Starting a Business QuickStart Guide: The Simplified Beginner’s Guide to Launching a Successful Small Business, Turning Your Vision into Reality, and Achieving Your Entrepreneurial Dream

Contents

INTRODUCTION

PART I – THINKING LIKE AN ENTREPRENEUR

| 1 | YOUR BIG IDEA

How Are Opportunities Cultivated?

What’s in a Thumbprint?

What Makes a Great Opportunity?

Some Considerations About Opportunities

The Nature of Competitive Advantage

| 2 | WHAT ARE YOU AFRAID OF?

Self-Limiting Beliefs

What If I Fail?

The Role of Luck

Do I Need a Business Plan?

| 3 | REACHING SUCCESS

Mindfulness

Work-Life Balance and Working for Yourself

Living a Self-Actualized Life

PART II – GETTING STARTED

| 4 | YOUR COMPANY

A Note on Strategic Planning

What Do I Do First?

Other Business Essentials

| 5 | WHAT ARE YOU SELLING?

Thinking of Your Product as a Solution

Don’t Become a Solution in Search of a Problem

How Do I Price My Product?

Positioning and the Price/Quality Matrix

PART III – YOUR VALUE PROPOSITION

| 6 | MARKETS AND CUSTOMERS

Who Should You Be Targeting?

Building Your Customer Avatar

Learning About Your Customers

Segmenting Your Market

Deep Dive: Market Segmentation

| 7 | INDUSTRIES AND COMPETITORS

Which Industry Are You In?

Direct and Indirect Competitors – The Difference

Deep Dive: Porter’s Five Forces Model

| 8 | YOUR VALUE PROPOSITION

Strategic Positioning

What Is the Value of Your Value Proposition?

PART IV – YOUR BUSINESS MODEL

| 9 | OPERATIONS

The Value Chain

Evaluating Your Value Chain

Outsourcing as a Strategy

| 10 | MARKETING

The 4 Ps of Marketing

Promotion

Place

Your Sales Plan and the Sales Cycle

| 11 | PLANNING FOR GROWTH AND CHANGE

Growing Your Venture

Planning for Change

| 12 | BUILDING YOUR TEAM

The Founding Team

Formalize These Aspects

The Ownership Structure of New Ventures

| 13 | WHERE DOES THE MONEY COME FROM?

How Much Do I Actually Need?

Where Does the Money Come From?

Equity Funding

Think of Funding in Stages

PART V – WRITING YOUR BUSINESS PLAN

| 14 | DO YOU REALLY NEED A BUSINESS PLAN?

Misconceptions About Business Plans

Before Writing Your Plan

| 15 | INTRODUCING YOUR VENTURE

The Executive Summary

Your Elevator Pitch

Company Overview

Product/Service Description

| 16 | WRITING YOUR VALUE PROPOSITION

Market Analysis

Industry Analysis

Constructing Your Value Proposition

| 17 | YOUR BUSINESS MODEL

Operations Overview

Marketing Overview

Growth Plan

Management and Staffing Plan

Financial Summary

The Appendixes

CONCLUSION

GLOSSARY

ABOUT THE AUTHOR

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Introduction

This is a book for people who are interested in starting a business.

Maybe you have an unfulfilled passion that you want to transform into your livelihood. Maybe you hate your job and want to get off the corporate treadmill. Maybe you dream of financial independence and want to be your own boss. Or perhaps you are a willing (or unwilling) participant in the gig economy and want to learn how to make a living at it. Perhaps you’ve even started a business before but aren’t quite sure you’ve got everything figured out. Whatever your circumstance, you will find value in this book.

I’ve spent over twenty years in the new venture ecosystem as an entrepreneurship professor, consultant, business school dean, and founder of my own ventures. When I began working with entrepreneurs, starting a business was hard and expensive. The dot-com boom and bust of the late 1990s/early 2000s demystified the process for the general public and made successful entrepreneurs into rock stars. Since then, technology has made starting a business much easier and less expensive, and self-employment is now a highly desirable career path for many.

Yet there are still profound misunderstandings among the general public about how to start and run a successful business. These misunderstandings are amplified by fawning press accounts that make extreme outliers of entrepreneurial success seem like the norm, as well as lifestyle-oriented blogs, books, and podcasts that make starting and running a business seem as easy as falling off a log.

My intent is to interject a dose of reality into all the hype. Yes, starting a business can be tremendously rewarding both psychologically and (possibly) monetarily. But it is also very hard work and will completely dominate your life, especially at first. You will have to deal with constant risk and uncertainty. How you approach these things will largely determine how successful you can be.

