CLASS RESOURCE GUIDE 

The New Business Toolbox: Help Your New Business Do It Right The First Time — Seth Godin 

Project: Create your own 7­part leverage plan. 

 The Business Model

1. Understand (and commit to) your business model

Every successful business has one. It's the alchemy of turning your resources and your effort into

something that people value, something valuable enough that it turns a profit.

The liquor store down the street has a simple model. Pay rent, stock the place with inventory, hire nice

salespeople and sell wine and spirits for more than they cost. Repeat.

Twitter has a more mysterious model. It involves creating a free platform that spreads, that's addictive and

that engages people for hours every day. Once attention is achieved, sell some of that attention to

advertisers.

And in between, there are literally hundreds of other models. There isn't a right one, just the one that works

for you.

2. Write it down!

In ten sentences or less, write down your business model.

1. List the assets you have or will acquire

2. List the human resources you will contribute or hire

3. Describe who your customer is and what the customer gets from doing business from you

4. And finally, outline what part of this is hard, which part is unique, and how you're going to

repeat it again and again.

Remember, you don't have to invent a unique business model. In fact, you should probably steal one

that's already working for someone else, somewhere.

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Freelancing vs. Entrepreneurship

1. Determine who you are!

If you're a freelancer, write down precisely what you will do to:

● Ensure a steady stream of work

● Create an environment where you don't go crazy and melt

● Consistently raise your prices, increase the quality of your work and generate a waiting list

for your time (at the same time).

If you're an entrepreneur, write down how you will:

● Relentlessly hire people to delegate work to

● Give yourself a promotion so you are constantly doing work you're unable to hire anyone

else to do

● Build an organization that has the cash flow to permit you to do those two things…

Funding

1. Fund your business

Create a page or more that answers the following questions as completely as you can:

1. Do you need money for this business?

2. Does more money increase the chances you will reach positive cash flow? Profitability?

3. What are the assets the money will go to pay for?

4. How long before the money invested starts turning into money returned?

5. Do you hope to sell this company?

6. When?

7. For how much?

8. What is the gross margin of what you'll be selling?

9. How long will it take you to reach scale?

Given all this, and what you learned in the video, what sort of funding are you seeking? Why would this

investor choose your offering over all the others available?

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Hiring

1. Commit to a hiring plan

If we can agree that a key part of your business is going to be your people and what they contribute, can

we also agree that some hires are better than others?

In this part of the 7-part plan, you're going to commit (not just describe, but commit) to what your human

resources look like.

1. Who are the first employees you need?

2. Where will you find them?

3. Why would they join you?

4. How will you tell the good ones apart from the convenient ones?

5. What's your funnel?

6. After hiring people, how will you evaluate them?

7. How long after starting will you give people a formal review?

8. What's your approach for talking about the uncomfortable?

9. Are you asking people to do work that's been done before, or to explore the edges of a

new universe?

Naming

1. Create a name (and live with it)

This is a tactical exercise in digital marketing and storytelling (don't use the word branding, please).

1. Open your browser to wordoid. Also open a new window to nameboy. And a third one to

hover.

2. Make a list of thirty words that describe things that remind you of how you want your

business to make people feel. They might be colors or animals or emotions or holidays or

relationships or historic figures...

3. For each word on the list, make a list of five more words that remind you of (but aren't

exactly about) that word.

4. Now you have 150 names. Start running single ones through wordoid and combinations

through nameboy.

5. Repeat until you find an available dot com domain. Grab it in Hover!

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Partnerships

1. Delineate your approach to partners

Consider the following:

1. Who else is helping you start this thing?

2. If they stopped working on the project in a month, would that be okay?

3. How much are you actually hoping they will contribute, today, tomorrow and year from

now?

Create a spreadsheet, listing each prospective partner. Under their name, list everything you're hoping to

have them do, in the long run and the short run.

On the same spreadsheet, make a different section where you list the hierarchy of how decisions are going

to get made.

In the video, we'll talk about how to take these two components and combine them with the financing page

of your guide to come up with an equitable plan for sharing the upside.

Cash Flow

1. Understand and control cash flow and pricing

Answer these questions, in writing!

1. How much is your product or service going to cost?

2. How much does it cost you to make one additional unit?

3. How much is your monthly overhead, all the expenses that aren't included in the cost of

making one more unit.

4. How many units are you going to sell every month?

5. Now you know what the monthly profit is (IF you sell all you make, AND people pay on

time).

Some questions, then:

1. What would happen to your numbers if you increase your retail price by 20%? 40% Lower

it 10%?

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2. What would you have to change about your business to get people to pay in advance? To

subscribe? How much more could you charge if you gave them credit?

3. For the first six months of your business, what if you committed to being much smaller but

only had clients that paid upfront?

Positioning and Storytelling

1. Find your niche and fill it

a. Draw an X/Y axis.

b. Label the horizontal and then the vertical.

c. In each quadrant of the axes, place your competitors and other alternatives on where they

stand.

d. Now, find the empty spot and there you go.

e. If you can't find an empty spot you can live with, draw different axes.

ADDITIONAL RESOURCES

● Business Model Generation is the one and only best book on this topic. Worth the $23... if used correctly, it's worth 10,000 times that.

● You can download the business model canvas that is talked about in the video. Get a free copy here (it will open in Acrobat and you can print it out from there.).

● Download the class attachment: twenty questions to help you think about your business as you design it.

● Listen to the first episode of my short-term podcast, including an overview of the differences between entrepreneur and freelancer.

● Check out this blog post. If you're in a hurry, here's the point in just one minute of video. ● For an inside look at how Kickstarter works for funding, check out this podcast. ● To think about the humility and storytelling that fundraising demands, check out this short video. ● Here's another excerpt where I talk about bootstrapping.

● Here are several blog posts on naming, worth a read: ○ The new rules of naming ○ Naming a business ○ Naming things ○ Sloppy naming ○ Being brave with names 

● Roller derby names! That's right, check out this exhaustive list of roller derby player names (ht Anil

Dash). If this doesn't open your eyes to just how much variety is available to people looking for two or three words that create a mood and are distinctive, then I don't think anything will.

● The naming tool of the year is wordoid. Scrolld down on the left, put in a fragment of a word and off you go.

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● What about Top Level Domains? If you visit this site, you'll see a huge list of TLDs (the "dot com" part of a website name). Most of those will be available during 2014. With such a huge variety of domains coming along, it's entirely possible that "dot com" will stop being the default, just like the 212 area code stopped being the only way to have a phone number in New York. The question then, is should you care if you can't get the dot com? At one level, no, don't worry about. If your business, Blue Radish Solar Heating, ends up being called BlueRadish.solar, it's not a crisis. UNLESS: 1. blueradish.com is a company that actually competes with you. 2. you're hoping that people will hear the name of your company and then find you online. Mostly, my argument for finding a dot com is that it eliminates most trademark issues AND most 'find us online' issues. But sure, you can be really happy going forward if you don't have one.

● Steve Blank's entire body of work is essential, and you can start here with his post about accounting for what matters.

● The Pizza XY

If you get a chance, go visit DiFara. But, either way, take a look at this graph. Can you imagine other ways you could split up the axes in the pizza market? Healthful? Famous? Advertised? Value/size of portion? Convenience/hours open? Variety of toppings? As you get more familiar with your industry, the range becomes easier, but the magic is that just about every breakthrough company is accompanied by someone who figured out a new set of axes.

 

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