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How to Start a Small Business Part 1

business, entrepreneurs, managers, startups, Uncategorized



1. Have an idea. It might be a product you’ve always wanted to make, or a service you feel people need. It might even be something people don’t know they need yet, because it hasn’t been invented!

  • It can be helpful—–and fun—–to have people who are bright and creative join you for a casual brainstorming session. Start with a simple question like: “what shall we build?”. The idea is not to create a business plan, just to generate some ideas. Many of the ideas will be duds, and there will be quite a few ordinary ones, but a few will emerge that have real potential.
2. Define your goals. Do you want financial independence, eventually selling your business to the highest bidder? Do you want something small and sustainable, that you love doing and want to derive a steady income from? These are the things that are good to know very early on.

3. Create a working name. You could even do this before you have an idea for the business, and if the name is good, you may find it helps you define your business idea. As your plan grows, and things begin to take shape, the perfect name may come to you, but don’t let that hinder you in the early phases—–create a name that you can use while you plan, and don’t mind changing later.

  • For a bit of fun, take a cue from the Beatles, who often use fun names for a song before it is finalized, like Yesterday, which had the working title of “Scrambled Eggs.”


4. Define your team. Will you do this alone, or will you bring in one or two trusted friends to join you? This brings a lot of synergy to the table, as people bounce ideas off each other. Two people together can often create something that is greater than the sum of the two separate parts.

  • Think of some of the biggest success stories in recent times include John Lennon and Paul McCartney; Bill Gates and Paul Allen; Steve Jobs and Steve Wozniak; and Larry Page and Sergey Brin. In every case, the partnership brought out the best in both sides of the equation, and every one of them became billionaires. Is a partnership a guarantee of being a billionaire? No, but it doesn’t hurt!
5. Choose wisely. When choosing the person or people you’re going to build the business with, be careful. Even if someone is your best friend, it doesn’t mean that you will partner well in a business operation. Start it with a reliable person. Things to consider when choosing your co-leaders and support cast include:

  • Does the other person complement your weaknesses? Or do both of you bring only one set of the same skills to the table? If the latter, be wary as you can have too many cooks doing the same thing while other things are left unattended.
  • Do you see eye to eye on the big picture? Arguments about the details are a given, and are important for getting things right. But not seeing eye to eye on the big picture, the real purpose of your business can cause a split that may be irreparable. Be sure your team cares about the and buys into the purpose as much as you do.
  • If interviewing people, do some reading on how to spot real talent beyond the certifications, degrees or lack thereof. People’s innate talents can often be somewhat different from the conventional education streams they’ve pursued (or failed to) and it’s important to look for “click” (you get along with them) and latent talents as much as paper credentials
    .



Using Surveys to Validate Key Startup Decisions

entrepreneurs, marketting, Uncategorized

Summary

This article describes in detail how to use on-line survey tools to validate your key startup assumptions, and gain actionable insights into topics such as pricing, target demographics, messaging, etc.

Introduction

By now pretty much every entrepreneur knows the basics of Lean Startup methodology: start by searching for product/market fit. Get out of the building and talk to customers. Run a series of experiments to validate your ideas. Above all else, validate your thinking as early as possible: don’t spend millions of dollars building something before you have tested the ideas and concepts with customers.
Where this tends to fall down in practice is that many entrepreneurs find it hard to reach real customers. Getting feedback from co-founders, friends, small focus groups, user testing sessions and even existing customers can be very helpful to qualitatively understand how others view your offering. But many times the sample group that you can reach is too small and biased towards people that will be polite to you, or who have self-identified as liking your product.
What if you could ask 1,000 potential customers about your product, new feature or idea? Would that help you make better decisions, create content or collateral, or gain important insights?
Many survey firms, including Survey Monkey discussed below, offer the ability reach a large specifically targeted audience that they have worked to identify. The following article was written by Brent Chudoba, General Manager of the SurveyMonkey Audience business, and describes how you might go about designing a survey, and interpreting the results, to gain actionable insights for your startup.

Background

My name is Brent Chudoba, I’m a VP at SurveyMonkey and General Manager of the SurveyMonkey Audience business, which provides on-demand respondents for our customers who need a targeted audience. My background, pre-SurveyMonkey, was in investing, and I worked for the investment firm Spectrum Equity, that acquired SurveyMonkey in a leveraged buyout in 2009. As an investor, quantifying a market opportunity was key to validating a business through diligence. Whether I realized it then or not, I’ve always been a researcher, only now I have a much better grasp of which tools are available to help people conduct more efficient and effective research. A big part my investment work was gathering company and industry data to form an investment thesis on the companies in my universe. As an operator, I’m still collecting data and trying to make good decisions as I help grow a business.

