7 Steps Toward Your First Business
Let's begin with a disclaimer. I'm sure this isn't the first post for entrepreneurs that you've stumbled across; I'm also sure you've noticed that most of them fall into one of these two categories:
- Posts featuring images of dollar bills flying out of computer screens, or money lying next to a MacBook, or computer keys with a $ signs on them, or… well, you get the idea.
- Posts opening with quotes from Steve Jobs, Richard Branson or other successful entrepreneurs. What follows is advice on adopting an entrepreneurial mindset, developing entrepreneurial habits, boosting your entrepreneurial self-confidence, etc.
If you've seen posts of this sort, don't expect the same things from this one. This guide doesn't aim to impress or inspire you, nor will it turn you into the new Elon Musk or something…
But here's why you should read it anyway: in this guide, you will find a realistic description of what starting a business is like, summarized as a series of steps. If that's what you're looking for, read on.
STEP 1. Come up with an idea
This is actually the simplest one. Chances are you already have several ideas swirling around in your head. But what if you don't — how do you come up with a worthy idea? Here are four tips to get you started:
Do something you love
Is there something that you're good at or something that you enjoy doing?
If you can turn it into a business, you're lucky.
Find something annoying
Think of something annoying — like traffic jams, Facebook ads, or queues in supermarkets. Now, think of a way to get rid of these pesky things.
Improve something lame
Find a thing that's totally, 100% lame and offer an improvement. Need an example? How about making a pair men's sandals that don't look ugly?
Createsomething weird
Go to ThinkGeek or Cool Sh*t You Can Buy, and you'll see that even the weirdest products have their customers. Now, try to come up with something weird.
Now, I have to warn you: it is a must that you care about your product or the concept of your business. If you don't, you will burn out long before you make any progress.
Yet another warning: do your homework. Research your niche online, have some real conversations with real people and find out if they find your idea worthwhile. According to Forbes, 8 out of 10 businesses fail because they don't ask for feedback from people.
Takeaway: only proceed to the next step if you have a business idea that either stems from something you love, or helps you combat something you hate. Also, do your research — about 80% of first-time entrepreneurs fail because they don't do this.
Pro tip: if this is your first business, start with something simple. Don’t try to reinvent the wheel, and make sure you cater to the actual needs of actual people.
STEP 2. Start counting
Okay, you’ve come up with an awesome business idea of some sort. What now?
Well, now you need to make sure you can turn it into a business. Obviously, you should do this before you make any serious investments. So how exactly do you find out if your idea is business material?
To do that, start counting.
Yeah, that sounded kinda vague, didn't it? Here's another seemingly vague, yet crucial thing: in business, you only control the processes that you can count.
So, what the hell are you supposed to count?
Begin with these tree things:
Expenses
All fixed and variable expenses associated with producing, advertising, and selling your product or service.
Pricing
The approximate pricing based on your expenses, your desired income, and your competitor’s prices.
Break-even point
The number of sales needed to pay off the costs of doing business (in other words, to break even).
In case you need a more detailed introduction into these things, watch this short video explaining the key concepts:
Takeaway: before you spend a single dollar, find out how much your business is going to cost you, if you can afford it, and how many clients you will need to attract to break even.
Pro tip: Learn about different pricing models, and never confuse margin and markup.
STEP 3. Launch and get online — fast and cheap
Here's a piece advice from Captain Obvious: every single business needs some sort of online presence — ideally, in the form of a website. Knowing this, you might feel tempted to find a web design studio and order an expensive custom site.
Don't do this.
Why? Well, because you're still on an early stage of developing your business, and you don't know if it will bring you money, that's why. Instead, choose a more affordable option:
- buy a readymade website from TemplateMonster, Creative Market, or ThemeForest or...
- ...get a premium plan from Wix, build a website and transfer it to your own domain.
And yes, I know what you're thinking about right now. If starting cheap is the goal, why not choose a free WordPress theme or a free plan from Wix?
Two words: Google Analytics.
Remember we've mentioned that you need to count everything? Once you launch, it's crucial that you are able to analyze every byte of data related to your customers' on-site behavior, shopping habits, and more.
Google Analytics lets you do these things for free. On the downside, you can only use it with self-hosted websites or premium plans from platforms like WordPress or Wix. That's the reason why the title says "fast and cheap", not "fast and free".
Takeaway: when launching your business, use a reasonably-priced website platform that supports Google Analytics. Also, learn how to setup and work with Google Analytics.
Pro tip: as a rule, 7 to 14 days are enough to fully personalize a template-based website. Taking this into account, try MotoCMS or other website providers that offer free trials. This way, you will pay for your website when it's 100% ready.
STEP 4. Get traffic
'Traffic' is just another term for 'potential customers', but you already know that, don’t you? So how do you get people to visit your website and buy your stuff?