How This Book Is Organized

This book starts at the most fundamental level—the mindset and cognitive factors critical to success as an entrepreneur. There’s a reason for this. In my 20-plus years working in the entrepreneurial ecosystem, I’ve found time and again that the right mindset is far more important to the success of a new venture than economic factors, airtight intellectual property protection, or killer financial projections. Over and over again I’ve seen ventures fail that seemed to have everything going for them. I’ve also seen too many ventures to count that succeeded despite so-called experts (i.e., me) thinking they had no chance at all. The intangibles are usually far more important than the tangibles in all creative domains, and, as you will see, I view starting a new venture as the ultimate creative act.

The next section of the book outlines the strategic issues you’re going to have to grapple with in order to determine the two most critical elements of a new venture—your value proposition and your business model. Your value proposition lays out who your customers are and how you distinguish yourself from your competition. Your business model addresses how you will run your business and how you will meet your profitability goals.

Finally, I include a basic outline of a traditional business plan with specific instructions for how to write it. Although many of you have no need for a formal business plan, there are good reasons to pull all of your thinking and planning into a series of concise, useful documents and other media, and I’ll go over how to do so.

Although this book is intended for everyone in the entrepreneurial ecosystem, I am focusing on the 99 percent of entrepreneurs who are not looking to raise large amounts of capital to rapidly scale into an eight-figure company. I will certainly touch on the different ways to raise money and the venture capital process, but this is only relevant to the vast majority of nascent entrepreneurs as a point of interest.

If you are reading this book, chances are you’re seriously considering delving into the complicated, exhilarating, frustrating, and rewarding world of entrepreneurship. Congratulations! It won’t be easy, but it may just be the best thing you’ve ever done. I look forward to helping you begin your journey.

Chapter by Chapter

Chapter 1: Your Big Idea discusses the nature of opportunities. Believe it or not, not all ideas are created equal, and being able to discern the difference between an idea and an opportunity is one of the first steps to getting started on your own entrepreneurial path. In this chapter you will learn where opportunities come from and what makes an opportunity great.

It’s no secret that starting your own business comes with significant risk and a mountain of hard work. For many new entrepreneurs their biggest obstacle is their own outlook and attitude. Chapter 2: What Are You Afraid Of? tackles some of the biggest misconceptions that hold back many would-be entrepreneurs. While it is true that the world of entrepreneurship is not for everyone, in many cases the fears of failure or the reluctance to start for various reasons are unfounded.

Despite what a Google search might tell you, the secret to entrepreneurial success is much more than a list of generic traits such as hard work and vision. As you will learn in Chapter 3: What You Really Need to Succeed as an Entrepreneur it is often the intangible aspects of starting a business that are the best predictors of success—not the tangible ones.

In Chapter 4: Your Company – The First Steps our discussion shifts to the practical aspects of starting your business including your company’s legal form. Chapter 5: What Are You Selling?"covers your product or service, how to set prices, and the strategy behind different pricing methods.

The next two chapters Chapter 6: Markets and Customers and Chapter 7: Industries and Competitors examine the people who will purchase what you are selling (your customers) and the firms that will compete with you. I’ll tell you right now—no matter how new, groundbreaking, or disruptive your product is you have competitors!

With the fundamentals regarding strategic positioning covered, Chapter 8: Your Value Proposition introduces the concept that makes or breaks many small businesses and startups—a robust and well-defined value proposition. In many cases, a startup’s value proposition acts as a shorthand for the startup itself. The value of your value proposition cannot be overstated.

Chapter 9: Operations dives into the nuts and bolts of how to structure your business with a focus on value, what to keep in house and what to outsource, and how to find and exploit efficiencies within your value chain—no matter what kind of business you are starting.

Chapter 10: Marketing explores the methods your business will use to reach more customers in your target demographic. In this chapter we discuss the promotional mix, distribution channels, and the sales cycle. Marketing plays a role in every business—new or well-established—and in this chapter you will learn how to use the promotional mix to grow your business.

Becoming an entrepreneur means embracing change. In Chapter 11: Planning for Growth and Change we discuss the myriad factors that impact growth and the trajectory of a startup. This chapter serves as a primer to growing your business and planning for the inevitability of change.

Business is done by people, for people. Your startup is no exception. Chapter 12: Management, Staffing, and the Founding Team covers everything you need to know regarding the people who will help you get your new business up and running.

Chapter 13: Where Does the Money Come From? addresses the topic that seems to be at the forefront of every new entrepreneur’s mind—funding. There is much more to a successful venture than money, but a venture won’t go too far without significant funding. This chapter delves into the various forms of funding including the truth about venture capital and angel investment.

