“By failing to prepare,
you are preparing to fail.”
Planning is the part of the process that most people overlook, ignore, procrastinate, avoid, skip entirely…you know what I’m talking about. Let’s face it, planning isn’t that much fun and you shouldn’t waste your time doing it…unless you want to SUCCEED!!!
Here’s a list of things to make your planning process more effective and much less painful. Go through the list and address each item. You don’t need to do them in this order, but you do need to give each one some thought and attention.
If you want all the nitty-gritty details or need more guidance, consider getting my book. It’s full of useful information and helpful examples.
Create a Startup Log
During your journey from entrepreneurial dreaming to business ownership, you’re going to generate a lot of information that needs to be stored somewhere. That means you need to create a “Startup Log” that will not only help you stay organized, but also document your history for future posterity and make your biographer’s job much easier!
Spend some time now defining how you want to do your Startup Log. Consider using a 3-ring binder (that’s what I do) or using Microsoft One Note or Evernote (I use that too).
List Your Strengths and Interests
Planning to be an entrepreneur should start with a little self-reflection. The worst thing you can do is start a business that fails, and the best way to ensure that happens is to do something completely outside your realm of expertise, or worse, do something you absolutely hate doing.
Spending a little time thinking about your strengths might help improve your chances of success. What do you like to do? What do you have experience doing? What are you good at doing already? If people ask you questions because they know you’ll have the answers, what’s the topic of those questions? Document the answers to these questions in your new Startup Log.
Create Your Viable Business Filter
Building a business is hard, but you can stack the deck in your favor by starting one that gives you the best chance of success. That’s where your “Viable Business Filter” comes in. This filter is a list of the most important requirements your new business must meet for you to consider doing it. In other words, the things that are most important to you.
For a little inspiration, here’s my Viable Business Filter:
- Simple as possible to start
- Low start-up costs (I’m very frugal)
- In my area of expertise
- The market isn’t saturated with competition
- Scalable (meaning it can be automated)
- Independent of the economy (as much as possible)
- It fills a real need AND demand that people or businesses have, and are willing to pay for
- It provides real value to its customers
- It’s a win/win for all involved
Your list may have more or fewer items on it. If your startup is a non-profit, you may want to replace that one with “breaks even” or something similar. Once you have your filter, run your business idea through it to make sure it’s something you should be doing.
Think of a Brilliant Idea!
If you don’t already have an idea in mind, you need to think of one before you can start your startup. However, contrary to what most people think, your idea doesn’t need to be brilliant to succeed. The company I sold in 2008 was a better mousetrap. There wasn’t anything brilliant about it really. We just did the same thing as our competitors, only in a different way (and arguably, a better way).
Your idea can be pretty much anything, but it should match up with your list of strengths and make it through your Viable Business Filter relatively unscathed.
Describe the Business Model
Here’s a list of business models that have been proven to work on the web…your business should fit into one of them: Ecommerce/eTailing (e.g. Amazon), Brokerage (e.g. StubHub), Human Connections (e.g. Facebook, Match), Content Creators and Aggregators (e.g. Google, Mashable, iVillage), Software Tools (e.g. Evernote, Dropbox), and Games (e.g. Zynga, Angry Birds).
Knowing which business model your business fits into will help you better understand its purpose and more easily identify your competition.
Determine If There’s a Need AND a Demand
I learned this lesson the hard way when I built a website with a large need but absolutely no demand. If your online business is going to succeed, your target audience must be willing and motivated to spend money on your product or service.
An easy way to determine if there’s a demand for your offering is to research your competition. If your idea is so revolutionary that you don’t have any competition, well, you’re wrong. EVERY business has some form of competition. It may not be direct, but you will be competing for the same customers in one way or another.
Go to Google and do a search on some of your keywords. Pay attention to the ads and the search results. Some of these listings will be your competition. Create a spreadsheet to log your research (or download my Web Startup Toolbox and use my Competitor Intel Log to make your life easier).