So how do you get quality feedback?

Learning about your own customers:

If you want to talk to your own customers, and understand product satisfaction, feature requests or anything else, a survey can be a great tool. You most likely have email addresses for your customers, or can provide a feedback link on your site, or even embed a survey in-product. However, your respondents are likely your biggest advocates who want to help you, or your least satisfied customers, who may want to complain. Surveying existing customers is no doubt a valuable exercise and can create preliminary benchmarks, but the focus of this article is on surveying non-customers, or people you may not immediately be able to access.

Learning about potential customers:

I always find it hard to generalize feedback programs without diving directly into a use case. I hope the following will help give you some ideas and inspiration for the topics that are most important to you when it comes to gathering feedback.
I have a friend who runs a startup called Modify Watches. It’s been around for two years, starting to grow nicely, and primed to add more resources and start spending money to grow. The company sells affordable watches that have interchangeable faces and bands, giving consumers hundreds of customization options. Modify Watches has a unique approach on accessories – you wear a different combination of pants and shirts most days, so why not switch up your watch face and band whenever you want to match your style or mood? The company has an e-commerce model with online as the primary sales channel. Modify could really benefit from talking to potential customers to understand its market opportunity, target customers, pricing tolerance and feature needs. Modify knows a lot of information about its business anecdotally and through customer data, but what about the potential customers that are harder to reach?
Since Modify is a startup focused on finding ways to gain new customers and is testing out different pricing, advertising and business model concepts, I asked my friend, “Why don’t you talk to a representative sample of US adults to see if they would buy your product, and what their pricing tolerance is on something like watches?”
My friend, the founder, was very interested. Apparently, Modify’s biggest problem (not dissimilar to most startups) is getting its product in the hands of more people. He told me, flat out, Modify has a great product, people love it, people evangelize it, but there aren’t enough people with the product on their wrists. To change this Modify had to decide how best to put resources to work on marketing campaigns, PR and partnership efforts to help jumpstart its growth and awareness.
The risk, from his perspective, is in having the confidence to expend resources and/or raise more capital to accelerate growth while relying on a relatively limited set of customer data and questions around business model approach, ideal customers, and price point.
So what’s a resource-efficient way to find data and insights around key business questions, in order to gain the confidence to push forward on growth and awareness efforts, while still staying nimble enough to pivot if needed?
Talk to potential customers. Determine the key business questions where feedback from a large audience would help you make better decisions. Using a survey or even series of recurring surveys to monitor trends can help find answers quickly, and help give you the confidence to sprint forward and grow your customer base.
The next section covers how you might run such a project and gives some examples of how to test some common topics faced by startups, using Modify as a specific example.

Using a survey and a targeted audience to make smart decisions

How do you get started?

Work backward. First, think of what you are going to do with the data once you have it. This will help you determine what exactly you need to ask, and how to ensure the data is usable. Starting by just typing out questions can actually prolong the process. I also recommend keeping goals narrow and focused. You can always run more survey projects, so don’t overthink the first project and try to address too many topics at once, which leads to longer surveys and more survey creation and QA time. You are also going to learn a lot every time you run a project, which will make each subsequent project more successful.

Create clear objectives

Key objectives for Modify:
  1. Understand if its core offering is priced appropriately
    • The data (output of answer options) needs to allow Modify to clearly indicate where people think the current pricing is too high, too low, or about right
    • Understand brand recognition (unaided and aided) in the market to get a sense of how they should position themselves in marketing/PR (and be able to cut this data based on watch/accessory budgets and demographics)
  2. Find out which types of customers are most likely to purchase its product
    • Where are the demographic sweet spots in terms of pricing and interest?
  3. Get custom market stats it can use to build a TAM (total addressable market), sanity check its market understanding and build customized data for presentations, potentially for fundraising
    • How frequently do people buy watches?
    • About how much do people spend on watches?
    • How likely are people to purchase a watch online?
  4. Understand key info around its new watch subscription offering to validate whether this is a business initiative it should focus on
    • Are people interested in a subscription offering that allows them to get new watches on a regular or semi-regular basis?
    • How much should they charge?
    • How frequently do people want new watches?