Search engine optimization and social media marketing are your primary sources of traffic, but they take months of hard work before you see any results. So how do you attract customers faster? The answer is simple: advertise.
Specifically, use Google AdWords to create ads based on popular search queries. The ads of this sort are the first things most people see when they search for products or services on Google:
Takeaway: while working on your SEO and SMM is a must, begin with Google search ads to attract relevant traffic faster. With an average cost of $ 1−2 per click, launching a small-scale campaign is a viable option.
Pro Tip: In case your business is based on a unique product or service, here's another tip — launch a crowdfunding campaign at Kickstarter or Indiegogo. Even if you don't get the funding, thousands of people will learn about your product.
Also, you can get additional tips on attracting the first 1000 visitors to your website from this book.
STEP 5. Test and Optimize
A huge benefit of using AdWords is the analytics on the performance of each and every ad that you get from Google. After running AdWords for a couple of weeks, you will end up with two lists of search queries:
- a long list of queries that don't work very well for you.
- a short list featuring the ones that bring you customers.
Once you've established what keywords lead to more conversions, you can start building your SEO strategy around them. This way, you will boost the volume of the traffic that's more likely to bring your money.
Also, Google Analytics will tell you a lot about the average age, gender, country of origin, and the shopping habits of your customers. Use this info to tailor your texts and images to the right audience.
Finally, use heatmap tools — just like the ClickHeat from Labs Media — to optimize the layout of your site. Software of this kind shows you what website areas receive more clicks, which helps answering conversion-related questions like these ones:
- Does green 'buy' buttons work better than the red ones?
- Where should I place my shopping cart, signup form, and social buttons?
- Do people actually scroll and read content on my website?
Takeaway: identify the best-converting search queries with AdWords, define your customer personas with Google Analytics, and use heatmaps when tinkering with your buttons and forms.
Pro Tip: if you have the budget to spare, try paid heatmaps — like the ones from Crazy Egg or Mouseflow.
STEP 6. Break Even
Alright, you've invested into your business, your website, and marketing. You've started attracting customers and optimizing your website. What do you do now?
Now, you need see how much time it takes to break even. The expenses you've made so far will help you determine if there is a market for your business. At this point, you can observe one of these two scenarios:
Scenario #1 Things don't go as well as expected.
If that's the case, return to steps 4 and 5, drive new traffic, acquire more data and perform additional optimizations. If that doesn't work, return to step 1 and try modifying your idea or choosing a new one.
Scenario #2 Everything goes as planned or better.
Everything goes as planned or better. In this case, you will feel tempted to start scaling your business, but it's a must that you break even first.
If you manage to generate enough sales to cover your expenses, you've made it… well, almost. But the good news is that you're good to move to the final step.
Takeaway: only proceed to scaling your business if you manage to break even. If you don't, try broadening or redefining your customer personas, using different marketing channels, and performing additional optimizations. If these don't yield the expected results, return to step 1.
Pro Tip: consider pivoting as a backup plan in case things don't work out. Here are the most well-known cases of companies pivoting from their initial strategy.
STEP 7. Level Up
Let me repeat myself. So far, every investment that you've made aimed to determine if there is a market for you and your business idea. Once you've confirmed the fact, it's time to find out how large this market is.
To do this, start expanding your customer base. There are dozens of ways to do this. Work on your SEO and social media presence to attract organic (i.e. free) traffic, or launch new AdWords campaigns to discover new customer personas and new winning keywords.
Besides, you can tap into Facebook Adverts, use the advertising services of other social media, or explore the potential of Quora and Reddit. Just don't act like a solicitor when approaching the latter.
Other than that, you can increase your product inventory and improve the customer experience for you existing customers. When it comes to such things, the sky's the limit.
Takeaway: once you know that your business can stay afloat, try increasing your inventory, expanding your target audience, or improving the customer experience for your existing clients. In other words, start growing your business.
Pro tip: at this point, long-term traffic generation strategies become one of your top priorities. For this reason, you will benefit from learning about the basics of SEO and SMM to secure your ability to attract customers in the long term.
FINAL THOUGHTS. Don't expect anything to be easy
If you've managed to reach this far, here are several pieces of advice that I expect you to treat with all seriousness:
- No matter how great you business idea is, you need to make sure there's someone willing to pay for it.
- Develop a habit of taking notes. Write down everything: your ideas, plans, tasks, etc.
- Starting a business — no matter how small — requires tons of work. Besides, get ready for spending dozens of sleepless nights learning new things.
- It is a must that you minimize your expenses at the early stages.
- Don't expect that everything is going to be perfect. In fact, don't expect anything to be perfect at the very beginning.
I hope these will help you. In case you need any additional info for first-time entrepreneurs, have a look at these webinars at Startup Hub. Also, good luck.