Despite some of the anecdotal evidence you may have heard, if you are starting a business you need to produce a business plan. This is true even if you aren’t seeking funding. "Chapter 14: Do You Really Need a Business Plan?" discusses the advantageous uses of a business plan and debunks some of the common misconceptions surrounding their necessity and implementation.

The remainder of this book Chapter 15: Introducing Your Venture, Chapter 16: Your Value Proposition, and Chapter 17: Your Business Model explore the exact steps to take when constructing your own business plan. Each step-by-step section delves into what to include, what to omit, and how to compile the information you will need to write your own winning business plan.

Let’s get started.

| 1 |

Your Big Idea

Chapter Overview

The difference between an idea and an opportunity

What makes a great opportunity?

The nature of competitive advantage and distinctive competencies

You’re a brand-new entrepreneur who has a big idea and a boatload of passion. You wanted to start your first million-dollar business yesterday, because you know your idea is so big that it will thrill your customers and fulfill your dreams in the process. The first question you have: how much is this idea worth?

Nothing.

Ideas are numerous, and they exist without inherent value. An idea—no matter how big or small—is a series of electrochemical reactions inside your brain. No one purchases ideas, and ideas cannot be assigned a dollar value. This does not mean that ideas are without potential—ideas are critical first steps toward developing opportunities. Unlike ideas, opportunities are the stock and trade of successful entrepreneurs. Opportunities are actionable, and they have the potential to provide value both to customers and to you. The distinction might seem subtle, but the difference between an idea and an opportunity is a critical one. Attempting to follow through with ideas that have not become opportunities will spell disaster for your venture. It will be doomed before it even begins.

Ideas and opportunities do not exist independently of one another, and they do not exist independently of people. Everything that has been created by people started out as an idea, but not everything that has been an idea has been created. This is the root of the value assigned to opportunities: execution. Opportunities are valuable in their execution. Just as an idea that is trapped in your head has no value on its own, an opportunity that cannot be executed has no value either.

There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations. We keep on turning and making new combinations indefinitely; but they are the same old pieces of colored glass that have been in use through all the ages.

– MARK TWAIN

Mr. Twain was correct. There are no new ideas. Every business idea is a permutation of existing ideas and conditions. Whether or not an idea can be evolved into an opportunity determines whether it will become reality, or whether it will just be another series of electrochemical reactions.

How Are Opportunities Cultivated?

A common misconception is that opportunities simply occur to entrepreneurs in a flash of insight. That may be how ideas come to us, but the process of uncovering opportunities is a little more complex. Opportunities aren’t just waiting around for an enterprising entrepreneur to come and find them. They are an extension of the entrepreneur.

Each person is a unique blend of his or her background, talent, insight, and perspective. Together these facets form a kind of thumbprint that is just as unique to each of us as our actual fingerprint. The concept of an entrepreneurial thumbprint is essential to understanding how opportunities interact with the entrepreneurs who cultivate them.

First, where do opportunities come from? Opportunities are cultivated through a variety of methods, and each of these methods is dependent entirely on the entrepreneur and his or her entrepreneurial thumbprint.

Opportunities Come from Active Search

An engaged, structured, and disciplined process of searching for ways to evolve ideas into opportunities will yield better results than a passive process. Instead of searching for new ideas or new knowledge, focus on solutions to existing problems. The simpler the better. A compliment that an entrepreneur should love to hear after pitching an idea is That’s obvious! Simple solutions to common problems have a higher potential for success.

Quick Case: Jazzercise, a legacy name in active fitness programs, was founded in 1969 by Judi Sheppard Missett. Judi was a teacher at a dance studio in Chicago when she noticed abysmal dropout rates among her students. Young women would attend dance classes to get a workout, but as the lessons progressed, students who had little interest in becoming professional dancers would abandon the class. To keep fees flowing in, Judi began holding warm-up classes with a focus on fun and fitness rather than honing dancing skills. These classes were later rebranded Jazzercize and developed into a fitness phenomenon.

Opportunities Come from Information

Entrepreneurial opportunities exist because different people have access to different information. What is an idea for one entrepreneur may be an opportunity for another who has the resources and the means to execute it. An opportunity that exists without the means to execute it does not have value. It is simply an idea.

Quick Case: Qualcomm is a name that for many doesn’t immediately ring a bell, despite the fact that the company is responsible for the functionality of devices that we rely on every day. Qualcomm is the telecommunications and semiconductor company responsible for—among other things—3G cellular technology. Qualcomm also holds patents for the technology that powers 4G connectivity and is a leader in the 5G space. When the company was founded in July of 1985 by former University of California, San Diego professor Irwin Jacobs, he didn’t have a business plan or a particular product in mind.

