By Urvashi Katyal.
Every time I study something interesting or do an online course, I have this habit of documenting it. Majorly for two reasons first, to test my learnings and second, to go through the crux of the subject to recall things when required.
The course I recently undertook was on Entrepreneurship by Massachusetts Institute of Technology. It neatly told about the different steps one must follow to build a successful business and to add more, they even introduced us to noble rules like 80/20, H4 and a lot more.
Before you start any business or when even you’re struggling with your idea there are certain forethoughts you need to consider and through this article, I have tried my best to explain them succinctly.
Stages while building a business
Ideation → Customer→ Designing offering→ Testing offerings →B’ness logistics
This step was started with a very interesting activity, we were given a task to read a blog and pick random two words out of which we had to form a business (mine were Trending life). It was fun to see how innovative people got with few words. Trust me, you should try out this activity to let your creative juices following.
At the very beginning, I realised that fortune doesn’t always smile at us so mostly, we really need to be on the tenterhooks to reach our startup idea (Sorry but no, aha moment!)
Anyway, the order started with mind mapping, brainstorming and finally, idea filtration.
We listed down 10 problems/ frustrations we wished to solve (Mind Mapping) and analysed each one of them as per their industry, opportunities and real need (brainstorming).
It’s recommended to check the ideas roughly against potential and fit. Evaluate each of them as your passion and enthusiasm (FIT) and the real need/ scalability level and value creation per se(Potential).
PS- The only key to this step is to know that the there’re no bad ideas.
Before getting into market research, it’s always recommended to share your ideas but from the perceptive of uncovering customer frustration and not solving it. (Let them do the talking)
Early Market Research- In order to understand your customers, it’s better to do at least 4–5 one on one, open ended conversation with people of different age groups before interviewing numerous people. This will help you understand and analyse the audience better. During interview, make it a point to focus on the need and not the solution because most customers would be nice to you on your face. Also, focus on your nose and drill down (Why? why??) and lastly, understand their priorities.
The market research would help us get closer to our customer segment. We can gather similar insights within our audience and also, choose our top segment (For eg- People between age group of 28–35 located in XYZ place, occupation gave positive insights). To go deeper into this, it’s recommended to to create a depiction of an customer persona; an individual having the biggest unmet need can actually be of great value.
3. Designing your offerings
Here, the major focus would be about prioritising the customer needs, it starts with knowing the difference between Customer v/s End User, many startups make the mistake of optimising a solution for end users whereas the real customer is the one who pays you for the offering.
Mapping your customer’s full case is of optimum value. After knowing your audience inside out, the next step if to form the right strategy. The challenge of starting a company is about coming up with the great idea but the harder part is to commercialise that idea and continue to create value for the customer from time to time. To form a great strategy there are certain points that needs to be kept in mind:
Competitive Advantage – You need to understand how the customers are getting their needs met now and understand your competitors notably.
Value Proposition Recap – Value Proposition is more like a sales messages that defines why should a customer buy from you and no one else.
The Promise – Quantify the promise you’ll make to your customer rather than making weak promises like “ Our product helps you save money” Focus on real numbers and impact such as “Our business will help you increase your monthly sales by 20%” or if they care about time and convenience, quantify the hours.
Finally, you just need to decide on your type of strategy such as:
(i) Product Development (Manufacturing yourself, outsourcing , partnerships and more) (ii)Commercialising a Service offering (Improving an already existing service- Uber works with driver to improve the value chain OR, creating a new offering altogether).
4. Testing your offering
In order to test your offering and start product development, there’re two major elements that needs to be kept in mind- MVP & Selling and Pitching. (Elevator Pitch).
MVP stands for Minimum Viable Product, it’s a simple version of your product so before going full throttle with the production, it’s recommended to form/ sketch an outline of your offering, setup MVP (list down top 3–5 features you wish to add at first) and then finally, develop the prototype.
Once you’ve a product in hand, you need to start thinking about your sales process ie. ways to acquire customers and forming the elevator pitch.
Customer Acquisition- It varies from industry and business type but in most cases, referrals and word of mouth is always the best way to get customers but since, they are earned over time they can’t be be a part of your early strategy similarly, social media is another channel that can be explored furthermore, it’s easier than other channels but mostly it tends to have a low yield. Personal relationship channel pay off the most though they require time investment. The ideal way to begin with is to Go out and sell yourself.
Elevator Pitch– 4 things to you need to add in your elevator pitch to make it exemplary.
(i) Start with a WHY? (Your mission/ purpose)
(ii) Cover components of Value Proposition your customer, your industry, the promise, and your strategy)
(iii)Spend the bulk of the time sharing how you are overcoming the biggest potential concern or risk
(iv)Make a clear ask (if it makes sense )
An example of an ideal elevator pitch.In order to excel the art of pitching, it’s better to focus on your communication which by the way is only 7% content, rest is all body language and tone. Also, make sure that you keep the practise going.
5. Business Logistics
In the business logistics section, you majorly need to take care of your operations and financials.
Operations → Mapping out all the processes that allow your offering to be made, sold, and reach the customer. In particular, note items that you will need from others, what will be done by your team, and the amount of time each process will take. It’s all about getting the process right.
Financials → How to generate money, well in order to form a successful financial scheme, there are factors that needs to be kept in mind:
Revenue Model (the strategy by which you get money from your customers)
Pricing ( how you set your price in a way to get the most value)
Sales projections (Approach to put together your expected sales over time) and lastly, valuation.