Updated: Mar 2, 2022
The further I went on my entrepreneurial journey, the more I realized I had A LOT to learn if I wanted to be successful. There are many moving pieces to even the simplest of entrepreneurial endeavors. The more pieces you take on the more overwhelming it feels.
It is complicated but it is also rather simple. Your entrepreneurial endeavor must create and deliver value to customers. Without customers who value what you have to offer, you have no business. You do not need to figure everything out, just how to leverage your value in a way that other people will want.
Create and Deliver Value to Customers
The very first product I wanted to create was called Integrate Green Now. My intent was to combine my background in organizational leadership with my passion for sustainability to help companies incorporate their sustainability practices into their existing business systems. I thought that it was more sustainable to systematically integrate their efforts rather than have a separate sustainability management plan.
Sounds like a great idea, right! To anyone in the sustainability field, this makes sense. But to my potential customers, it did not. I started talking with companies and they wanted me to help them retrofit their buildings and do ROI calculations for energy saving improvements. They did not see any value in what I wanted to offer and I did not see myself doing what they asked for.
So, I scraped that idea and began the long, tedious effort to better understand my own value as it relates to the needs of potential customers. You can design the pretties widget, build the fanciest new app or invent an entirely new framework without gaining any traction in the marketplace. If a customer does not want a pretty widget, or a fancy app or a new framework, it does not matter how “perfect” you make it.
Value, like beauty, is in the eye of the beholder. Someones out there value Chia Pets enough to keep that company in business. You might think that buying a Chia Pet is the biggest waste of money. Meanwhile, you also think that your idea is oh so great…the big question is, do your customers agree?
Are Business Plans Dead?
It used to be that when someone had a business idea, they hunkered down in their garage, and figured out the perfect business plan. They did not talk to anyone about their business until “everything was ready.” And then they made a big splash trying to get people to buy their pretty new widget. Most often in these types of scenarios, the business does not make their financial projections in sales…
As Steve Blank says, “No business plan survives first contact with customers.”
Turns out, not everyone wants to buy your pretty new widget. And would it not have been nice if you figured that out before you invested tons of money, energy, time and focus getting your spiffy widget manufactured?
I hear over and over again from founders with a lot of passion and vision that the first thing they need to do is make a plan. And they usually think it needs to be really long too! Nothing could be further from the truth. Sure, you might eventually need a business plan, or an operational plan. But to start, the only plan you need to follow has three steps: 1) Document your business idea as assumptions. 2) Test said assumptions, 3) Learn & iterate from your experiments.
JUST TEST IT
I introduced the Experimenter as one of the personalities needed in your entrepreneurial endeavor. Cultivate your inner experimenter. Draft up questions about your business idea you want answered and determine the best way to answer them; design a test.
And by test, I don’t mean ask your family and friends, “What do you think of my idea?” That almost always results in false positive feedback.
No, you must actually first test if your idea has any resonance. I once had a client that was developing a counseling practice in a new, niche market. She spent hours soliciting feedback about this new counseling niche trying surveys and in-person interviews of potential customers and key partners.
All the key partners she interviewed were excited for the idea. But no one in her target market wanted to talk about this particular problem…After enough failed experiments she got a pretty clear indicator that there was not the resonance needed for this idea to be viable, at least not right now. And she pivoted.
The quicker you test the assumptions that inspired your idea, the sooner you can apply lessons learned and reduce waste. That is the central premise of the Lean Startup process and with a little concerted effort, it is an approach you can take too. So before you build a website, design a logo and get business cards printed, test your idea to see if it has any resonance!
The beauty of this approach is that by testing your ideas, you remove some of the uncertainty that leads to fear! You can face your fears about starting your own entrepreneurial idea simply by testing it first.
The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company by Steve Blank & Bob Dorf
The proverbial bible for startups in the 21st century, Blank and Dorf’s manual outlines how startups are different from existing companies. They provide a step-by-step overview of the lean startup methodology from developing your hypothesis to the customer discovery process and all areas in between. Utilizing the business model canvas, this book helps entrepreneurs quickly determine where and how to pivot in order to develop a scalable business that has product/market fit. The lean startup approach makes the difference between success and bankruptcy because, as Steve Blank says, “No business plan survives first contact with customers.”
Traditional business building practices are antiquated. The secret to success in the 21st century marketplace is to quickly document, test and iterate on your ideas. The key is to engage with your customers early on in the process. Reis suggests that “The fundamental activity of a start-up is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.” The idea is that by accelerating the learning process, startups can validate their ideas before blowing through their limited resources so that they find a product-market fit.
You have come this far, take your own practice a step further by answering the reflection questions below!
What uncertainties about your business give you pause for great concern before moving forward?
What evidence do you have that your good idea is a viable business?
In what ways could you apply lessons learned to pivot your business model?
What is the next thing you need to test about your business?
Share your ideas, reactions and feedback to this chapter in the comments!