Define Your Target Audience
If your target audience is “everyone,” I’m going to scream! Your target audience is NOT everyone, at least not right now. Maybe someday, down the road, everyone might be your target audience, but if you ever hope to get that far down the road, you need to focus on a smaller niche to start. This will allow you to focus your energy, services and marketing dollars on a manageable segment of the population. I talk a lot about target audiences and how to define them in my book.
Develop Your Monetization Plan
How are you going to make money with your web startup? Are you going to markup products? Provide services for a fee? Charge for membership? Take a percentage of a transaction? Use affiliates? Sell advertising? Up-sell? Cross-sell? Or something else?
In your Startup Log, write down what you plan to sell and how much you plan to charge for it. Also try to estimate a sales volume for the first year, or at least set a sales goal.
Locate Seed Capital
Also called “Startup Funding,” this will probably come from your personal savings and credit cards. Unless you’re well connected in the funding community with past experience with startups (in which case, you shouldn’t need to read what I’m writing), you won’t find anyone to fund you until you have a proven business model with existing cash flow. At that point, you’re past the “seed capital” phase of your startup so external funding isn’t a viable source for most people.
The beauty of the web is that a lot of websites can be launched for less than $1,000. I recommend checking out Elance.com and Freelancer.com to get bids for your project when the time comes, but that’s a little further down the road. For now, all you need to do is make sure you have at least some money at your disposal for startup expenses.
Write Your Business Plan
If you’re like me, you just thought “Ugh!” or “Yuck!” But don’t checkout just yet. If you’re starting a business in the real world, you’ll need one of those “yucky” business plans that takes weeks to write because you can’t afford to make a mistake. If you don’t do your diligence and you build a restaurant in the wrong place, you could lose 10’s or 100’s of thousands of dollars.
The web is a whole different animal, though. Since the startup costs for an online business are so much lower, and since it’s so easy to change directions (or “pivot” as we call it in the web world), a formal business plan isn’t as valuable or necessary. Instead, you only need to cover some basic things, and if you’ve completed the planning tasks up to this point, most of your work is already done. Download a copy of my “Simple Business Plan” template to kick start this process.
Get Support from Family and Friends
The last few steps of the planning phase have less to do with your startup and more to do with your current situation and attitude.
Every business is a family business, even if your family doesn’t work for it. Talk to them about your dreams and aspirations and get their support because you’re going to need it. This is especially true if you’re married because your spouse will be riding the roller coaster with you. If he or she isn’t supportive, your in for a rough ride.
Keep Your Day Job
The best way to launch a web startup is to keep your day job until it’s generating enough profit to pay your salary. If you have a spouse who’s supportive of your dream and makes enough to support your lifestyle, working full-time on your web startup may reduce the time it takes to generate enough profit to pay your salary.
Either way, you need to make sure you have enough income to support you for at least two years because it could very well take that long to be labeled a success.
Control Your Excitement
Excitement is a valuable driving force, but it can cloud your judgement if you don’t keep it under control. Try to remain objective and seek outside help from a coach or mentor to help keep your feet planted firmly on the ground.
Ready, Fire, Aim
Nothing is EVER going to be PERFECT so don’t waste a lot of time waiting for perfection. Do your planning. Get ready. And then pull the damn trigger! You can readjust your aim (or pivot) after you’re in forward motion. It’s better to make mistakes quickly and adapt than to take forever making a decision and let your idea die on the vine. To quote Nike, “Just Do It!”
Dig Deep for Perseverance
“Success is going from failure to failure without loss of enthusiasm.” Sir Winston Churchill said those powerful words and they apply today and to web startups just as much as they did 60+ years ago to a world at war.
You’re going to experience up’s and down’s. There’s no avoiding it. Just don’t let the “down’s” deflate you to the point of giving up. Dig deep for your perseverance and keep moving forward.
That brings us to the end of the Planning for Success phase. If you took the time to do your research and log everything, you’re well on your way to launching your web startup. Congratulations!
Now, you can take a break and appreciate your progress and all your hard work, or head over to the next section on Starting Your Startup >>