When a team of people endeavor on a journey together with the hope of starting their own business they are usually equipped with enthusiasm, potential and some great ideas on what to build. However, they often lack some essential thoughts focused on the business value and the business sense of the start-up. This is because most of the people who join the journey have little or no experience in the business space. While this is a problem it isn’t a grave problem. In fact, it is perfectly ok for not to have great business literacy. What you need to do is to ask a simple set of questions and discuss with your team and find answers to these questions.
Following is a short list of questions that you should consider discussing and finding answers
- What problem are we trying to solve?
- What value does the solution deliver?
- What are the key experience elements?
- Where are we today?
- Our reality
- Where do we want to be?
- Our vision
- What is our business model?
- Who are the competitors?
- What is our positioning?
- What is the market category we can lead?
- How would our customers perceive us?
- What is the list of frequently asked questions?
- What is our breakeven point?
- What is our exit strategy?
What problem are we trying to solve?
While we can have the greatest idea on earth with our start-up, it is a must that we define clearly what problem we are trying to help solving for potential customers. Rather than focusing on detailing the technical beauty of the product we have, we need to start with the problem. Then guide our audience though to the solution we offer to the problem we are solving.
Framing the problem properly will help us define what we are doing better and help all forms of stakeholders to better understand us.
The detail and rigour with which we define the problem is the most important factor to find a good solution. The better we design the problem, the better will be our solution and hence, better business opportunities we will create.
It could be that we are solving many problems, however, it helps to keep focus on one problem, or a few of them. Focus is key to stay on track.
What value does the solution deliver?
It could well be that many others are solving the same problem that we are solving. Then why should customers buy the solution from us? It is the value that matters. Value is not about the pricing, the feature set or how we do things. Rather it is the why factor for customers. Why should they buy it? For what value? Why should they value it?
A novel, innovative, effective solution to the problem at hand would be desirable by customers. The solution also needs to help add value to customer’s customers or the end users. If the end users are satisfied on the experience they gain, they will value what they receive.
In simple terms, it is not the products we build or the services we deliver. It is about the value that we deliver.
What are the key experience elements?
We must first understand what a great experience looks and feels like for our customers. Disney is considered a great example of customer experience. How can we create a Disney-like customer experience? We need to start by asking the right questions. For example, what are the key elements of experience that make our brand stand out in the minds of customers? We need to find out what drives people to our brand and causes them to be loyal advocates. By gaining insights into experience elements that resonate with our customers, we can later harness customer intelligence to design a customer experience strategy.
We also need to ensure that the whole company understand the key experience elements and their rationale. The marketing, sales, product design, engineering and product support services must have a unified approach to customer experience.
Everyone on the company need to be aware of the key experience elements and need to understand how their roles play a part in connecting these experience elements.
Where are we today?
We need to clearly understand where are we today? What is our reality today? Based on the cycles, resources, ideas, designs that we have today we can plan how we want to progress. It could well be that at the inception, we only have a great idea. It is too early to worry too much about feasibilities and financials. If we have the right ideas, we can make it happen and money will come. What is critical is to be truthful to ourselves when evaluating where we are today.
Where do we want to be?
Over time, every start-up wants to grow and progress. Given a reasonable timeframe, may be 18 months, where do we want to be? Answer to this question would be our vision. Hence, take time and visualize. It is OK to dream a little bit in finding an answer to this question.
The reason we want to define where we want to be (there) in comparison with where we are today (here) is that the plan for the journey from here to there becomes our initial strategy. In other words, the execution plan to get to our vision is a journey from current reality towards our vision.
What is our business model?
A start-up is a business. Every business needs to make money. The simple question is, how is our business going to make money? The business model should focus on the way our start-up is going to make money. Sometimes the product could be free and the services provided on top of the products could be the way we want to make money. We can licence a product at a cost. There are many cloud models out there which is predominantly based on monthly fee model. We need to pick one or a couple of models to make money, not too many offerings when we start.
Pricing is part of the business model. Pricing is not the sole concern of defining a business model. We need to think about the big picture of the sales funnel starting from marketing, the website visitors, potential customers who are interested in buying our products and services and those who would actually make a purchase. The success of the business model reflects in how many paying customers we eventually end up with. In other words, there could be many who appreciate our products and services, but our business model is not a success unless we can convert majority of the interested leads into paying customers.
Who are the competitors?
