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Starting a business venture is never easy, and surprisingly, not always planned. Many entrepreneurs “fall” into a venture, and before you know it, they find themselves frantically both building and learning about a business at the same time. As an entrepreneur this scenario might sound all too familiar; know that this is perfectly normal- here are eight steps to get you moving ahead on your venture.
Step 1: Outline your main goal
What is your objective? Are you focusing on a problem or a solution? If you’re focusing on only developing a solution, then you will fail. Why? Because a customer will only buy if they think you will solve their problem. The business world is littered with great products that failed, or needed someone else to make it a viable business (look up the origin stories of Starbucks or McDonalds).
That brings me to an important point that investors want to hear– can your business model scale? Have you thought about the future- as any investor would want multiplying returns. So keep it simple and scalable.
Step 2: Outline your values
At what cost are you willing to do business, or better still, what values will govern how you will do business? You might think this is not necessary to know for a young startup, but it is very crucial. Think Valeant Pharmaceuticals. When you hit the ground running (and you will be!), most of your time is spent on crises that never stop, and on staging meetings with current and future investors, customers, suppliers and distributors. As a result, newer employees joining the company may not know the principles and values that you run the business with, and perhaps take for granted.
As a founding team, take the trouble to articulate your corporate values and live by them. This will be the bedrock of your awesome culture and it can be your competitive advantage. Sure, people technically work in companies, but the truth is that people work for people. The greatest companies had the best people– the fact that they could attract, hire, train and retain these employees is the reason why they succeeded.
Step 3: Build a product concept that works
A lot of investor money does go into research and development and concept ideas –see Elon Musk’s SpaceX or Tesla- but in the end, the market only accepts products that work. You need proof of concept, and it needs to be able to scale quickly without too many bugs (like Sarah Blakely’s Spanx), or you need a heavyweight investor or celebrity endorser who has the connections and clout to help you get the help you need.
With this being the case, make it a point to start small– show your target market that it works, and then expand your market, constantly working out the flaws. I have heard so many youngsters talk about how someone stole their idea- sorry, but if the idea does not work, it's a dream, and there are no copyrights on dreams yet. A process can be copied too– even a patent can be reverse engineered! So either you need to take an audacious risk (and it helps if you put your own money behind your venture– it shows the proof of your belief in what you are doing), or your idea simply works!
Step 4: Find a market that appreciates your product
While it’s tempting to want your product to be the next instant global brand, you need to remember to start small. Remember that Facebook began in a dorm room in Boston. Start in markets you can win –which are often the markets where the bigger players or competitors ignore (think Aramex, Airbnb, or Flipkart)– catch them off guard. Jamalon is a great example– it is now the largest Arabic online book store. Mumzworld has 30% of its range exclusive to itself- making it now the most visited online children’s products’ retailer with 250+ brands in the MENA region. Uber now has local competition like Careem, which began in the UAE and just got a US$10 million Series B round of funding.
Step 5: Map your networks
If you haven’t done this yet- start now, seriously! Networks are assets that are nurtured and developed. Build your networks methodologically. No, I am not saying you should attend all those networking sessions. Figure out who you want to meet and why, and then arrange to meet them. Classmates, employees and customers can bring in strong networks– not just investors. Create an advisory board, and this is an opportunity to rope in some key mentors. Research shows international diversified networks leads to more funding, more customers and more expert knowledge that you can’t pay for in your early years.
Step 6: Outline key indicators of performance
Sure, you measure customer acquisitions numbers, sales and profits- these are all common fundamentals, but don't forget to look at customer retention, return on investments and referrals as well. Take a look at the startup metrics Dave McClure and Andreessen Horowitz recommend. Understand the beating pulse of your business so you can predict the slumps. More importantly, when chasing capital or employees, remember at what cost you give away your share of your company. Whether customer, supplier, distributor, employee or investor, read the fine print.
Good governance is non-negotiable, so begin the habit of regular audits. I have met so many entrepreneurs who first fund their lifestyle and then their business. This is bad practice. Fund your lifestyle with your money– when investors put in their money, tell them what your compensation and perks will be, and what are the considered office expenses. Doing a course at Harvard- whose money pays for that? Attending a conference and staying at a five-star hotel and ordering meals for “networking reasons”: well, what was the outcome? Be ruthless with your governing style– you set the precedence for the organization.
Knowledge should be a key indicator. What makes a startup grow is how quickly founding teams can learn and take advantage of the opportunities around them. This is a learning process. You don't need to go to university, as there is so much information freely available and some great advice, too. There are online universities, TedX talks, posts on LinkedIn Pulse- just don’t stop learning, and make sure your organization learns too. A learning organization is one that manages the challenges of business growth.
Step 7: Provide value to your stakeholders
Ask yourself what value you provide to each of your key stakeholders. Start with employees, customers, suppliers, distributors, shareholders and even mentors. Here’s a simple logic to keep in mind: if the cost of being with you is more than the benefit, then people will walk away. Invest time to make sure you keep your valuable stakeholders close.
Step 8: Be careful about what you promise
You can’t control the media, so be careful with what you promise. Look at the issues surrounding Meredith Perry’s U-Beam and Elizabeth Holmes’s Theranos. This caution is especially required with technology you haven’t mastered. Tesla was founded in 2003, and it was only in 2008 that they shipped their first car. Space X was founded in 2002, and it was only at the end of 2010 that they were able to return a spacecraft from low-Earth orbit. Too much media exposure can open you up to close scrutiny, and worse, highlight every inaccurate statement you made unwittingly, even in good faith.