A prospective client comes to me and asks “Josh, I want to start Business X. What do I do?”
Actually, lots of prospective clients ask me this.
There’s nuance — some have raised serious funding and some haven’t, some want to get into the music space, others in fitness, others in nonprofit, and so on. There’s a lot of specially-tailored advice, accordingly, but there’s some more generalize-able insight I thought I’d share.
The biggest thing I consistently see missing from business plans and aspiring entrepreneurs? Get your first 15 customers.[ref]15’s a good starting point, though depending on the size of the customers, you might want more, you might want less.[/ref]
Things that you (maybe surprisingly) don’t really need in order to get your first 15 customers:
- Funding, investment, or loans
- 10-year financial projections
- 796-page business plan
- Gob’s business model
- A Technical Co-Founder
- Business cards
- Office space
- Precise laser-focused research
- Etc.
Things that you do typically need:
- A few sentences about what you’re envisioning
- Some small prototype/demo
- Hustle
The stuff in the second bullet list: Cheap. The stuff in the first: Expensive — if not costly in terms of money, then in terms of time and prognostication.
We initially did things the wrong way when we conceived Eleven Magazine years ago. As students in an entrepreneurship class, we spent weeks building business plans and financial models and pitching to prospective investors who probably thought we were a bunch of idiots because I’m sure almost every single thing we wrote could be challenged or proven wrong.
It was a fun academic exercise, but it didn’t get us all that far in a practical sense. In the ensuing years of running the magazine, we never wound up referencing the business plan or financial model even once. We’re lucky that we had enough energy, hustle, and intelligent advisors[ref]To whom I am still and forever indebted.[/ref] to get us to the next step — otherwise we could have easily been bogged here forever or given up without even really giving our idea a chance.
What actually got Eleven off the ground was taking our prototypes out to potential customers, selling, and learning. It turns out our initial pricing strategy was utterly ridiculous. It turns out our initial sales strategy — printing out a dense, 11-page[ref]Of course it was 11-pages[/ref] media kit to give to every customer — was also ridiculous. It turns out people did really respond to the product and the physical medium. So we proved we were on to something, and fixed the things that didn’t work.
Before we knew it: Eleven Media Group had its first 31 customers — and our revenue was safely in the black — and we hadn’t even printed our first issue. We also learned a lot about what it would really take to run this company and had a chance to decide whether and how to move forward — without sinking our (or investors’) money into a nebulous pit.
I think the same philosophy can be applied to nearly every business from apps to retail. Sure, there’s a big challenge in securing the right real estate for your retail store, and you’ll want to have an idea of how many customers you’ll need to make the numbers sustainable. But if you do that first — if you put the carriage before the horse — then you miss out on answering key questions like “Is this really something that customers want” or even more importantly “Is this really even something that I want myself?”
Envisioning running a lofty, growing, successful business probably sounds enticing to just about anyone and it’s what drives aspiring entrepreneurs to the arena. Understanding the grit of what makes your startup work is something that will invariably be learned quickly — so learn it before the fixed costs and heavy philosophizing and save yourself from potentially barreling down a lifestyle you might not love or a business that might not work.
Best of all: once you’ve got your first 15 customers, figuring out everything else in that first bucket immediately comes much, much more easily.
(Oh hey, also, I guess. If you thought this was helpful and you’d like to talk more pointedly either personally or professionally, I’m just an email away at josh@joshpetersel.com)