5 Questions to Ask Before Creating Your Startup
Eric Ries. Brant Cooper. Patrick Vlaskovits. Dave McClure. These are just a few of the dozens of voices who are leading the way for entrepreneurs. They've written books, given talks, started accelerators and seed funds encouraging a growing army of future startup founders to forsake the traditional 9 to 5 job and start new ventures.
The startup culture seems to have pervaded society, but not because it’s glamorous or “in.” The struggles and sacrifices and lack of huge VC investments today make starting a startup decidedly un-glamorous.
Startups have become ubiquitous because it’s becoming a necessity.
Why? Because the traditional career trajectory up the corporate ladder is dying. In fact, it’s already dead. As James Altucher said recently:
“The country has been out of a recession since 2009. Four years now. But the jobs have not come back. I asked many of these CEOS: did you just use that as an excuse to fire people, and they would wink and say, ‘let’s just leave it at that.’”
It’s become evident we all must become entrepreneurs. Many of you will become consultants or solopreneurs. And many of you will decide to create a startup business, either in the technology sector or in some other industry.
But before you go charging ahead, there are a few questions you have to answer for yourself before you quit your job and put your family through the roller coaster ride of starting a new company.
1. What market am I familiar with?
Most entrepreneurs make the mistake of starting with a product. They have a great idea for a new technology, and then they go look for customers for that technology. But that’s a long and treacherous path.
Instead, start with a market.
Peter Drucker, the 20th Century’s most famous business guru, said that “…the purpose of a business is to create a customer.”
Find a market segment with an unmet need, fill that need, and you create a customer.
Think about what market segment you’re intimately familiar with. Maybe the market segment is you: you’re a cycling enthusiast, and you cycle 20 miles every other day. You cycle with other cycling enthusiasts. It’s a part of your life.
You’re familiar with the culture, the language, the products, the goals, and the needs. This could be your market segment.
Ultra-triathlete Rich Roll knows his market. After recovering from alcoholism Rich became a vegan and a triathlete. He then became an ultra-triathlete, competing in some of the most grueling competitions, like the Ultraman triathlon and the Epic5 challenge.
Rich had been an attorney, but with his new-found focus on endurance sports and nutrition he founded a new company, Jai Lifestyle, to provide plant-based nutritional supplements to endurance athletes.
Do you think Rich Roll knows his market? He IS his market.
2. What problems does my market have?
When you are intimately familiar with a market, or when you study a market, you get to know its problems. This is where opportunity happens. A market segment with an unfilled need provides you with an opportunity to solve that problem and fill that need.
Our parent company, Making Sense, owns another software company, Doppler, an email marketing tool. After a few years growing Doppler and interacting with our initial customer base, we received a lot of customer feedback that indicated they needed help with landing pages.
Many of our customers knew they needed landing pages to provide a focused web destination to close online sales, but they didn't have the technical know-how to do create landing pages themselves.
3. What are my unique skills?
I had a friend who was dying to start a Cuban restaurant. I said to him: “that’s great, man! Have you ever run a restaurant before?” His answered me sheepishly: “no.”
When you start a business, and you’re intimately familiar with a market that has an unmet need, it’s probably not a good idea to go fill that need with a solution you know nothing about.
Many would-be entrepreneurs dream of starting a restaurant. Few know how to run a restaurant.
Now there are exceptions. I have another friend who started three successful restaurants with no restaurant experience. But he had a unique skill: creating businesses. He could raise money and partner with people who DID have the restaurant skills.
That was my friend’s unique skill: starting new businesses by putting together the pieces that fit perfectly together.
But the more typical restaurant route is exemplified by trendy up-and-coming Austin, Tx-based restaurant Barley Swine. It was started by award-winning Chef Bryce Gilmore. Do you think a famous chef knows how to run a restaurant? I won’t answer that for you.
Copyblogger was started by Brian Clark who had honed his chops as a direct-response copywriter. He combined the concept of blogging with copywriting, and started a business providing training to web copywriters. Interestingly, Copyblogger has been really good at knowing it’s market and their problems intimately, and have launched a couple of software companies to fulfill these needs.
