Table of Contents
When you decide to start a business, it is just the beginning. But before you make that final leap, there are things that need to be done. Today, we will take a look at what those things, the last three of them, are. Hopefully, this will help you, and other aspiring entrepreneurs around the world as well, avoid unnecessary mistakes and help you build your first successful business faster and at the first attempt. Anyone can become an entrepreneur, start a business and succeed. Let’s find out how to beat the odds.
First 3 things to do are in part 1.
Find customers or clients
In the first part, we discussed how to run a test. We wanted to find out if there is any market for what we want to sell. As in any business, if there is no market or no customers there is no business. If we want to start a business that will be sustainable and successful in the long term, we need two ingredients. The first ingredient is something we can sell to customers. This can be a product or a service. The second ingredient are those customers, people who will buy what we sell. Often simple in theory, but hard in practice.
If validation is the king, cash flow is the queen
There is one mistake many aspiring, and sometimes even serial, entrepreneurs do. They start a business right after they validate their idea. They take successful validation as a sign to take the leap and start a business, often almost on the spot. I made this mistake as well, and not just once. What should we do instead when we validate our idea? We should start getting our first clients and customers. If you used the Kickstarter approach we discussed in the first part, or something similar, you are on the right path.
Otherwise, you should take the product or service you’ve successfully validated and you should start acquiring customers or clients. You should start selling your product or your service. And, you should do this before you actually start a business. I know that this may sound a little bit weird to some people. We need to remember that we can’t build sustainable business without stable cash flow. Business needs to be profitable to survive. Sure, we could pitch investors and get some money.
The problem is that this is not sustainable in the long term view. Also, it is not guaranteed that we will be successful and raise the amount of money we think we need. The best way to start a business and build a resilient company is by making the business self-sufficient and therefore sustainable. In order to do so, we need to generate stable cash flow and become profitable. Money is the lifeblood of a business. And, we need to get this done sooner rather than later. When? Before we make that leap.
It is easier to start a business and build a company if we have some money to keep it going, at least for a few months. What if we don’t have any cushion, or investors covering our backs? Another, and probably also the only, way to do it is by generating cash flow and turning a profit. In other words, we have to start selling what we want to sell before we start a business, not after it. We need to keep in mind that if validation is the king, cash flow is the queen.
No free work, no free products, set your prices accordingly
This means one thing. If our business is based on selling a service, we should never work for free. Our goal is to build a business, not a hobby. Hobby doesn’t have to make any money. Our existence doesn’t depend on it. That’s why it is just hobby. If you want more reasons, read this article. We have to charge for whatever we do if it is a part of our service. The same applies to selling our products. We should avoid giving it away for free. When we give away our products for free, all it does is one thing.
When we give away our products for free, we are saying that it is not worth paying for. Why would anyone give something for free if it was valuable? The more we value something, the more we want to get paid for it, or the more we are willing to pay to get it. Have you ever seen Apple giving away free iPhones or Tesla cars? Hardly. We have to adopt the same philosophy. We must wholeheartedly believe in our products and services and we must charge according. So, find a better price than freemium.
Some thoughts on discounts
One possible exception might be discounts. Although, I am strongly against discount. One thing every entrepreneur should consider before he decides to use discount. When we sell something to one person at full price and offer discount to another one, we just robbed the first customer. The first one paid more than the second even though both bought the exact same product. Is this fair? I don’t think so. There are two ways to solve this problem. First, we can lower the price of our product or service.
The problem is that this is again sign that our product or service is not valuable enough. It is not able to support the price we set for it. Even we don’t believe in it. Otherwise, we would never lower its price. Our second option? We have to find people who can afford to pay the full price. We have to remember that not everyone on the street is our customer. There are people for whom our product or service will be too expensive. That is okay. Not everyone has an iPhone in her pocket or Ferrari in her garage.
Having said that, discount may still be a helpful tool for us, in the beginning, to start a business and get the initial momentum. However, if we decide to try discounts, we need to make sure there is a specific deadline for when the discount strategy ends. Meaning, it is just a short-term “hack” and we can’t run any type of discount forever. Otherwise, if people are not willing to pay the full price for our product or service, then there is a bigger issue we have to solve. In that case, back to validation and research.
Connect, build brand and following
Another thing we should do before we start a business is building a brand and following. When we validate our idea, we should start working on the brand of our business. We should also start to communicate on social media in channels related to our business. We need to start a dialog with people who are interested in the industry. In the future, these people can become our customers, clients, users or evangelists. It is important to keep in mind that we are talking about dialog, not a monologue.
And, even if some of these people will not become our customers, clients, users or evangelists (not everyone will), that is the end. These people can still help us a lot. They can teach us many things about our business. There are many people on social media who are experts on what we want to do as a business. And many of them are willing to share their knowledge, often for free. All we have to do is to reach out to them and start open and honest conversation. Ask questions and then listen.
Tip on building a brand and following
Now, what are some ways to build brand and following? How can we get people interested in our products, services and company? The best way to achieve this is by creating value and helping people. Creating and giving away some value and helping people is the best marketing “hack” I know. It often works 10x better than spamming people with offers and other promotional messages multiple times a day. Are mailboxes are already full of that garbage and people are more and more sick of it.
