So you wanted to launch your company this summer but what a bummer it was when the news of the lockdown came through.
You probably had everything in mind: a solid idea for your startup as well as a problem that needed to be solved. And the remaining you were going to figure out as you moved forward with your company.
However, the lockdown got extended and well, you were stuck with your idea left inside in your head.
We know… it sucks
But are you sure that you should be cursing the lockdown instead of using it to build your company?
It is true that your startup cannot function properly due to everyone staying indoors. However, you can still lay a solid foundation for your company instead of winging it as you go.
Why should you build a solid foundation for your company?
Because one of the biggest reasons why 7 out every 10 businesses fail within the first ten years is the lack of laying down a solid foundation.
We empathize with the moment when you were sitting in the classroom and suddenly the breakthrough idea came into your head. We understand the feeling as well as the rush to become an entrepreneur.
But after teaching the art of building a business to thousands across the country and helping them build their own successful business, we know that the basics of any startup or business are the most important.
In this article, we will help you fight with the “lockdown boredom” as well as build a solid foundation for your startup.
Without building the ground floor, you cannot hope to build your own empire state!
Laying down a foundation during the lockdown
We are going to be taking a look at the three most important pillars of building a business:
- Business model
However, note that there are other foundational steps one can take while starting up like coming up with a solution for a mass problem and building a team. These three are the most basic of starting any business and thus, we will be taking a look at them individually.
Building a business model
Simply put, a business model is a plan for the successful operation of a business. It is made by identifying the sources of revenue, the ideal customer base, products, and financing details.
According to Peter Drucker, “a business model is supposed to answer who your customer is, what value you can create/add for the customer, and how you can do that at reasonable costs.”
If we take the example of Facebook than they have an advertisement-based business model. Meaning that they let people use their product for free but profit by advertisers wanting to promote their business on Facebook.
There are various types of business models but here are some for your better understanding:
- Manufacturer – example, Ford
- Retailer – example, Amazon, Flipkart
- Franchise – example, subway sandwiches
- Brick and mortar – example, local shops
- Freemium – example, Spotify, tinder, YouTube. The company offers a basic plan which is for free and costs an amount or a membership fee for extra features.
- Subscription – example, Netflix. Unlike the freemium model, the subscription model does not have a free plan.
- Aggregator – example, OYO, Uber, Ola.
Your business can have more than one business model but it is essential for you to know which one will suit your company better. Moreover, pick those which will favor you as well as your company’s vision, the most.
You can use these tips to build your business model:
Keep your customers in mind
While building your business model, we suggest creating a solid customer persona first. Ask yourself who your ideal customer is, what do they look like as well as what do they do and are interested in. Creating a customer persona and keeping it in mind will let you understand what type of business model will best suit you to make a profit from your business.
Don’t over or undersell yourself
You will need to keep the pricing of your product in mind. You cannot keep your product too costly. Neither should you keep them so low that it becomes insignificant. We suggest taking a look at your competitors and set your own pricing accordingly.
Develop a strong value proposition
There’s a ton of competition in every single industry and niche today. As a result, the customers have a ton of options before buying anything. If you wish to make your company be seen in the crowd, you will need to add a solid value proposition for your product or service. You will need to give your customers a reason to buy from you rather than an already established brand. This is where adding better value to your offer can come into play. Adding a USP (Unique Selling Proposition) is an amazing way to stand out from the crowd. Not to mention, its a great marketing strategy as well.
Establish a business process
Every business is unique and has its own process. You need to establish your own business process and have an understanding of the various activities that are required to run your business. You can establish the key business process by first identifying the core of your business. For example, if you are thinking about starting a marketing agency, then your key business process would be to market other businesses. Similarly, if you are a shipping company, your core process would be to take care of parcels and shipping of orders.
Understand key resources
Every company needs a set of things to carry out their daily processes, find new customers, as well as to meet the goals. For example, a website, warehouse, marketing budget, etc. You will need to understand what your company will require to function properly. Document all the essential resources required to sustain your business needs.
Let’s say that your business is booming, you have a product that the market loves and you are seeing a good number of sales. However, without a good financial system, your business is bound to fail.
Reports suggest that 95% of businesses that have failed in the first five years did so due to poor financial management. Even some of the big companies like Blockbuster and Kmart failed due to poor finances.
You can choose to set up a finance department for your company with the current resources you have or get professional help.
Here are a few tips to help you create a good financial plan:
- Keep track of all the invoices
- Keep track of the inventory
- Take your day-to-day expenses into account
- Plan for contingencies
- Create a budget for everything
If you are serious about the long life of your startup, we suggest giving the finances of your company, its deserved importance.
Imagine opening a shop that sells all the required items but nobody ever walks into it. The reason for that would be poor or no marketing at all.
Marketing your business or product or service is the only way for people to know about the new guy in town i.e., you.
Market research, product development, identifying a customer base, and brand positioning are all functions of marketing. As a result, they should all be done way before a product is ready to launch.
Keeping marketing in mind in the early stages of your business has its own perks. Perks like understanding your target audience and getting insights for developing your product sure come in handy.
Many companies come up with great ideas as well as products. However, very few execute on the marketing side of things properly. This results in the market never knowing about the product and thus, the company ends up being shut down sooner or later.
Don’t do the same mistakes as others. Use this lockdown to build a marketing plan or strategy for your future success.
Hubspot has an amazing article that will help you create a marketing plan for your company – check it out.
Can, building a business be taught?
There’s no doubt that everyone must have, at least once, had the thought that people like Mark Zuckerberg and Elon Musk had a flair for building a business or becoming an entrepreneur inherited within them.
That they had a natural talent for building a business.
The above thought has made many delay in launching their own startup for years. In many cases, it has even made them never take the leap and starting their own company.
We agree that some have a natural talent as well as enthusiasm for certain things. However, this does not mean that if you weren’t born with those genes, you can’t learn a certain skill.
Entrepreneurship, as well as the art of business, at the end of the day, are indeed skills. And just like all the other skills, they too can be taught and learned.
So if you are having confusion or doubts before launching your startup, know that this is very normal. Understand that you will feel confused about many things. But until and unless you take the leap and become serious about learning the various skills.
Pavan Bheesetty, a mentee of MyCaptain, too was a confused engineer before he had the chance to meet Captain Zeeshan, CEO & Co-Founder of MyCaptain. Zeeshan became Pavan’s mentor and helped him turn his idea of VR Cinepolis into reality.
Pavan went from being a confused engineer to pitching his idea in front of NSRCEL IIM-Bangalore.
Pavan is a living example that entrepreneurship and building businesses can indeed be taught.
So if you are feeling a bit nervous or confused, we suggest you become serious about learning how to run a business before actually running a business.
What’s smarter – learning by making mistakes or by observing the mistakes of those who came before you?