When an entrepreneur decides to go into business, it’s not because they love business – it’s because they have a vision and a dream. I don’t care if we’re talking about Mark Zuckerberg or the guy opening the hipster bar around the corner. No one wakes up and thinks, “I can’t wait to file my taxes and buy a mop.”
People go into business for themselves because they have a passion. Sometimes, that’s a passion for a lifestyle. Sometimes, it’s a product. Sometimes, it’s simply a passion for innovation.
When you wake up, struck by the need to open your own business, you’re waking up to a lifetime of hard work and frustration. The payoff can make the whole thing worthwhile, but you have to be prepared for the first steps.
“Entrepreneurship is a lonely journey,” InnovatorsBox founder Monica Kang says. You have to ask yourself, “Is this something I’m ready to do for five or ten years? Is this something I’m not going to regret if disaster happens?”
It’s the micro-version of Warren Buffett’s advice on stock buying. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
The investment you make as an entrepreneur has to be well thought out. You’re spending your money, your time, and your social capital to get this thing off the ground. Don’t be the chef who opens the door without testing the recipes or the startup that fails to keep a year’s worth of receipts.
“The average entrepreneur is an expert,” Isha Edwards, Brand Marketing Consultant at EPiC Measures, says. “They’re not a business person.”
Over the next few months, Capterra is going to focus on the ins and outs of starting a business. We’re going to talk about raising money, hiring employees, finding your first customer, and everything in between.
That whole journey starts at the beginning, though. If we’ve learned anything from Sesame Street, it’s that every story has a beginning, middle, and an end. The story of your business will have all these parts. If you get ahead of yourself, your nights are going to be full of regret and frustration. If you go in with a good plan, you’ll be sleeping soundly.
Do your market research
When we look back on the History of the Entrepreneur in the 21st Century, we’re going to see millions of interesting – often very good – ideas that never made it past year one. These are the ideas in search of a market.
Being an expert in a field, as Edwards references, means seeing the value in things, even if that value isn’t apparent to everyone else. Your incredible idea needs two things – 1) to be useful to other people and 2) to be explainable.
To figure out where you stand, you need to test the waters. Survey the people that make up – what you think of as – your target demographic. You may be surprised by how little they care. You may then be surprised by how much someone else is willing to pay.
Jessica Johnston-Myers at The Venture Center told me that entrepreneurs often fail to test their assumptions before diving into the business. This can lead to lost time, lost revenue, and a frustrating experience for everyone.
Many entrepreneurs fail to reach out beyond “their college roommate or their mother’s best friend,” she said.
Doing your market research ahead of time can make all the difference. Whether you use a survey tool or just jump right in and start making phone calls, the more feedback you can get before spending cash, the better off you’ll be.
Have a minimum viable product
Once you know who you’re going to be selling your product to, you need to spend the time making it. Many small businesses rent office space, do market research, and start building hype only to get stuck in development for six months.
It’s the lovely café that puts up its banner saying “Opening this Fall” and then proceeds to plaster “Spring” then “Summer” over it as delays crop up.
Matt Powell co-founded Fūzd, a multilingual messaging app, and says that he and his co-founder took side jobs to pay for living expenses while creating the app’s first iteration. After the day job ended, they would “devote the whole night, every night, to the project.”
Kang worked nights and took all of her vacation while working on InnovatorsBox. Edwards started building her consultancy a little at a time, until she had enough in place to launch a full-time operation.
Whatever it takes, you have to have a product before you get too far into the business.
Setup – and automate – your sales funnel
If you’ve got a product and a plan to sell it, you need to sort out the actual selling before you go much further. How are you going to turn those contact points into sales?
A quick story. I interviewed with a marketing firm back in North Carolina before I moved up to DC. In the interview, the founder asked me what kind of traffic we got at my then-current employer.
“Around 3,000 visitors a month,” I said.
“3,000?” he laughed. “Hell, I put a video of my dog eating a banana in the office on YouTube and got 30,000 in the first day!”
He was very proud of that dog.
That’s not a sales funnel – that’s a dog eating fruit. If you don’t understand how to reach people and how to move them from “vaguely interested party” to “buyer,” you’re not going to last long. In Mr. Banana’s defense, he also did real marketing, and his company is still kicking.
A sales funnel is systematic and it generates relatively repeatable results. That doesn’t mean you can just walk away from managing it, but it does some of the work on its own.
Depending on the product or service you sell, you’ll probably want some marketing automation tools, like drip campaigns and web trackers, or you might be an old school sales business, which requires a different kind of plan.
The key is to reassess the value you’re generating on a regular basis.
Justine Beauregard, founder of Mirelle Marketing, says that too many entrepreneurs get caught up in the language of automation. They set the funnel up and forget about and assume “some magical lead fairy is going to come in and help them.”
In fact, building sales requires constant tweaking and management. The businesses that suffer the most are those that don’t have a cohesive plan and that don’t take the time to measure their return on investment, Beauregard says.
Get your sales funnel clarified early and massage it often.
Determine what investment you’re willing to make
Remember when I said that there’s a lifestyle associated with being an entrepreneur? Before you jump in with both feet, you need to figure out if that’s something you’re ready for.
No small business gets off the ground without investment and no investment – or very few at least – simply fall into founders’ laps. I’m not just talking about cold hard cash, either.
“You have to use your time strategically,” Kang says. “Every opportunity you say ‘Yes’ to represents another opportunity you’ll have to turn down.”
The time you spend on the business – especially if you’re going to kick things off while working a day job – is time you can’t be out enjoying your friends or family.
When Powell started working on Fūzd, he says he basically gave up taking advantage of everything else New York City had to offer. Instead, he and his cofounder toiled away on their app.
Know your limits. Know how deep into credit card debt you’re willing to go. Know how long your kids is willing to forgive you missing their soccer games. Know what you’re willing to give up to make this dream a reality.
Build your pre-launch support network
The last thing a budding entrepreneur needs to have in place is a support mechanism. When you quit your job at the bank and open a food truck, some of your friends are going to tell you you’re crazy. When things are looking down, it can be hard to find friendly faces or supportive words.
The Venture Center helps its members by focusing on mentorship programs, where neophytes are paired with successful business leaders. Powell found a great source of knowledge and financial resources in his own mentor. Kang – who operates out of WeWork Manhattan Laundry – loves the feeling of camaraderie that comes from a shared workspace.
Whatever your safety net looks like, you need to make sure you’ve got access to it before things get hairy. With so many cities focusing in on startups, it’s easier than ever to tap into the resources around you. Use them. Give back. Go to meetings and meet new people who are in the same boat.
If you don’t look after your own mental health, you’re going to burn out before you’ve had time to be successful.
We’ll talk about all of these issues more as the year goes on. Two things that you’re going to see come up again and again are market research and network building. If you can only do two of these things, I’d say focus in on those.
Find out if your idea is worth the napkin you drew it up on and then find someone to tell you when you’ve gone off the rails – or to give you a hug when the rails have gone off you.
Business is, at heart, still about relationships. The relationship between you and your customer is going to keep your business healthy. The relationship between you and your network is going to keep you happy.
To follow along with us on the startup journey, follow the Capterra Knocking Down Doors blog. If you’ve had a great kick-off experience – or a horrible mess that others can learn from – I’d love to hear about it in the comments below.