So you want to start a business. Maybe you have a great idea that will make life easier for millions of people but you don’t know where to begin. You are not alone. No one is born with a business idea or roadmap in their heads. They read, study, and research first. That is precisely what this article is all about. Now, I will be walking you through the first steps you need to take to get that business running.
Get Your Big Idea
To start a great business, you need a great idea. Some of the biggest innovators found it helpful to focus on problems and then the solution just appears. Just be prepared because some of the best ideas come to you in very unlikely circumstances.
Do you have the technical skills to build a great software product? If you don’t, do you have the managerial ability to attract and direct great builders? Remember, Bezos didn’t start with the entire Amazon business empire in his mind. He only wanted to sell books online. So you don’t have to start with your entire idea fleshed out, you only need a kernel of one. But even with the kernel of one, you still need to be sure you have a viable idea.
Research The Market
The most important part of any business is the end consumer. Your business idea does not work if it does not solve the problem of the consumer you are selling it to. No matter how great your business idea is, you have to be certain it is something that the market wants. This is the phase where you get your product market fit.
There are several ways to conduct this research. The first is to observe. If you want to sell software for a business, for instance, it is important to speak to your potential customers about their business needs. Ask them what they struggle with and sick their opinion on what they think would make it easier for them to do business. If you struggle with pricing your solution, it may help to ask them how much they would pay for a potential solution.
The founders of DoorDash, for instance, only started DoorDash after going up to restaurants in their areas and asking them what problems they had. Before they began their research they had planned on building a different business altogether. But after their market research, they truly understood what problems they needed to solve and went about solving them.
Figure Out Your Strategy
If you followed the first two steps properly, then you should already have two things; a great business idea and some confidence that your idea would be successful. Of course, this isn’t a guarantee of success. Some of the best business ideas fail either because of faulty execution or because they are simply too late to the market. Myspace, for example, could have been the trillion-dollar corporation that Facebook is, but a mix of horrible execution, too much inflexibility, and a product that was way too early to market doomed the business.
Define Your Vision and Mission
Your vision statement should show your projection, telling us where you see yourself in the near future. This should be an aspirational statement that guides what you want your business to look like in the future. Your mission statement, on the other hand, should define the purpose of your business. It should detail what your business does, who your end consumers are, and how you serve them.
Remember that these two are not – and should not — be set in stone. Business environments change all the time, and the most important thing is the sustainability of your business, not the permanence of your market or goals. Netflix, the streaming giant, first started as a DVD rental business. It only switched to streaming in 2007, and today it is one of the biggest streaming businesses. Kodak, on the other hand, failed to accommodate the growing digital camera industry and failed as a result.
Develop Your Unique Value Proposition (UVP)
Ideally, you should already have an idea of what your unique value proposition is. What is the new thing you are bringing to the market? If you have an idea of what that is, your strategizing phase is the time to extensively document it.
If you execute this process diligently, you may be surprised with what you find. McDonald, for example, only found out that it was a real estate business years into operation. This sort of realization shouldn’t be your lot because by then it might be too late. That is why it is important to be extremely introspective and figure out the special benefits your customers will get from your business and the special perks your business might have as a result.
Develop Your Minimum Viable Product
Developing an MVP, though cheaper than building a full-scale product, can be extremely expensive. Building a software MVP can cost as much as $10,000 with some estimates going up to $100,000. And you don’t want to waste precious money on developing a product that you are not reasonably sure has an above-average plan in the market.
The purpose of an MVP is to get early feedback from customers before launching the product into the full-scale market, and this requires some personal work. Facebook, for instance, had Zuckerburg as a primary engineer for at least the first year of the company.
The founders of DoorDash, for instance, were the company's first riders before they opened it up to other riders. So creating an MVP and testing it out requires immense personal investment from you as a founder. You need to get on the streets, walk the talk, and interface directly with your customers and your product.
Plan Your Business Model
Facebook did not have a revenue model until long after it achieved product market fit and built an MVP. The same goes for businesses like Instagram, Snapchat, and WhatsApp. Some software businesses do not yet have a viable revenue model despite being worth a lot of money and being quite successful. Twitter is one of those businesses, and it was sold for 44 billion dollars.
This means you need to figure out whether your business will make money through sales, subscriptions, or advertising. You also need to know your cost structure which includes your fixed and variable costs. In essence, you should have a full and comprehensive picture of how much it costs to run your business and what numbers you need to reach profitability.
Operational, Organizational, and Legal Plans
At this point of development, you should probably also start thinking of raising money if you haven’t already. It is difficult for most businesses to raise funds before achieving product market fit or having an MVP, especially in a bearish market. Venture Capitalists are unlikely to listen to founders who haven’t done some groundwork.
However, if you already have a winning idea, a great MVP, and a path to profitability, raising money becomes way easier. This does not mean you should not attempt to raise funds before this phase, it just means it is a lot easier to do so once you’ve done the groundwork. You’ll simply have an easier time asking for money if you have already done most of the background work, and you will get investments at much more favorable terms. Then you need to work on hiring the best hands and making sure the legal part of your business
Conclusion
Starting a business is one of the most difficult things to do in the world. The road to profitability is littered with the corpses of failed businesses and broken dreams. The truth is even if you do everything right, there is still a huge chance that your business will go bust. About 70% of startups fail within their first five years. Sobering statistics such as this should not dissuade you — it should only tell you how much work lies ahead and how thorough you have to be with your new venture.
But the good news is that the market mostly rewards founders who work hard and create great solutions for their customers. If you work hard and have a great vision, who knows — you could be the next superstar founder out of your community.