Value
The most important thing to have in your new business is value. Good old-fashioned relevancy to your market. How does your business offer value? How does your business solve a problem? How does your business do anything that is focused on value, rather than focused on money? This is by far the most important part of any new business.
Too often people jump into a new business and forget the value part. They are merely mimicking somebody else who has done things right or they are too focused on making money. These are not the priorities of a new business. These will only pervert the most important goal which is to offer something of value, something needed, something real.
Look at some of the best businesses in the world: Google, Facebook, Amazon, Apple and Pixar. These companies did not start off with the idea of making money as their primary focus. They started off following a dream and a passion. They saw a way of doing things better. They saw a way of helping people. They saw a way to add value to the world. This is the correct mindset. Financial success will always follow value - it's inevitable.
It is also extremely important to stand as objectively outside of the business and ask yourself if this is something that people could really benefit from. Is there really something of value here, or do you just think there is value. It can be useful to discuss these ideas with friends and family but be aware that they will rarely provide a critical, honest opinion. In most cases friends will always say that you have the best idea in the world and it will be the greatest business ever.
Just be sure to throw as much honest and hard questions at the business as you can when you are starting out. It is much better to discover that things won't work out in the beginning, then to put a lot of time and money into something only to discover a year down the road that this just isn't cutting it.
Sales & Marketing
Almost every business requires sales and marketing. You could have the absolute best product in the world, but if nobody knows about it then you're not going to get very far. I would go as far as to say sales and marketing is one of the most important aspects of any business, right behind value.
You can never have enough sales. If you go to any business they will always be in need of new sales. If you can get more customers to their door they will be happy.
Most businesses do not market correctly. While getting an ad in a newspaper or doing some pay per click online can be beneficial, the true benefit comes from really thinking hard and deep about the optimum ways to drive relevant users to your business. This is where true creativity and ingenuity shine. There are so many possible ways to get your business out there cheaply and effectively.
The important piece is to test lots of different things and to measure the results. As you find certain areas of advantage you should focus more effort in these areas and work on really scaling them home. Each businesses has certain ways of marketing that will work well for it and others that will not.
Market Research
It is important to understand the market for your business. Are there people who will use what you are building? Does your product or service solve a problem for this market? Is this a large market of potential customers or a small market? Is this for older people or younger people? Males or Females? All these types of questions are imperative when formulating your new business. You do not want to jump into a market where nobody needs what you are creating. This all ties back to value.
Partners
Should you have business partners when starting out? This depends and is different for each business scenario. The important question is does the partner provide value? And equally important, is the partner trustworthy? I have seen more businesses destroyed by bad partners than almost any other cause. Bad partners are everywhere and they can develop at any time.
Money can really change people. Never forget that. Even the nicest and most honest people can become corrupted by greed and graft. You can never be certain on whether or not a partner will be fit for the long run, but you can most definitely refine the picking.
You want to look for somebody who doesn't put money at the forefront of their life. You don't want somebody who is into flash and nice things. You want to find somebody who has integrity and characteristics built on honesty and hard work. A business partner should not be somebody looking in the short term, but rather somebody looking ahead long into the future. You want somebody who is fair and not controlling.
Use your best judgment when finding partners and always be aware that they can change at any moment.
Investments
The question of how to fund the operation is extremely important. There are many options to consider here, but I think it is important to keep things as simple and basic as possible. For most new businesses I really think bringing in an investor is overkill for a number of reasons:
- You lose control of your business
- You scale too quick and don't take time to formulate
- You become less creative, use money to solve problems
- Your business model changes from creating value to finding money
Obviously, investments are an important part of any business, but I don't think their place is in most new businesses, unless you are more skilled and experienced. If you're just starting out I would highly recommend using what little capital you have yourself and just getting to work. The wise way to go about it is to continue your day job and slowly save up $5,000 - $20,000 that you can use to slowly use to survive if needed.
Really cut down on all expenses and become as frugal as humanly possible. Your goal is to cut down on everything: get rid of all debt payments, drive a crappy car or ride a bike, eat cheap and healthy (yes, it's very possible), live in a small house or apartment. Don't worry about what people think, that's not important right now. We're talking business here, are you trying to succeed or fail? You need to be willing to take all ethical measures to make this business work and that includes making sacrifices with your personal life. You will only grow from these experiences and over time you may develop a yearning for thrift and hardships.
