other forms of marketing
  • 92% of consumers believe recommendations from friends and family over all forms of advertising
  • 64% of marketing executives indicated that they believe it is the most effective form of marketing

Learn more about word of mouth in our guide: 30 Ways Founders Grow Their Business ➜

Resources

We put together the best resources on the internet to help you start your IoT startup.

Tools

Books

Web Resources

Videos

Case Studies

meet the author
Pat Walls

I'm Pat Walls and I created Starter Story - a website dedicated to helping people start businesses. We interview entrepreneurs from around the world about how they started and grew their businesses.