Getting Started with Your Own Business, Part I
Going from the idea to your first customer
One of the most common questions I get asked is how I got started running my own business. I typically have a pretty snarky answer (big surprise there), but today I want to provide practical advice to those who are seeking to start their own business. Part I of this guide will focus on everything that should come before you land your first customer. There will be a Part II to this guide that will outline what you should after you land your first sale, but first things first!
I see/hear bad advice all the time about starting a business from scratch. Most of the advice is well-intended, but quite overblown for a newbie. When you are starting out you shouldn’t focus on creating a favorable tax structure, designing the world’s best logo or the slickest website. Instead, all your time, energy, creativity and moxie needs to be directed at landing that first customer and then your second and then your 100th. Why should you spend time worrying about asset protection when you don’t have any assets to protect?!?? Again, spend that time, money and energy on landing your initial customers.
With the preface out of the way, let’s take a look at 6 practical, easy-to-follow steps to get you focused on what’s most important.
#1: Market Research
The first thing that any wannabe business owner should do is the homework. This means getting out and talking to potential clients/customers, people already in the business or a whole lot of Googlin’. This is especially true if you don’t have much experience in the market you’re entering. What does research look like? Well, it can take many forms, including:
- Price — What does the top of the market command? What about the entry level? Look at different pricing models and determine which space you’ll play in. Are you going to be McDonald’s and serve everyone? Or will you be the elusive 5-star restaurant with a month-long wait list?
- Proposals — Are client proposals in your industry done verbally or in writing? Are they formal presentations or informal phone chats? Are they expected to be a one-page highlight or a ten-page in-depth review of anything and everything? Knowing this upfront will save you a lot of time, headache and hassles down the road.
- Customers — What does your ideal customer look like? Where do they hang out, both online and in real life? What are their major pain points?
- The Size of the Market — This comes from traditional Fortune-500 style market research, but you must absolutely know how big is your available buying pool. Is the market 20 customers who will pay literally any price for your item? Or is the market 2.1 billion people who will each pay a few bucks for your product? Or somewhere in between? Knowing this can prevent a lot of wasted time and effort.
- Competitors — Who else is out there doing what you want to do? How does what you are offering stack up against the competition? Are they a local mom-and-pop shop across town or a multinational behemoth? Know who’ll you’ll run up against before you actually face them.
#2: Business Plan
When I was first starting out in my real estate investing business, I spent at least 30 hours working on my business plan. It was great. It had all sorts of charts, graphs and models. It outlined everything from A-to-Z and then some. Well, I hate to say this, but it was a big waste of time. I looked today and the document has been sitting on my computer without being opened since August 12, 2013. Why? Because after typing 15-pages, I printed it out and checked it off my to-do list. It became so big and unwieldy that I did not want to put in the time or effort to revising my business plan. I was more concerned with running the business day-to-day. I’ve made dozens of tweaks to my business since then, but those changes now show up in my marketing plans or renovations, not in my formal business plan. It seems a bit pointless to go back and update my business plan monthly since I work in my business every single day of the year.
Now, with all that said, business plans are still essential to any new business. But! You sure don’t need to spend countless hours and typing into the wee hours of the morning to create one. Instead, I advocate writing a one-to-three page plan. It should contain the basic fundamentals of your business, such as:
- Market Size/Opportunity — Refer back to step #1.
- Organization — Who all is involved in the company? Is it just you? Or you and a few friends? Or you and your mother? Whatever it is, be sure to spend time detailing roles and responsibilities for each person on the team so there isn’t confusion later.
- Product/Service — Detail exactly what product or service you will offer to your customers. What makes it unique or better than the existing competition? Or for those who attended Business 101 — what is your unique selling proposition?
- Go to Market Strategy — How will you let potential customers know about your business? What is your marketing strategy to get your first sale/customer/client?
- Pricing — Again, we covered this in step #1, but a section on how your pricing model will help us with what comes next.
- Funding — Do you have all the money you need or will you need to raise outside funds?
