So You Want to Start a Business?
Note: The following blog post is an opinion piece authored by an Edmonton-based member of the Global Shapers Community. This blog post does not necessarily represent the opinions, values, or mandates of the Global Shapers Community as a whole.
You’ve got a great idea. Your family and friends refer to you as the next Elon Musk. You’ve got a business, and you’re going to be an icon of the Millennial generation.
Gut check time.
I’ve started, run, and moved on from a variety of business models in Western Canada. These simple questions have kept me on track throughout the growth of my businesses. While I haven’t always liked the answers, these questions have always shown me blind spots and brutal truths that I use to correct course, and get back on track.
1. Who is your customer?
It doesn’t matter if you’re working on a pre-revenue startup or a multi-million dollar business, you should ask yourself this question daily. As a business owner you get caught up in the minutia of running the day to day you forget the basics. Remember, without customers there is no revenue. Without revenue, there is no profit (in fact there’s massive losses), and without profit, you and your investors aren’t happy people. Ask yourself “Who is my customer,” and describe them in as much detail as you can. Age, sex, location, income, hair colour, eye colour, race, religion, spending habits, etc.
If you’re thinking “My customer is a business,” stop that thought right now. B2B hasn’t existed since 2000 - like it or not we’re all in the people business, it’s your job to sell to a person, not a business.
If you can’t clearly define your customer in detail, stop, and figure it out.
2. How much are my competitors charging?
Oftentimes the response to this question is “I don’t have any competitors,” “I do X differently,” or “That doesn’t matter because I can charge more.” All of these answers are unfortunately wrong. Every business has competitors. NASA competes with Space X. The Government competes with Private industry to build buildings, acquire land, and own resources. Amazon competes with brick and mortar retailers. Your app idea competes with every other app on the app store regardless of what it does - you’re competing for attention.
Once you identify your competitors, figure out how much they charge. It doesn’t better if you’ve built a better mousetrap if no one is willing to pay for it. Figure out how much the market is willing to pay for your product or service, then reverse engineer your price and offering packages from there.
3. Why are you doing this?
The single best piece of advice I’ve ever received is business is “never enter without an exit plan.” Don’t start your business assuming it’s going to all work out one day. Start with a goal in mind - do you want to sell in X years? Do you want to run this business for the next 30 years? Do you want a take on a partner? Is this just something you run for a while until the next best job offer comes? You don’t need to define this to every detail, but it’s an important question to ask yourself before you start because you can build your business to fit your end goal. For example, if you’re looking to sell, build revenue to as high as possible, and start talking to potential buyers early. If you want to run it for 30 years, focus on highly profitable relationships, start slow, and build a strong loyal team.
4. Are you happy?
The only thing money can’t buy is time. Once you’ve started, ask yourself this question every day, and if the answer is no, put a plan in place to fix the things that drain you of energy and make you unhappy. Don’t build a business you hate, build a business where you get to do what you love every day.
Entrepreneurship looks really sexy on Instagram - in reality it’s long days, incredible amount of stress, and countless amount of people depending on you to be your best self every day. It can be incredibly rewarding, and incredibly frustrating. I hope these points help make your decisions a little easier.
- Steven Knight, Global Shapers Community Edmonton Hub
Dated October 26, 2019