Another problem is that this type of mass marketing (or just spamming) can lead to bad associations. When people will hear the name of our company or product or service, they will inevitably start thinking about that marketing spam. You know, that annoying email you saw in your mailbox again this morning. This is not exactly the best way to start a business. People should want to talk about our company and products or service because they want to share their positive experience, not to complain.
There is a big difference between asking people to promote you and people promoting you because they want. And, this difference is usually easy to hear and distinguish. This is also why asking or even paying people to promotion you is less effective than giving them reasons to do it on their own. Positive, honest and passionate word of mouth works better when it comes from person’s heart than from wallet. We have to surprise people and give them more than they expect and look for ways to help them. How?
Again, we have to start a conversation with our customers, clients and users. Conversation is the cheapest way to build a brand, following and then to start a business. This is the best way to find out how can we help them. It is also the best way to find out how can we create more value. When we want to know what would make the day of our customers, clients and users better, we just have to ask. This is how we can build brand people will love to talk about and promote. Actually, it will be brand built by people.
Prepare yourself
Prepare yourself. This will be the last thing we should do before we start a business. Well, there are many other things to do, but this one is important and applicable in general. It is safe to say that success of a business largely depends on its founder. As I mentioned in the previous part, it is not that 80% of startups or business fail in the first year. Rather, it is 80% of founders fail in the first year. I believe that it is the personality and character of the founder that matters the most in the end.
Is it possible to start a business and create a successful company if you have certain personality traits, skills and characteristics that might be hurting both, you and your business? Yes it is. It is also possible to fail even if you have the “right” set of traits, skills and characteristics. Well, if there is anything in that sense. However, what will change is the probability that either A or B will happen, either you succeed or you fail. When you think about it everything is just a probability. Nothing more or less.
Personality traits to learn and train
With this in mind, there are some personality traits we should acquire and train if we want to improve the probability of success. One thing before we move on to specific traits. Have an open mind. If you don’t believe that these traits are trainable, like any skill, you will be more likely to fail. So, think about the following traits as skills, as something you can learn and train with sufficient effort, time and commitment. Your personality might be more flexible and formable than you might think.
The first skill to learn and train is growth mindset. This is a concept, in short, is about understanding that our abilities and intelligence can be developed, that they are not set in stone. Put simply, if you don’t know something, you can learn it. And, by learning, you can even increase your intelligence. There is a great book on this subject, everyone should read, Mindset: The New Psychology of Success written by Dr. Carol S. Dweck. Seriously, this book can, and probably also will, blow your mind.
Next on the list are confidence, discipline, perseverance, resilience and focus. All these skills will be incredibly useful after you start a business. You will need confidence in yourself, your idea just to start. Then, you will need it to keep going. Discipline? The decision to start a business means that you will dedicate many years of your life to one thing. You have to be disciplined to work on your business and do what is necessary every single day. 365(6) days a year. Forget vacation for the first few years.
Next, perseverance and resilience. You will experience many moments when you will want to give up, sometimes even multiple times a day. You will need a huge dose of perseverance and resilience to get through these moments. Your business will depend on it. When you start a business, you can throw in the towel just because 30 people told you “No”. You have to swallow it and keep going. Also, you can’t give up when your business hit a roadblock. You have to find a way around, over or through it.
Finally, the focus. When you decide to take an idea and start a business, you can’t just change your mind a day, week or month later. If you want to build a successful business, you have to focus on that idea and ignore everything else. Remember that building a business takes years, not weeks or months. There is no such a thing as overnight success. What often looks like an overnight success is a result of many years of hard work. Don’t start a business if overnight success is what you want.
I just realized that there is one more trait or skill that will be crucial for your success. It is humility. You must stay humble and constantly seek advice, listen and learn new things. Humility, seeking advice, listening and learning are the keys for continuous progress and improving both, yourself and your business. As Aristotle said: “The more you know, the more you know you don’t know.” Learning is a never-ending process because there is always something new we can learn. And, it is a key to success.
Closing thoughts on things to do before you start a business
This is it. Now you know all six things you should do before you start a business. Please, keep in mind that these things are not everything. There is a lot more to do, especially from the administration point of view. However, these six are generally applicable and we have a lot of control over them. And, this is important. Focus your energy, effort and attention on what you can control and don’t waste energy on the things that you can’t. That doesn’t mean to ignore them. Just don’t worry about them as much.
Final words. First, forget statistics. Just because someone wrote that 80% of startups, or founders, fail doesn’t mean odds of your success are lower. Second, review your plan as you go and make corrections, or even a pivot, when necessary. Your plan is just an estimate or draft. It changes and evolves. Third, make the final decision. Do you really want to start a business? Forget what others say. Think for yourself. It is okay to be afraid. It is not okay to do something just because someone else did it or said.
Ask yourself and look for the answer inside yourself, not outside. Listen to your heart, your mind and your intuition. If the answer is “Yes”, even somewhat uncertain, go ahead and make that leap. What if you fail? Well, you can always get a job somewhere. However, a better question is, what if you succeed?
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