Cashflow
Staying profitable is one of the hardest parts about starting a new business. In most cases you will start in the negative and have to slowly work your way out from there. The constant pressure of needing to stay afloat and yield a profit is just what leads most businesses into corrupt practices and unethical principles. Businesses will slowly change their morals as they face the pressure of having to close up shop soon.
For this reason, it is important to have as few expenses as possible and to make sure you have the savings reserves to handle what you think will be a reasonable amount of time to get things going. It may also be wise to start the business in your free time and to avoid the pressure of having to make money while also develop the business.
What you absolutely do not want to create is a situation where you are in panic mode and are stressed about the financials. You need to have space and time to let things fall into place rather than force them into place. This is an absolute must.
Automation & Scalability
This is something not a lot of people hit on while talking about business, but it is something I find important, especially in a more technical world. What parts of your business can be automated? Can you replace people with machines? While it may sound like a bad thing to replace people with machines it really isn't. Allow me to elaborate on this a bit.
There are certain tasks that are always going to need to be done with physical labor and grunt work such as farming, construction, manufacturing and so on. The more the repetitive and mindless tasks can be transferred to automation the less humans need to waste their time on it and the more they can focus on family and ideas. To think that by replacing somebody with a machine is bad for the economy is elementary at best. Our goal is to free ourselves up. Do you like working a 9-5? Do you enjoy doing the same thing over and over again? Do you enjoy repeating things that you already know? And I'm not talking about becoming lazy and doing nothing because everything is done for you. I'm talking about spending your time on even more important tasks - becoming better as you can focus on much more important things.
Residual Income
Not Exchanging Time For Money
In most cases you do not want to exchange time for money in your business. You do not want to have to show up to work every day in order to make money. You want to be able to not show up and still make money. This is a very important point that people often overlook. Your goal is to replace yourself, preferably with technology.
Hard Work
Finally, once you have at least developed somewhat of an idea of how things will work get to work. You are never going to get things perfect. Start with what you have and iterate from there. The worst thing you can do with any new business is never start. You need to get out there and make some friction.
The beginning of any new business is the hardest part, but it is the most important. This is where you will test and try new things out. This is where you will discover that certain aspects you thought were a slam dunk weren't so great, and where you will find new elements come to life that you would have never thought of initially.
One of my favorite entrepreneurs of all time, Walt Disney, said it best:
The way to get started is to quit talking and begin doing.
Walt Disney
He just cut straight to the quick of things. Less talk, more work. For a number of reasons people are always reminiscent to get started in a new business venture. This is why so many people are employees. Of course it's going to be hard. Of course you're going to fail. Get used to it.
Time
Things take time. Don't be fooled by the overnight success stories you hear - they don't happen. And why should they? It's about building something slow and steady. It's about the journey of waking up each day to discover and try new things. Building a business is not about trying to make money or rip somebody off. It's not about trying to get rich quick or living a lavish lifestyle. Building a business is about waking up each day and doing what you love. It is about offering a unique part of yourself to the world. It is about developing yourself while helping others.
Once this way of thinking about business has set in the time will disappear. No longer will you try to get things done quick, or take shortcuts. You will discover that the process of taking things step by step is the enjoyment.
Fix The Bottleneck
In every business there is always a pressing issue that is holding up operations. This is your focus. In server management it is called a bottleneck as it is the piece of hardware that is keeping the server from operating at peak performance and slowing everything down. This same bottleneck needs to constantly be found and fixed in your business.
When you start out sales and marketing is usually the bottleneck. So fix it. Find ways to generate new sales. Look for unique and useful ways to market.
Go Until You Get Stopped
People seem to always find things to hold them up or worry about things that don't matter.
What not to worry about
There are a few things you may have noticed that I have left out. Some of these things may be the name, the business cards, the office and so on. While most of these things may make you feel good, they mean very little to your audience. It is much more productive to focus on real aspects like getting a sale or making a phone call than coming up with a name. All the cosmetics will take care of themselves as you scale.
Another thing that people will let bring them down is the legal paperwork and all the corporate happenings.
There SHOULD Be Problems
If there are no problems you should be very suspicious. Thing's very rarely go smoothly. If anything you should encounter problem after problem, setback after setback. This is good, this means you are being challenged and doing something different. When you face a problem you are encountering something new.