The 9-Step Startup Cheatsheet
Starting a new business is simpler than you think but that’s not to say it’s easy. There are myriad distractions along the way vying for your limited time and resources and you may fall into the trap of “majoring in minor things”. Hundreds of books offer startup advice but the process boils down to a few key steps, regardless of the business you have in mind. Follow this outline and you won’t go far wrong in your next venture.
8 key steps to launch your startup
- Validate your idea. This is the vital step – the first hurdle – which many startups fail to clear. You need to have proof from the outset that there is a market (or at least sufficient interest) for your product or service. You can find this out by running a validation test of your idea.
Asking friends or family “Would you buy this?” is not validation. Validation would be sufficient stranger interest (e.g. signing up to your “keep me informed” mailing list); getting a written commitment to buy or, best of all, getting a sale before you’ve even launched.)
- What problem are you solving? Don’t create a product/service and then try to sell it. Find out if people will buy first.
- Who are you solving it for? Identify a specific target customer for your offer. It’s useful to create a customer avatar, a fictional representation of your ideal customer.
- Do they care? You may well be solving a problem for a specific audience but is the problem causing sufficient pain to motivate them to part with their money or can they live with it?
- Make connections. Start reaching out to people who may want your product or service. Do this as soon as you have a minimum-viable product (MVP) or prototype to show them what you’re building. A mistake many startups make is to launch then try to market their offer. That’s putting the cart before the horse. Build your network from the start, before you’ve finished creating your product.
- Build a minimum viable product (MVP). Before you invest serious time and money in your startup, you want to know if you’re onto a winner or a hiding to nothing. You do this by building an MVP. Eric Ries, who popularised the lean startup methodology describes an MVP as “a product which has just those features and no more that allows you to ship a product that early adopters see and, at least some of whom resonate with, pay you money for, and start to give you feedback on”. Examples of MVPs you can use are:
- An explainer video. As the name suggests, an explainer video is a short video (typically 90 seconds of animation) explaining what your product does and why people should buy it. Dropbox started in this way, growing their pre-launch waiting list to 75,000 with one simple video.
- A landing page. A landing page is a simple one-page website that tells potential users what you do and asks them to take some form of action (typically to submit their email address to a mailing list) in return for some benefit. Landing pages are an essential tool to gauge interest in your idea: if lots of visitors are taking the desired action, you’re off to a great start. If no one is taking the desired action, pause and try to figure out why. Does your product/service need tweaking? Are you targeting the correct audience? Are you solving the real problem? (Once you have a landing page, you can drive traffic to it using Facebook).
- Manually fulfil the product or service. This is not scalable and it’s no way to get rich but that’s not the point of an MVP. Remember, the purpose of an MVP is to test if your idea works. The manual fulfilment MVP is just that: you present your product or service to your target market and as orders come in, you manually do what needs to be done to fulfil it. When you are confident the idea has legs, then you can begin automation and scaling.
- Crowdfunding. Another form of MVP is to see if you can raise money from the market using one of the many crowdfunding platforms out there. It’s the ultimate form of validation and has the added benefits of raising money and building a community to further test your idea.
- Just one feature. You can build an MVP around your one major benefit, i.e. unique selling point. It’s far easier, cheaper and faster to build a prototype that does just one thing. You’re testing to see if your main selling point is powerful enough to engage your audience and validate your idea. Of course, you can add future features down the line.
- Focus on serving your customers. These days, products are a dime-a-dozen. It relatively easy to have anything built: websites, apps, physical prototypes, pop-up stores… That’s not where your success lies. Your success depends on delighting customers by solving a pressing problem in an efficient way. Tony Hsieh, founder of Zappos, said, “We believe that customer service shouldn’t be just a department; it should be the entire company.” Out-serve your competition and you’ll have a chance of succeeding. Don’t just pay this concept lip-service: live it deeply and design your business around it. Treat customers as you would like to be treated.
- Sales before branding. It’s more important to get those first sales through the door before worrying about branding, logos and letterheads. Here’s a hard truth: a lot wannabe entrepreneurs like the idea of “being in business”; far fewer want to do the grunt work. When you’re starting out, your focus should be on getting your first 1,000 customers. Everything else is a distant second.
- Don’t waste money. A laptop, phone and internet connection and some business cards from Moo is all you need when you’re starting out. In the early days, Amazon founder Jeff Bezos, used a door on bricks as his desk. Noah Kagan, founder of AppSumo and SumoMe (both multi-million dollar businesses) started without a website, found his first client by cold-emailing and manually fulfilled orders. You don’t have to be that spartan but it brings home an important message: an ounce of hustle is worth more than a pound of dazzle.
- Engage with your audience. It’s insanity that many startups erect walls between them and their customers, hiding behind anonymous contact forms and gatekeepers. You need to be in the trenches listening to what your customers are saying, both the good and especially the bad. What are the complaining about? What can be improved? What do they love? What do they hate? What is their main frustration. You can’t buy such valuable information, so use it. Be obsessed about making your customers happy. You don’t have to implement every suggestion (nor should you) but it’s often enough for customers to feel they have been listened to and that you care. You’re not so important that you can’t talk to your customers. Talk to them or they’ll start talking to your competitors.
- Constant improvement. Continually look for ways to improve your business for your customers (not necessarily for you). Endless, small improvements quickly mount up and the results can be dramatic. Use a method popular in retail: take a walk through your store. Effective retailers literally walk around their business trying to see it through the eyes of their customers. You may not have a bricks-and-mortar business but you can do the same thing by asking “What is it like for our customers to do business with us?”Analyse every customer touchpoint and ask yourself, “How can we improve this?”, e.g. what frustrations and inefficiencies can we remove?
- Careful expansion. Going forward, maintain a tight operation. It’s tempting, once the money comes in, to start throwing cash at every problem or of doing things just because you can afford to. Slowly begin to build out your business from MVP to your original vision, all the while taking on board audience feedback. Create a feedback loop: release updates, get feedback, incorporate changes judiciously, repeat.
- The most important thing you must do when launching a startup is to validate your idea.
- Build a prototype. (If you’re creating software, we highly recommend you read Getting Real by Basecamp).
- Focus on customers, not the product or service. Do things that benefit them, not you.
- Validate your idea. Take the plunge. Get out of the office and start talking to your target audience. Cold email, telephone, arrange a coffee meeting, buy them lunch and see if your idea has mileage.
- Build and promote your MVP. Pick one or more of the MVP models outlined above and run with it. Promote them on Facebook. Get your idea out there to see if there is sufficient interest. Don’t be disappointed if the response is underwhelming. Ask yourself what needs to be changed. Are you targeting the right audience? Are you tackling the correct problem? Use feedback to modify your approach. That’s the whole point of creating an MVP: to know where you stand.
- Sell one unit. Armed with your MVP, approach your target audience and land your first paying customer.