- Financial Analysis — This does not and should not require a Ph.D. in Economics to put together. It should be a simple analysis of your break-even point and an estimate of how long it will take you to get there. If you want, you can go ahead and do some future looking projections (no more than 3-to-5 years out) to show estimated revenue/profit for once you pass your break-even point.
#3: Name
This is a step that trips up many wannabe entrepreneurs. They spend countless hours brainstorming, eliminating and deciding on a name for their business instead of on revenue generating activities. It’s asinine and it drives me insane. That’s not to say you shouldn’t spend some time creating a business name that you love. It should also feel like it does a good job of incorporating your values, product or service. But don’t tell me that in 1964 Nike meant anything to anyone except Phil Knight. Or that GoPro meant anything in 2002. These businesses went out and made their brand name resonate with customers, not the other way around. So go ahead, spend a day, at most two deciding on the name of your product or service, but anything longer than that you are doing a disservice to yourself. Pick something and go make it mean something in the eyes of your customers.
#4: Internet “Storefront”
First things first. You’ll definitely want to secure profiles on the major social media platforms: Facebook, Twitter, Instagram, Pinterest, Snapchat, YouTube, etc. Follow all of the native guidelines for each platform. If possible, try to make your username the same (or close to it) on all social platforms to make it easier for people to add you across all channels.
After your social sites are set-up, you can opt to make a website as well. Depending on what business you are in it can either be seen as optional or mandatory. Hopefully, you did the research back in step #1 to make this an easy answer. If you are going to launch a website, please don’t go crazy with it. Use something like Wix or Squarespace for something drop-dead simple or stand-up a Wordpress site for more customization options. Either way, just like in step #3, don’t go nuts here. Get a “good enough” website and then go back to generating revenue so you can then hire a much more talented and skilled website designer than you’ll ever be. (Disclaimer: obviously if you are in the web design space, your website better be on point. For anyone else, it needs to be good enough).
While we’re at it. If you also want to grab a separate business number, now is a good time to create one. I used Google Voice for a few years in my business until I needed a more robust solution. Now I use a paid service since I needed a bit more features/functionality than what gVoice offered. Again, start small, basic and free — you can always upgrade from there.
#5: Do Something
At this point, you should be armed with everything you need to know to go out and get your first customer. You should have all the information you need to attack the market from your research. You should have a go-to-market and pricing strategy from your business plan. You should have a name and phone number so people can reach you. You should have an internet “storefront” so people can see the real meat and potatoes of who you are and what you provide.
Now there’s only one thing left: do something!! Get out there and network. Go pitch potential customers. Go out and provide value on other people’s social accounts that are in your space. Go out and do. In the beginning, customers aren’t going to come to you. You have to go to them. Eat, breathe and live the desire to land a customer. It took me from January 2013 until April 2014 to get my first deal. You have to have the patience, courage and perseverance to stick with it until you start to see the fruits of your labor. Wake up each morning and do something to further your goal. Hopefully, it won’t take you 16 months like me, but if it’s something you truly want and obsess over, it’ll make the reward all the sweeter.
#6: Constant Education
This is probably the most overlooked step out of the six. That’s because once people start doing, they don’t want to take a half-step back and reflect. Reflect on what’s working today versus last week. Reflect on current industry trends and what that means for your potential customers. Reflect on an article written by Warren Buffet on a business lesson he learned. Reflect on a chapter in a book about personal development, industry trends, history, etc.
Education can take multiple forms but you are only failing yourself and your business if you do not take the time to stay educated on all facets of your business. Whether you are attending trade shows, networking events or participating in an online forum, make sure you are getting out there and staying informed on everything and anything that relates to your business and customers.
There you have it. 6 simple (but not easy!) steps to starting your business and landing your first customer. If you have any questions about any of the specifics here, don’t hesitate to leave a comment or reach out to me directly on Instagram (@foken). I’ll have the second part of the guide up shortly talking about what to do after you land those first few customers!