Making Sense, our parent company, was started by Cesar D’Onofrio who started his career as a software consultant. He knew software, and was good at selling, and he has know built a software consulting firm, an email marketing application, and a landing page application!
4. How can I test my idea before launching my company?
Deciding when to quit your job and dedicate yourself 100% to your new endeavor is one of the scariest parts of the startup process. What if it fails? What if I don’t make enough money to pay the mortgage? What if I don’t get any funding?
You need a safe way to test the market to see if your idea is something actual customers will pay for.
In his ground-breaking book The Lean Startup, Eric Ries recommends creating a “minimum viable product” to offer to real customers. Ries says this is better than conducting market surveys or running focus groups.
Participants in focus groups have a tendency to provide answers that they believe people want to hear.
“Sure I’d buy that product!”
But when presented with an actual opportunity to buy the product, their wallet magically disappears.
Ries says is that you’ll never know if your product will sell until you actually ask people to part with their hard-earned money.
We talked about creating a minimum viable product (or MVP) in a previous post. One of the best ways to do that is to create a landing page as a substitute for your MVP. To make this successful here are a few tips:
- Create a clear headline
- Add a compelling value proposition
- Have a prominent call-to-action
- Create an offer that people will find difficult to refuse and
- Test different versions of your landing page
Another great way to test your idea is through your blog. That’s the concept of building the minimum viable audience: create enough content to build a minimum critical mass of subscribers, then encourage them to start a frank dialog with you so you can learn what they need or lack.
5. How can I build a customer base?
So you know your market. You know what it needs. You have a skill, or you know some people that have a skill to create a solution to fill that need. Finally, you know how to test your idea.
Now all you need to do is build your product and sell it to some customers.
Building the product is the easy part. The hard part is creating customers.
The internet makes it easy for anyone to create customers. But it also makes it hard. Why? Because anybody can do it, which means anybody IS doing it. That creates a lot of noise and mediocrity.
Our recommendation, especially if you don’t have a huge marketing budget, is to use a content marketing approach.
This is an oversimplification, but to build an audience of buyers for your product, these steps seem to work well:
- Create overwhelming value for your customers. Share your best knowledge, and share the knowledge that solves your customers’ problems. When your customers feel like you are talking to them and to their particular needs, they’ll put you on their short list of must-read content.
- Market to influencers. To get your content out there, you’ve got to leverage the already built-in audiences of other businesses with complementary, non-competing products. Guest blogging, interviews, and social media sharing work here.
- Subscribe them to your newsletter. Brian Massey says that email is the biggest social media platform on the planet. Take them through a nurturing program using email, so you can get them to know, like and trust you enough to buy from you.
- Make an offer. Come up with a killer offer, and send them to your landing page to close the sale. For tips on how to make a great offer, read Mark Joyner’s book “The Irresistible Offer.”
There are other ways to create an audience. A very quick, easy and extremely popular way is to create a joint venture with a company that already has an audience in your market. This video by Jay Abraham provides good tips on creating joint ventures.
Is there anything more?
I think the last question you should ask yourself is: are you willing to dedicate yourself whole-heartedly to your startup?
Creating a new company is a lot of work. It requires tender-loving care, as well as sleepless nights, long hours, scary situations when you don’t know if you’ll make it or not.
To be successful as an entrepreneur, you can’t just give it a quick try and then conclude it didn’t work if success doesn’t come right away. You need to commit to this…and you also need help along the way.
That help can come in the form of mentorship from some of the brightest minds in the field. Here’s a reading list of books and blogs from these bright minds:
- The Lean Entrepreneur, Brant Cooper and Patrick Vlaskovits
- The Entrepreneur’s Guide to Customer Development, Brant Cooper and Patrick Vlaskovits
- The Four Steps to the Epiphany, Gary Blank
- The $100 Startup, Chris Guillebeau
- Choose Yourself, James Altucher
- The Icarus Deception, Seth Godin
- Paul Graham’s Blog
- Dharmesh Shah’s Blog OnStartups
If you can answer these questions for yourself, and you’re committed to venture off on your startup adventure, then you’re ready to go. Good luck on your startup adventure!
If you already have your own Startup and you want to share you experience or if you want to add some good tips to our community please feel free to do it, we want to hear your stories!