STARTUP BUSINESS GUIDE

Nkem Mpamah Startup Evangelist & Author of The Entrepreneur. http: space/

© 2015 Cognition Global Concepts Ltd. Cambridge UK . http://www.theentrecoach.com

Guide for starting, managing, and growing a profitable and sustainable business that customers want.

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Raising Your Odds of Success !The advancements in microchip technology in recent years have created so much opportunity for anyone in any part of the world to start, manage, and grow a business with ease. This sad reality is though; despite the advancements in technology, the number of businesses that fail within the first three years is on the increase.

A recent study by Harvard Business School's Shikhar Ghosh says that 75% of all businesses fail. The study is consistent also with the experience of many developers whose products and software struggle to find customers in the market.

Having coached, mentored and advised startups and experienced entrepreneurs in the past five years to start, manage, and grow successful businesses across the world, I have been privileged to experience first hand, what works for most businesses and what doesn’t. As Startup Evangelist, I have built several businesses from scratch. I have seen many businesses succeed; I have also experienced the ugly side of business failure, even with my very own first business. The story is the same whether you are building your business in United Kingdom or America, or in far away Africa or China.

The increasing rate of failure notwithstanding, there are lots of opportunities for anyone in any part of the world, who wants to start, manage, and grow his or her own business successfully.

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!Why Small Businesses Fail !Businesses fail for many reasons. Some of the common ones include:

❖ Lack of finance ❖ Inexperienced leadership and management ❖ Poor planning ❖ Wrong Location, and ❖ Poor customer service !

All the above factors notwithstanding, many businesses still fail. We have seen smart CEOs and executives from large corporations who started their own businesses and failed. These folks have top class leadership and managerial skills. Their expertise in strategic planning is second to none. Having worked for large companies for decades, they understood the ins-and-outs of excellent customer service. I reckon that they do have a bit of financial stability from past savings, at least to make a start. Nevertheless, they failed; why?

Here is the key. Businesses fail, not because founders do not build products and services exactly as they have them in mind. They fail because they build what they think customers want.

As entrepreneurs, we must understand that what we think is not always what customers want. Truth is that only customers have the right to decide what he or she wants. Therefore, when we create products or services, we must discipline ourselves for the choice of the customer to override what we think they want.

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!!When it comes to starting a business or developing new products, entrepreneurs must answer two important questions:

1. Can we build it? 2. Will anyone care? !

The first trap many entrepreneurs fall in is having the belief that anybody can build what customers want. This fallacy has been demonstrated in so many ways. For example, when people come across an idea they love, their first instinct is to rush up the pyramid to create a product or service without finding out exactly what the customer want. Thereafter, they rush to the market to sell what they created. Trouble starts after they had tried so hard to sell without success. Then they realize that nobody cared about what they built. !So while many entrepreneurs can build anything they want, not many people would care to buy them. !

Exposing Startup Fallacy !Over the past five decades, MBA classes have deceived entrepreneurs to believe that anyone can start and build a successful business by writing a business plan. So a great majority of business founders believed the lie and adopted the pattern.

So the moment they find ideas they're passionate about, they write a business plan, then rush up and create a product or service. They pitch to investors and if luck shines on them, they build more of the products they think customers want, hire sales executives and go full scale. Because their foundation is weak, they always fall the moment rejection starts pouring in.

Unfortunately, they waste so much money and time writing business plan, developing products, and executing strategies that ultimately lead to failure.

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!!You Don't Need a Business Plan at this Stage !When starting a business or developing new products or services, you don't need to waste your time and resources writing a business plan. Business plans are great tools though, but not for startups. A business plan is meant for large companies to execute strategies and accelerate growth. !The problem is that some startup founders think that having a great idea is equal to

having a business. Truth is that you do not have a business until you have validated your idea in the market. That said, it is waste of time and money to invest in strategy from day one. !The goal of a business plan is to organize resources efficiently in order to reach certain business objectives. A business plan consists of two parts, operating plan, and financing plan. !Operating plan identifies key resources such as leadership and management, h u m a n r e s o u r c e s , m a r k e t i n g , technology, and other strategic actions. Financing plan provides funding for

effective execution of operating plan. It covers things like 3 - 5 years forecast of cash flow, profit and loss account, and balance sheet statement all of which are useful only in large companies. !You need to understand that a startup business is not smaller version of a large company. You cannot manage a startup in the same way as large companies. Unfortunately, investors compel founders to do so by writing business plans, only to satisfy their ambition of taking a portion of their business. ! !!! The Entrepreneur - Informing, Advising & Inspiring Entrepreneur to Build Sustainable Business �5

Lean Business Model Canvas by Alexander Osterwalder

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Design a Business Model that Translates your Idea !If startups are not smaller versions of larger companies and should neither prepare business plans nor execute strategies, what then should they do? Good question! !When starting your business, you will need to first design a business model not a business plan. A business model contains series of guesses, assumptions, or hypotheses that demonstrate how you will create value for your customers, as well as receive value back into your business if your idea succeeds. In other words, a business model shows clearly how your product can make money for your business by delivering value to customers. !You can use Alexander Osterwalder’s Lean Business Model Canvas to design your business model. The canvas consists of 9 blocks, each of which is useful for making useful assumption about how you can create value for the customer, and receive part of the value back into the business. !When designing your business model, your first priority is to create compelling value propositions. Value Props are the products or services you are offering in the market. A business model compels you to tie your value propositions with the pains and needs of your customers from day one. Rather than wasting time to write business plan and build products that customers will not buy, you want to take reasonable steps to Search for market for your product or service. This is what a business model will do for you; Find A Product-Market fit.

