No Idea How to Start a Business? Here’s How…
A five-step plan for starting a business, when you have no idea what to do or where to start.
Let’s start with the bad news;
Building a sustainable, scalable, and ethical business is not easy. In fact, it could well be one of the hardest things you’ll ever do. And then, just when you think you’ve got it figured out, a pandemic starts.
Things are about to get tough.
The negative effect of Covid-19 and subsequent lockdown will have on the global economy is significant. Industries will disappear and people are going to lose their jobs in the millions. You may be one of them (I hope not).
The optimistic news;
Now be just the right time to scratch that entrepreneurial itch and start a side hustle that turns into a hustle. Here’s a couple of businesses that were born in recession to get you pumped — Microsoft, Disney, General Motors, Google, and Facebook.
This is all well and good, we’d all love to own Google, but wtf are you going to build and where do you start?
Fear not, my information gathering and entrepreneurial friend, for I have asked some super-smart founders and investors that have been guests on my show exactly this…
If you were to start a business right now, how would you decide what to build?
What are the first things you should do when you decide?
Some of these steps will sound obvious and may even be annoying. However, if you are serious about making this work, do the work. To quote Ross Nicholls, the 12x UK Brazilian Jiu Jitsu Champion -
“Once you accept this is going to take working as hard as you can, every day, for ten years, the rest is easy”
Are you ready? Let’s do this…
Photo by Gratisography
STEP 1 — Find the Problem
“The biggest mistake I see people make is trying to find a problem for their solution, rather than building a solution that solves a problem” — Said Kevin Monserrat, the former deal flow man at Microsoft now VC head honcho at Consilience Ventures. So here lies the first step — Find a problem that needs solving.
There are two sentences that start a company — Wouldn’t it be cool if? or Wouldn’t it be better if?
But how do you find this problem if you aren’t already sitting in a gem? Well, here’s a super simple but effective exercise;
For the next week, every time you interact with something whether it be parking, texting, eating dinner, or reading an article on Medium. Ask yourself what would make this cooler or better.
I promise you, you will be inundated with things you hate in the world and you’ll be aching to solve them. I apologize for ruining your peace.
TOP TIP — You don’t have to be an expert in the issue to be able to solve it, you just have to be passionate about it. If you aren’t, give up now because if this goes well you’ll be solving this problem for the next 10 years.
STEP 2 — Is this actually an issue?
“The biggest mistake I see founders make is not speaking to potential customers” — Said Max Kelly, former SVP of Techstars and Head of Investments are Virgin.
He’s not wrong. Just because you think it’s an issue, doesn’t mean it actually is for others, and secondly, it may not be enough of an issue that they are willing to pay for it to change.
Spend more time on this than anything else. You need to deeply and thoroughly understand the problem that you’re trying to solve. Learn the words your future customers use, the struggles they go through and the pain it causes. You need to be able to walk in their shoes and feel real empathy.
The more you understand the problem, the better the solution will be.
TOP TIP — Don’t be afraid to talk to people about what you’re doing. Too many founders are afraid someone will steal their idea. The truth is, it’s incredibly unlikely they will, and if they do, it doesn’t matter, you are a better executor and that’s what will make all the difference.
STEP 3- MVV
“The biggest mistake I see founders make is building things their customers don’t want” Said Anthony Rose, the founder of SeedLegals and former boss of BBC iPlayer.
That’s not a typo, it’s not MVP, we’re a few leaps from that. The new emerging concept from the startup wizards is Minimum Viable Value.
What is the minimum value you need to deliver to your customers for them to buy your service? This is your North Star. This is the core focus of what you're going to build and the most important decision you’ll make. Get this super tight and don’t complicate it.
Some great examples;
Uber — Allowing you to order a cab from your phone
Deliveroo — Allowing you to order food to your house from your phone
Airbnb — Allowing homeowners to rent out a room/house to holidaymakers
Stakester — Allowing you to play someone at a video game for money.
TOP TIP — Don’t be afraid of oversimplification. The best products and companies became successful because they solved one problem exceptionally well.
STEP 4 — Is this worth it?
I hate this term as it’s a little intimidating, but you need to now look at the unit economics and scalability.
This is pretty critical because if it doesn’t add up, you will need to go back to step 1.
I’ll walk you through it bit by bit.
What’s your unit of value?
Rolex’s unit of value is a watch. Ford’s unit of value is a car. Netflix’s unit of value is a subscription.
How much is this? Check out your competitors (don’t lie to yourself, there will be some).
What’s the cost of the sale?
Rolex has to buy the parts and cost to actually get people to but them, so marketing. Ford is roughly the same. Netflix pays royalties instead of parts, and the rest is the same. Estimates are fine.
What is the Unit Economics?
This number is 1 minus 2. Despite what some people will tell you, there is no golden rule on what this should be as a percentage. But it needs to be positive!
Does it scale?
How many of these are you going to need to sell to make enough money for it to be worth it?
Are you being honest with yourself?
Are these numbers realistic? Do you need to sell a squillion before you can afford to buy a Happy Meal?
The best resource I know for this is from Accelerated Digital Ventures
TOP TIP — This matters, spend time on it. It can be frustrating and intimidating if you, like me, aren’t an economist. But it will become easier and is an essential step.
STEP 5 — Avengers Assemble
“The biggest mistake I see founders make is thinking they can do it all on their own” Said Warwick Hill, former CEO of Microsoft for Startups and now NED and Advisor for global enterprises.
Look, yes, you are incredibly gifted, talented, smart, wonderful, beautiful and that lasagne you made that one time was genuinely better than a restaurant. But even though this is very impressive, you are just one person. If you are going to turn this dream into something sustainable and life-changing, you’re going to need help. Soz. Even Greta has a team.
Write a list of all the things you are going to need to do. For example, build a brand, win customers, design the product, write the code, incorporate the entity, sort all the legal stuff, to name a few. And now, being brutally honest, mark the things you are able to do well and then go and find someone equally enthusiastic and gifted as yourself to do the rest.
TOP TIP — Never underestimate how many people are ready to start a business but need someone to lead them. Don’t be afraid to ask someone to help you or join you.
Photo by aitoff
The startup journey is unimaginably hard, HOWEVER, if you set off on the right foot and build from a solid foundation, your probability of success is going to be significantly improved.
Go get ’em tiger.