The Typical Strategy and Why it Will Fail
Have you found yourself daydreaming about the day you can finally walk out of that office job to pursue your true desire of being the boss of your own business?
There are so many entrepreneurs who are walking in the same shoes you are, itching to escape that dreaded 9-to-5. But wait! Don’t write that resignation letter and leave just yet!
You need money coming in consistently to pay house, utility, and food bills while you put together your business. This is reality. So, unless you just won the lottery or inherited a bunch of money, that new business of yours needs lots of brainstorming sessions, preparation to get it set up, marketing services put in place, and much more.
John L. Nesheim’s popular book, High Tech Start-up, advocates you leave your job early on in the startup process, around the fourth step of the plan we’re going to lay out for you below. But that is way too soon and far too risky. Business-building takes time and effort, and until your startup is completely off the ground and bringing in revenue, you’re going to need some backup to cover your expenses. So, unless you have lots of one-hundred-dollar bills hidden in old shoes or between your mattress and bed springs, you need to prepare financially first.
The School for Startups, developed by award-winning entrepreneur Jim Beach, was created to get you the best proven-results path to get started with very little to no risk to your finances and your mental health. So, here is a step-by-step plan for how to build your startup the right way!
1. Your Great Idea
The first step to building a business starts with a great business idea. Maybe you have lots of ideas already, or maybe this is the very thing you struggle with the most. If you’re having trouble deciding on a business idea, check out this blog for some great ones.
When it comes to generating business ideas, the important thing here is that it doesn’t have to be something you’re passionate about. Look around you and identify problems you can solve. It could be as simple as offering shoelaces to your local high school track team.
Probably no one is ever going to be passionate about shoelaces, but there’s still a need for them. Maybe the real reason why you want to start a shoelace distribution business is because you’re passionate about providing for your family, and this is how you can bring in extra income.
Being passionate about making money and providing for your family is enough!
Research means understanding everything you need to know to do the job you want to do. Who are the companies that carry the products you want to sell? Make a list of each one. What do they charge for the product (for example, those shoelaces), how do you get those products to another business where customization of the product occurs, such as custom colors or designs? Can that design company then send the finished product out from the business to the customer? Do you need to set up a delivery company to handle this part?
The other side of research is market research and understanding who is selling similar products. Make a spreadsheet of the sellers you find, what they charge customers for the products, and find out delivery fees and delivery time from the finished product to the customer. You want to know who your competitors are, what they’re selling, and how they’ve set up their business.
Once you collect all this information into the spreadsheet, spend time reviewing it and determine what makes these businesses stand out (or not) and decide how your business could stand above them. This brings us to the next step.
3. Value Proposition Test
While examining your competitors in the previous step, consider what your competitors lack that you could provide to your customers, making your company and what you sell as unique. In marketing, we call this the Unique Selling Proposition (USP).
If you’re offering software as a service (SaaS) to dental offices, for example, your USP might be that you have made it easy for office workers to select any type of pre-loaded automated report they need to run on a regular basis.
Interview with dental offices to see if this is something they would be interested in, and how much they would be willing to pay for it. This will give you insight into whether your business idea is worth putting the time and energy into. If you have a great idea, but no one else is buying it, then in all reality, it’s probably not as good of an idea as originally thought to be.
So, let’s talk strategy about how you can put together your business, how you will operate it, and where. Many small companies today can start small without being in a brick-and-mortar building. The proverbial garage, the dining room table, the basement, or attic, all work well in the beginning. If you offer SaaS, you could run it remotely with no problems.
Make a list of business expenses first: cloud service, software programs (probably several), annual software licenses, business licenses, products, shipping, etc.
Visit a lawyer to find out the best way to determine the most efficient category of business structure you need, such as Limited Liability Company (LLC), Corporation (Inc.), or Sole Proprietorship. A lawyer can discuss these options with you, including how to structure several businesses under an umbrella business.
5. Choose and Develop Your Business Model
This is where you decide on the business model for your company. Here is a list of some of the most common business models with a brief description for each.
You offer specific services and charge set fees by the hour, a monthly retainer, or receive a commission.
Customers sign up for something you send to them on a regular basis and are charged monthly or annually.
Two services are provided for a fee that, if purchased separately, would cost more. For example, a software company that offers 10 to 12 separate programs, can offer a suite containing all of the programs, that if purchased separately, would cost you more.
The customer is charged to rent equipment for a specific amount of time (hook-on trailer), by the mile (rental vehicles), etc.
Distributers buy bulk product and then distribute the product to customers at a higher fee to make a profit.
Typically, these are brick-and-mortar stores where customers buy a special product or buy any number of products, such as groceries, household goods for a cheap price, florists, etc.
Customers buy a designed product, and the seller uses one or more vendors to create the product under a pre-arranged agreement, then deliver the finished product to the customer.
So, which business model will you choose? Think about which will be the most effective for accomplishing your goals.
6. Build Rapport with Suppliers
Before you choose a product, printer, or delivery supplier, do research first to see what prices are charged per product handled. Do phone (or video) interviews with the main contact point of each supplier to get a feel for who you will work with. Check online ratings and reviews to see how other customers like working with each of the companies you are looking at.
While running your business, stay in touch with any suppliers you work with. Get to know them well and find out who you should contact if there is a problem or an emergency that needs dealing with quickly. Have at least one contact, preferably two, at each supplier’s business that you can get in touch with quickly to solve problems.
Always treat people that you work with well, because they are ultimately part of your success.
Stuff happens from time to time. Maybe there’s a delay in shipment. The best thing you can do to notify the customer of the problem and handle the situation the best way you know how. Your job is to keep everyone happy, including suppliers and customers.