What the founding team did have, however, was an abundance of engineering talent in their small team and the vision that wireless connectivity would change the world in even more dramatic ways. Former Qualcomm CEO Paul Jacobs (son of founder Irwin Jacobs) said of the company’s foundation, Having visions which are out there allows people to have creativity. The main force of a company is shaped by a vision.¹

The takeaway from Qualcomm’s story is that Jacobs and the rest of the founding team started a company knowing what they wanted to do and how they wanted to change the world. They did this knowing that they had a well of technical knowledge and a firm belief in their vision.

Opportunities Come from Change

External changes can create opportunities in two ways:

Change that makes it possible to do things that haven’t been done before

Change that makes it possible to do something in a more valuable way

An external change that makes it possible to do something in a more valuable way could be the catalyst that makes an idea that otherwise would not have been actionable into an opportunity that has the potential to provide value.

Opportunities Come from the Process of Effectuation

Effectuation is essentially the opposite of causation. It is a process used to identify entrepreneurial opportunity when the future is unknown or unpredictable. We often think of new ventures as starting with a goal, then gathering the resources needed to achieve that goal. Effectuation, on the other hand, starts with the resources at hand and then assembles them to build the goal.

The difference between causation and effectuation may seem subtle, but it is important. A great example of the difference is your approach to making dinner. If you were to take a causal approach, you would carefully plan out a menu in advance, then check your kitchen to see what you have, then go to the store to buy any missing items. In an effectual approach, you would look in your refrigerator and pantry, see what you have, and plan your menu accordingly.

Causation versus effectuation—which is the right method to use when developing an idea into an opportunity? The answer is both. When it comes to making dinner on an average weekday night, you probably use the latter. If you’re planning a dinner party, the former is probably best. The moral of the story is that sometimes the best opportunities are found by just looking around and seeing what skills and resources are available to you.

What’s in a Thumbprint?

An entrepreneurial thumbprint—like an actual fingerprint—is unique to each person. Fingerprints all look similar at a glance, but upon closer inspection we see that no two are alike. Unlike our fingerprints, however, we are not born with entrepreneurial thumbprints. Furthermore, unlike fingerprints, an entrepreneurial thumbprint evolves over time. It is a blend of our skills, talents, connections, and experience.

In exactly the same way that an opportunity cannot exist independently of an entrepreneur, your entrepreneurial thumbprint cannot exist independently of you. In fact, it is you! To uncover the ridges and whorls of your own entrepreneurial thumbprint, ask yourself the following questions:

What are you passionate about?

The topic of passion comes up frequently in this book and in any conversation involving entrepreneurship and the act of starting a business. If you’re not passionate about an idea, it will stay an idea. It may be a good idea, it may be an interesting idea, but if you aren’t inspired to make it a reality or passionate about its execution, then it will never manifest into an opportunity. Conversely, where you may lack passion for an idea or a business concept, another would-be entrepreneur may be excited about bringing it to fruition. Your personality, interests, inspirations, and passions contribute to forming your entrepreneurial thumbprint.

What do you know well?

It’s okay not to have an advanced understanding of business concepts at first. In fact, many successful entrepreneurs are not MBA holders. Starting a business isn’t as simple as monetizing your passion, but that underlying passion and knowledge forms the solid core of your entrepreneurial thumbprint. Someone who travels avidly and has a lot of experience navigating the world of rental cars, air travel, and hotel bookings is better suited to starting a travel agency than someone who has never left the country.

Who do you know?

Having a huge social network isn’t a prerequisite to success, but a long contact list can certainly help. A portion of your unique entrepreneurial thumbprint is composed of your network—both personal and professional. These people may be the first ones you reach out to when it’s time to start funding your venture, but when it comes to distinguishing the difference between an idea and an opportunity, you’ll find that your network is worth more than a round of financing. Who do you know that has skills or knowledge that complement your own? Better yet, who do you know that has skills or knowledge that fills in gaps in your own experience? Do you know anyone who could act as a mentor or provide other forms of guidance on your entrepreneurial journey? Are there members of your network who can get the word out about your new venture, or lend a hand getting you off the ground?

Ultimately, your personal/professional network plays a large role in defining your entrepreneurial thumbprint.

Is there a particular problem you want to solve?

If you are familiar with a particular field or industry, it is more than likely that aspects of it that frustrate you also frustrate others. Inconveniences, limitations, and frustrations—collectively referred to as pain points—are tremendous drivers of entrepreneurial opportunity. This is true even if you don’t know exactly how to fix the problem right now. As you explore the idea, discuss the issue with others, and gain a greater understanding of the how and why of the problem, it will become clear whether the other aspects of your entrepreneurial thumbprint can help