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!!!Put Your Idea to Test !After designing your business model, which is based on mere assumptions, you need to test it. There are many reasons why you should test a business model. First you want to ascertain:

❖ Whether the pain or need you are trying to resolve exists in the market.

❖ How many people are suffering from the pain/need, i.e. your market size.

❖ The nature of the competition existing for the product or service.

The process of testing an idea or business model is divided into two steps: customer discovery and customer validation. Each step is easy; you just have to get outside the building physically or virtually and talk to prospective customers. In customer discovery, you obtain feedback from customers about the nature of their pains and the impact on them. The second step, customer validation helps you to find repeatable scalable business around your product. !Each step puts you face-to-face with real people having the problem you want to solve. So you will interview them, document their feedbacks, and use it to determine the key features to include in your product or service. !!Build a Minimum Viable Product (MVP)

After carrying out successful customer discovery, you are ready to build a Minimum Viable Product (MVP) from the feedback you already obtained.

An MVP is a prototype product or service that has sufficient features to solve a customer’s pains or needs. It is a fast, convenient and

economical means of getting your product to early adopters, who are more likely to buy and use them, and also offer meaningful feedback. MVPs are used to conduct customer validation, to ensure that they meet customer’s expectations.

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!BUSINESS EXECUTION !So far, I have tried to unpack the importance of Searching For Market, which is the first step in starting a business. Let me now assume that you have successfully validated your MVP, in other words, you have found a market for your product or service. Welcome to the Execution Phase, which is the second crucial step in the Startup process.

In this phase, your primary goal is to identify key strategies that would take your business to the next level and execute them. Disciplined execution of carefully selected strategies is the secret for growing any business (whether big or small, profit or non-profit), and the tool most companies use is business plan.

A Word of Caution: You can only implement this phase after you have successfully found a market fit. Anything outside that is building to fail.

Traditionally, many entrepreneurs abandon the Search phase and rush up to invest in execution phase. It is almost impossible to succeed in execution phase if you do not already have a product or service that customers are willing to buy. Think of what could happen when you run Facebook Ads to sell un-validated product or service. I bet your revenue will hardly offset your advertisement costs.

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!!Business Planning, Strategy Execution, and Growth

!Behind any company that grows continuously is a set of culture that the owners of the bus iness execute relentlessly. Many businesses don't grow due to lack of disciplined execute by founders. Absence of cont inuous execution is the Number One challenge facing most business executives all over the world. !The easiest way companies stay focused and achieve their goals is by writing and implementing a business plan. Although top performing companies go beyond business planning to hire business coaches, who hold them accountable to

achieve their business plan objectives. !A good business plan should be able to answer questions such as: !

❖ What marketing strategies will you deploy to close much sales? ❖ How much finance will you need to inject in to achieve next growth level? ❖ How many employees do you want to hire for this purpose? !

A business plan consists of two key parts: operating plan and financial plan. Each part will help you to figure out “What” and “How” (the strategy and step) to reach your goal.

Your business plan need not contain 100 pages as if you were to pitch an investor. Since the goal is to reach your next growth level, your first step is to clearly define what your next growth level looks over a three-year period. How much revenue do you want to achieve? How much profit are you seeking to make? What marketing strategies need to be executed everyday to achieve your target revenue? What other forms of support would you need? Also, what are the 3 or 5 Key Breakthrough Actions (KBAs) that you and your team must execute consistently to reach where you want to be?

Finally, your strategies must align with your growth objectives.

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!!How Can You Implement ALL These? !After reading this eBook, you may be tempted to think; "Oh my God; this sounds so great but the process seems long." Well, you may be right to think so; but here is the key.

We have summarized the entire process of building a profitable and sustainable business for you in two simple steps.

They are:

1. Search for market, and 2. Execution of strategy !

If you’d like to work with us, and leverage our expertise to build your business successfully, we will take you through each phase, one step at a time. We will not bother you about Step Two until we have helped you to adequately implement Step One.

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Working with us will give you the opportunity to eliminate waste both in time, money and resources you would otherwise invest in a traditional approach. Your total risk exposure will be enormously reduced.

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!!We adopt Lean Culture approach to Startup Coaching. Lean Culture is a set of Startup coaching tools used by successful founder to start a business, and create products and services that customers want. By implementing these tools, you can raise your odds of success, and build a sustainable business around your product.

You can read and implement the entire Lean Culture concep t f rom my bes tse l l i ng book , The Entrepreneur.

This book contains step-by-step instruction about how you can start your business. It provides guidance on how you can implement lean culture, which consists of the following concepts and tools:

❖ Lean business canvas ❖ Value propositions canvas ❖ Customer discovery model ❖ Minimum Viable Products (MVP) ❖ Customer validation model !If you’d like me to coach, speak, or train your team, group or entire organization on business growth and e x c e l l e n c e , s e n d a n e m a i l t o m e a t

media@theentrepreneur.space.

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Visit http://www.theentrecoach.com/free-consultation/ !

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