10 steps to build a great business from scratch
These are my current hypothetical stages to build a great new business.
1. Tackle with uncertainty (Market, Product, Business) without any product
2. Tackle with the uncertainty with MVP
3. Scale the product
Each stages are further divided into 10 steps in total.
1a. Reduce market uncertainty by doing customer development. Are there any burning needs to be resolved by your product? Don’t develop any product until you talk to 100 potential customers. Read O’reilly’s Lean Customer Development
1b. Eliminate product uncertainty by doing expert interviews. Is your team able to develop the product to resolve the burning needs? This step is a good chance to look for your partner to venture out. Ask not only for insight but also to join your team
1c. Minimize business uncertainty by proving unit economics. Would your customers be willing to pay as much as profitable?
2a. Develop a MVP, minimum viable product. It is not necessarily moving software. Consider Concierge MVP etc.
2b. Prove customer satisfaction, as measured by NPS or churn rate. Don’t sell hard to customers who don’t fit your product yet. The first goal is to achieve product-market fit in a narrow sense.
2c. Gauge unit economics again to build your business plan. Is it LTV/CAC≥3? How much is the churn? Do you have 18 months cash runway?
3a. Eliminate bottlenecks in your business process. You would need new people who can automate and/or standardize processes.
3b. Find unique traction. Among the various channels, you need to find one that will allow you to acquire a greater number of customers within limited budget. Usually it is not Facebook/Google ads. Is it MGM(Member get member)? Any viral design?
3c. Blitzscale your business. Big players soon join your market. Move much faster than them. Brands are usually created after the success of product and scale. Not vice versa. Set sales as your goal.
3d. Scale your business. Set operating profit as your goal. IPO may be soon.
Some of the steps need to be done simultaneously. Sometimes you need to go back and forth between the steps. But don’t skip any steps. Haste makes waste.
