Over the past few months friends and colleagues have increasingly sought my advice and considerations when thinking about starting a business. In this two-part series, I am going to share with you a simple list consisting of the ten pieces of advice that and a bonus “brief” business plan template that I wish I had when I took the leap into entrepreneurship.
I started Mod + Ethico in November 2015, and for years prior to launching, I had analysis paralysis. In business school I was building an enviable toolbox of know-how and skills to launch a business: studying strategy, market research, marketing, finance, courses specifically geared to launching products and services; yet I was still paralyzed with fear of jumping into unknown territory.
These steps provide a simplified roadmap, relevant to anyone, at any age and from any background looking to make a leap into starting their own business.
Ten steps to starting your own business (here’s the first five):
1. Always Be Ideating (ABI)
Always be ideating (ABI): this one is obvious, but find inspiration in your everyday life. Great ideas are all around you. Is your baby a Houdini with her mittens?! You wonder, “could there be a better product out there?” Adalynn (my now 18-month old) is a constant source of inspiration for product ideas. This does not mean I pursue each one, but as I see areas where her unique needs are not being met, a lightbulb goes off. I record all of these opportunities.
Keep a log of your personal frustrations and gaps in products and services in your own experiences. There is a good chance that if you have a frustrating experience, or have a need that’s not being met, others probably do to. Does that mean it should or could be a business idea? Not necessarily, but it’s a place to start. I keep a running log recording ideas I have. I find this ongoing brainstorming makes the ideation come easier. It’s a muscle that I constantly flex rather than carving out a specific time for ideation. For me, this practice is conducive to honing creative muscle memory.
2. Preliminary Research & the 5 Cs
Conduct Preliminary Research & use the 5 Cs: Customers, Competition, Company, Collaborators, Context. I find the 5 Cs, a long held marketing framework to be a useful method for conducting a preliminary research to help define and unpack an opportunity. Identify potential customers: who needs this? Create a customer archetype. Who is the competition? Think beyond an exact copy of your concept, where are customers meeting this need right now? Competition can be non-obvious alternative options. What does the company look like? What’s the business model? Collaborators: What resources do you need to bring this idea to market, and what’s the value exchange? Context (a.k.a. Climate or Conditions): why is the market primed for this idea now? What are trends?
3. The “Brief” Business Plan
Create a “Brief.” Create a short business plan. You may have heard, gone are the days of the 100-page plan. That’s true in some ways, especially for the entrepreneur who is scrappy and bootstrapping. You may need to build out a more detailed business plan if you intend to raise funding, but for starters, a “brief” to give you a framework will do the trick.
4. Generate initial financial projections
Create rough financial model. Get an idea for what this may cost you over the next 1-3 years, broken down by month. Input your monthly and/or annual costs. Create some very rough estimates based on costs for what you may need to bring in to offset those costs. What’s your estimated burn-rate? How much funding do you need, and how do you plan on financing? Boot-strapping (a.k.a, self-funding), friends and family, small business loan, venture capital, etc.
5. Assess how to proceed.
Evaluate – will you build, pivot, or abandon?. Based on your preliminary research and projections – challenge your business plan. Does it appear viable? If “yes,” let’s think MVP. If “yes, but” let’s consider a pivot, and revisit steps 1-4. If “no,” abandon. There is no shame in abandoning an idea. You are getting valuable practice in ideating, conducting research, and even if you are disappointed in the sunk cost of resources: your time, perhaps some financial investment. Just think of how much sanity and capital you saved by not sinking a major investment into what could have been a money pit for you.
Stay tuned for the next five steps to starting your side hustle in our next post.
Contributed by Candice Collison, founder of Mod + Ethico