We need to be open about the competition. We need to understand who our real competitors are, and we need to consider each one of them with due respect. Sometimes we may miss some of the competitors because we have not looked into the market broad enough. When we are in a starter mindset the products and services that we design are like our babies. We protect those babies with love and pride. In the process our ego towards how superior our product and services, might prevent us seeing through the reality of competition. For this we need to be humble enough when we consider the competition.
Having said that there is no reason to be afraid of the big players. We could be young and wild and early in the cycle but we have the ability e to grow mature and beat the competition. Remember that it is the simple things such as the value delivered and the experience provided that makes the difference.
While it is unethical to copy or imitate competition, we can always be inspired from our competition. Every competitor out the have their marketing strategy out in the open. We can observe how often they release, how often they upgrade, quality and the customer sentiments of their services. We can always be inspired by watching and observing the competition.
What is our positioning?
What is positioning? Positioning is about were our products and services stand in relation to other offerings in the marketplace and in the minds of the consumers. It takes marketing efforts, repeated narratives, and storytelling to get to the right positioning. More importantly, we need to spend time and go through repeated iterations to get to the right positioning we want. Practice makes perfect in case of positioning as a start-up.
What is the market category we can lead?
Being able to focus and keep that sharp focus in the long run is a key pillar of success in a start-up. There could be many things that we could do with the same product or service. However, what will be our single most important differentiator and what market category we can lead the best? The narrative, the story line, the proof points, and the differentiator can all lead to this segment that we can capitalize to our best.
As a start-up, we might not have customers or prospects when we start to try out and prove the points, on which summit on which hill, we can dominate in the market. However, our ability to roleplay with empathy and our willingness to go to market and go after prospects sooner than later will help us reach results faster.
How would our customers perceive us?
To understand customer perception, we need to talk to potential customers early in the cycle and understand how they would perceive our pitch, our narrative, and our story. Are we resonating with the customers enough to the extent that they will feel confident that we could solve their problem better? Are we communicating the value that make bring them closer to close the deal?
In the early stage of the cycle, we need to be open to learn as much as possible from customers. The most unhappy customers will give you the greatest feedback.
What is the list of frequently asked questions?
The more customers you reach, the more record keeping you need to do. To a start-up, this is much more than mere customer relationship management. This is more about, how much we can learn from our early customers and how soon? Having a comprehensive FAQ is a great sales tool. Further, we can use the insights from the FAQ to better tune our narrative, storyline, and the pitch. We can gap fill the misconceptions that the customers can run into. We can ensure we shorten the sales cycles.
One of the key problems with a start-up is when we go and pitch the product to potential stakeholders, they tend to stereotype us into something that we never meant. Well, this is not something wrong with the stakeholders, rather we need to get better at speaking our minds on the design, value, positioning, and the niche of the offering we have. Every little question and every little remark matter in the early stage. Note them all down, try to map the rationale, why did they perceive us like that, why did they ask that question, and after some time, you will know how to address the potential questions even before they ask.
What is our breakeven point?
Breakeven point is the point at which the total cost and total revenue are equal. At this point, there is neither a loss nor a profit. We might be thinking that in case of a start-up it is too early to think about breakeven at the beginning. However, thinking about breakeven early in the cycle, ensures that we get to know our expenses and earning ability realities early in the game. This will enforce us to have good financial control, better pricing, and make financially informed decisions from early days. As we grow mature and want to bring in investment or cash out our business the potential investors would want to investigate the combination of future growth potential and current financial stability. This is where financial discipline and control from early stage of the company is going to pay off. After all, if the business cannot bring in a profit, why bother investing time and money into that business?
What is our exit strategy?
Every start-up needs to see the end of the tunnel. The start-up mode, the growth mode and large corporate mode are quite different modes of execution. Some say, even though we have grown, we still run as a start-up, but that is just a myth and that does not scale or sustain. The stat-up mode is only sustainable with limited number of people and for some defined amount of time. Then the company needs to transition into growth mode, and then to large-scale mode. The start-up grows at a very rapid phase in the start-up mode and then need to settle into other modes as time progresses. This is where the exit strategy matters to stat-up entrepreneurs. It is a must that we think about a strategic plan to sell ownership to another company or investors. The idea is to liquidate and make a substantial profit. We may or may not stay with the company after this start-up exit. We need to plan for a proper exit as part of the business strategy in the early stage of the start-up.