Where to start: Overall Vision & Business Plan
Encyclopedia Entrepreneuria is a resource guide to help founders tackle business functions and tasks. Each blog is a summation of the tips and articles from the website from one section. Contact me with any questions, comments, and requests!
Vision & Strategy
Business plans have gone out of fashion as investment materials and have given way to pitch decks. However, going through the process of writing a business plan will help you understand your assumptions, market, competition, and roadmap. There are many frameworks out there such as the Business Model Canvas, The Lean Startup, and Disciplined Entrepreneurship. The more you do, the better.
Problem & Solution
Ideally, you want to solve a problem that you have experienced personally. If not, you should at least have some special insight into what the problem is and how it can be solved. Also, make sure this is something you care deeply about as you’ll spend years of your life on this company. Interview customers to truly understand if this is a real problem that people will pay for or just an inconvenience. As you interview customers, be impartial and don’t explain your product as you won’t receive unbiased and honest feedback.
Initial Target Market
Pick a concentrated market that you can sell to with one set of materials, messaging, and product features. Too often people get obsessed with the size of the TAM and spread themselves too thin, but early on generating some sort of traction and revenue is most important. Ideally, your initial target market will reveal itself through interviews so be sure to listen and willing to adapt to what the customer needs.
Competition is a good thing to a certain degree because it means you’re onto a good idea that others have identified as an opportunity. Focus on your main differentiators from competitors instead of trying to be the best at everything. Pay attention to what they are doing well and don’t be afraid to mimic best practices.
Don’t delay too long before putting something in your customers’ hands. It should be usable and useful but doesn’t need to be perfect or include every feature on your roadmap. If you delay too long, someone else could beat you to market and you’ll miss out on valuable feedback from customers that will help drive the next versions of your product. Pick metrics to track the success of your MVP or any features you’re testing before you release the product.
Don’t forget that a business needs to make money! Even if you are not charging customers (freemium) or plan on a different revenue strategy that kicks in later (like advertising), you must have a roadmap for how you’ll get there and be sure to test if your assumptions are realistic. Be sure to align your business model with the pricing, sales channels, and customer requirements.
Make sure you have people that are well suited to handle the essential aspects of building your specific business, whether that be technical, legal, sales, etc. You can hire or outsource out non-mission-critical functions or learn them yourself. Everybody on the very early team should be fairly compensated with equity and truly believe in the mission and product. Ideally, the founding team will have worked together in the past and if not, be sure to get to know each other.
Don’t expand in too many directions too early. Pick one adjacent market or product feature that makes sense based on customer requests and/or interviews. Don’t expand if you still have room to grow in your initial market because the ROI will be lower and the sales cycle will be longer for a new market. Don’t neglect your initial customers.
Growth is a cross-departmental function and heavily dependent on metrics. Take in as much data and feedback as possible to understand how your customers are behaving. Use cohort analysis to determine improvements or regressions over time and drill down to find the root cause behind the numbers.