7. Sell Stuff as a Test
Dropshipping, mentioned above, is a great way to make money. When you do a test run of your dropshipping delivery system, watch every step of the process to make sure it’s working smoothly and efficiently. You might need to buy Aunt Susie, your daughter, or your husband a t-shirt to see what happens, but at the end of the day, it’s just a business expense – and they get a gift. Order one for yourself, while you’re at it.
If you sell SaaS, consider offering a local dental office a discount on the software program by building your platform with them so it can be tested in a real office scenario.
You might even get a first customer and a good review out of it.
8. Iron Out Operating Kinks
Operating kinks can occur anywhere along the pathway of marketing, advertising, or ordering and delivering products. The important part is seeing that all the connections are in place and working smoothly. If you find a weak point, fix it right away and test again. The operating process must be perfect before officially opening your doors.
Once everything is set up, stay on top of it each week by monitoring the processes, the orders, and delivery times. As an entrepreneur, you’re going to go through trial and error, and that’s perfectly ok! Don’t be afraid to change things up in your business strategy if something doesn’t seem to be working.
Stay attentive to any changes that could occur within your business model of operating systems. Repeat Steps 7 and 8 about every two weeks or once a month, depending on how intricate your system is, to make sure everything is operating smoothly. In doing this Repeat step, you might also find simpler ways to do things that cost less money, meaning more profits for you. If simple enough to make that change without aggravating your business model, then get it done.
This is how we learn from our mistakes and grow as entrepreneurs!
10. Build Your Business Plan
The best way to build a great business plan quickly is to follow the Business Model Canvas – a guide that outlines everything relating to your business and how it will be run. So, let’s get started!
Key Partners refer to the third-party vendors you work with, such as those who provide a product for you to sell after personalizing that product, and then shippers who deliver the product to your customer’s home. Partners can also be your bank where you opened up your business account and, with luck, also have a line of credit. Partners can even be those who work on your business with you such as an assistant, research analyst, your blog writer and social media manager, and more. Even if they are remote independent contractors, they help you with your business, leaving you time to do what’s important to you and your business. So, who are your key partners?
Your key activity is what drives your business. If you offer SaaS programs to your customers, then designing customized software programs is the key activity. You spend your days designing programs for clients who bought your software, and you also do regular updates to each client’s platform. You conduct important client phone or video calls, following up on leads, looking for new customers, and looking for funding partners who see the value of your software program.
Key resources can include:
- Financial services, such as banking, funding, line of credit, and more.
- Employees, independent contractors, suppliers, anyone who helps in your business.
- Physical products and/or services for sale to clients.
- Physical hardware and equipment, computers, software, phones, printers, fax machines (yes, some still use those), office supplies, business licenses, business registration, etc.
- Support systems such as your business coach, emotional support such as family members, best friends, others in business not related to yours, etc.
The value proposition is how you convince potential clients they want to buy what you offer because it solves a problem or fulfills a desire they have. Occasionally, it is called the Unique Selling Proposition (USP) and is also part of developing your brand recognition with clients and potential new buyers. The more visible your business is, the more well-known your brand becomes, mainly for that unique offering, along with excellent customer service. Take advantage of all the social media platforms and other opportunities where you can present informative content, place an ad for a special discount or an upcoming event and stay in front of your potential customers.
Customer relationships are very important to the success of any business. This ranges from the selling process where you offer the client what they need to achieve success with their own business. Listen to what they want and then give it to them. Build loyalty right from the start so they stay with you, even if a competitor offers the same product or service for a cheaper price. Customer service, when done well, is vital to keeping current customers happy with your service and products. Offer loyal customers access to a new product at a discounted price. This is part of building your strategy so your business is stronger.
Who are your customers and what do they want? You can answer this question by doing the occasional survey and offering a small incentive to do so, such as an Amazon card for $10. People want to tell you what they want and what they want more of, including their wish list.
Segmenting customers means you know the age groups most commonly buying your products and services, what gender they are, their age group, whether married or single, how many kids, what their professions are, and more.
Channels mean the platforms you use to work your business. The website, your blog, cloud service, and your social media platforms are channels used to market products and services. Use paid advertising wherever a relevant potential client niche will find your ad, click on it to learn more, and best of all, buy from you. Funnels are the pathways from a series of channels, leading to a landing page where the customer learns more information and then buys the product or service from you.
What does it cost you to run your business? Prices of your website and hosting company, paid subscriptions to software programs and cloud platforms, dropshipping fees (if relevant to your business), business licenses and registration fees, attorney fees, employee and independent contractor fees, and coaching fees to keep you sane.
But there is also how you price your products and services. Decide how much you want to charge for your products or services, and how you will charge for them. For example, you can offer a Basic Plan, a Standard Business Plan, and a Pro Business Plan.
Set yourself up for multiple streams of income within your business by doing the following actions:
- Look into affiliate programs not only for your business to have people selling your software program, but for you to promote other businesses on your own.
- Use Google AdSense to place advertising on your website and get paid for it.
- Subscription plans are great for generating monthly income. Aside from add-ons to your software program, have a membership plan for a newsletter, and develop products related to your brand and business you can sell online.
So, When Do I Quit My Job?
Unless you have lots of money currently bankrolling your lifestyle, you shouldn’t quit your job until you reach Steps 9 and 10. Begin saving your money so you have funds to cover at least six months of mortgage (or rent), utilities, food, vehicle fees (gas), and other necessities you’ll need.
Stay with your current job if you can. If not, look for another job to tide you over while building your business. Once your business is up and running, when you receive enough money consistently to cover your bills and make a profit, then you can quit!
We hope you found this guide informative and helpful, giving you much to think about for your future.
Get ready to begin building your business with very little risk and the potential for big gains in your future!