Starting your own business: The definitive guide. Are you hung up on the “idea phase” of starting your own business? Do you feel like none of your ideas are good enough–or do you have so many ideas and don’t know which one you should turn into a business? This post is for you!
First: I hear from many of you who have heard the advice that business should be about your “passion”. If I hear the words “find your passion” or “follow your passion” one more time, I’m going to stick a fork in the eye of the person who says it.
Starting your own business isn’t necessarily about “following your passion”, and you don’t have to “find your passion” before you start a business. Stop beating yourself up for not having a passion that people will pay you large sums of cash for, and follow this four-step process to starting your own business instead:
1. Figure out who your customers are.
Most aspiring business owners start from the wrong place. They start from “What do I know how to do?” or “What’s my passion?” That’s where a lot of people get stuck. They don’t know what their passion is, or how to monetize it.
I start from the opposite end. I listen to people having conversations, and my most common questions when talking to others are “What do you want?” or “What do you need?” That way, I find out what is missing in their lives, and then figure out if I can build a product or service around that.
I love watching reality TV, but I don’t expect someone to come dump 5 figures a month in my lap for me to do so! Instead, I start out looking at what customers will pay for. Then I create products and/or services that I know people want and charge people for them.
The benefit of looking at business from this perspective is that it’s not hard to find customers. You already know there is a market segment that is asking–no, begging–for this product or service. You don’t have to create a market. Just find the people who need what you have to offer and cater to them.
2. Survey some potential customers to see if they are interested in what you want to offer.
Again, this starts with the customers, not with what you want. Ask them what their thoughts are on your upcoming product or service. (This isn’t the right time to pitch them.) Ask them if they would use it. Ask them what you can do to help them make a decision.
This is your time to write down all the questions they have. “Is x included?” “Would I have to…?” You need to be able to understand what questions your customers have, then answer those questions in your website copy or when you pitch potential customers later on.
3. Once you get some “Yes” answers, sketch out what you have to offer.
Regardless of whether you’re selling a product or service, customers generally hate open-ended offers. You want to be able to offer a few packages of services or products and let them choose.
Imagine going into a restaurant and having the waiter say, “Okay, what would you like to eat tonight?” You reply, “Well, what’s good here?” The waiter says, “Everything, sir!”
At that point, you’d probably be stymied. Do you order a hamburger, a steak, or a salad? You’d also probably never come back to that restaurant again.
Now compare that to your sales process. If you’re a web designer or other service professional, you’re probably used to asking the client what they want first. That’s a good sales tactic. But then most people make the mistake of leaving it open-ended, or worse, letting the client decide what he or she wants. (Hint: Most people have no idea what they want. “Um, a website. That gets us business.”)
After you ascertain what the client is looking for generally, you pull out the menu of services that you provide. If the client wants something outside the scope of your menu, you can figure that out with him or her. But your menu sets up some “ground rules” when working with your client, and it also allows you the freedom of being able to systematize some parts of your labor later on.
Always have a menu.
4. Sign a few clients and make sure this is what you really want to do.
In some cases, you will sign some clients and then feel pulled in a totally different direction. When I started Simpli (my web hosting company), I originally planned for it to be a content management system–like WordPress is today. I developed the system myself, putting countless hours into it, and deployed it for several clients.
My clients all needed a really good web hosting company, and I had terrible experiences with web hosting in the past–including having my server, with all my data on it, stolen right out of a datacenter! I didn’t have a company I felt comfortable recommending, so I started my own.
Pretty soon, the web hosting side was growing faster than my content management system side, even though I was putting 80% of my time into my development work. I could tell it was time to switch gears, so over the course of several months, I wound down my content management system business and went full-time into web hosting. And the rest, as they say, is history.
It’s totally fine if you get a few clients and then say “This isn’t for me.” If this happens to you, find someone you feel comfortable referring your clients to and then refer them out. Then do something else. That isn’t “failure” at all. In fact, be proud of yourself for taking the step most people don’t have the guts to take: starting your own business!
A Totally Different Way of Looking at Business
This procedure is totally different from the way most people start businesses. Most people start with “I”. “I can do web design.” “I know how to knit.”
I challenge you, instead, to start with “You.” Who are your customers? What do they want or need in their lives? How can you help them achieve their goals?
Starting your business from what customers want or need will not only free you from the burden of discovering your “passion”, but it will also help you grow your business exponentially faster. Look around–the answers to which business you should start are right around you, in the conversations of others.
What do you wish you would have known when you were starting your own business? What advice would you give to other aspiring business owners? Feel free to share in the comments!
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30. July 2010 at 5:58 am
Hey Erica,
This is a simple make sense approach. Most individuals just dive right in and then realize that the business they just spent a handful of time and money is not for them. Anyone looking at starting a business needs to make sure they read this.
Chat with you later…
Josh
30. July 2010 at 6:53 am
Erica, I think this is an excellent post and exactly what startup entrepreneurs need to hear. Way too many people go through all the administrative time and cost of setting up a business, only to realize later that no one (or very few people) really wants the product or service that they are offering. Your approach makes a lot of sense and could save some entrepreneurs a bunch of wasted time and money. Paul
30. July 2010 at 6:56 am
I agree doing a little market research is crucial!!
30. July 2010 at 6:55 am
Great way to put it @josh I think it simple enough for somebody that’s just getting started. I know I had to struggle at first because I thought I needed to re-invent the wheel, but I think it’s all about digging into a market and being remarkable in some way.
When I first started out I was blessed to had have read great books like rich dad poor dad and other great books that guided me.
I still like how you set it up in this post for someone that’s has no idea what to do or where to get started.
30. July 2010 at 8:17 am
I just read in Entrepreneur.com an interview with the entrepreneur who invented the SippiGrip and one of the things that impressed me was how she went around, just talking to everyone in her target market. Showing them the product, asking if they would buy it and how they would improve it. Understanding your customer and their perceived needs is the foundation of any business, and this entrepreneur went about it the right way, on the cheap but effective.
30. July 2010 at 10:34 am
See, that’s great. I think a lot of people invent things and assume that their invention will make them “MILLIONAIRES!” But really, it comes down to execution.
Most million-dollar businesses aren’t “new” ideas, either. They’re simply better versions of what’s out there right now. They do everything the same as everyone else, except for ONE thing that makes them stand out. And if you want to know what that one thing is, often it’s just better customer service!
-Erica
30. July 2010 at 11:15 am
Tyler, I’m doing this right now with my little product. It’s too early to say if it’s working. I’m acquiring customers the hard way, one at a time!
I call it the “TMC” method.
You know, Tums, Motrin and Caffeine.
Ok, off to stress out, laterz
30. July 2010 at 9:23 am
Hi Erica,
I like the post and I find it’s increasingly a common theme among business/entrepreneurial blogs and articles. Tim Ferris and Ramit Sethi constantly reinforce it. However, what happens if your customer isn’t the general public or easily accessible. What if you are targeting mid-size companies – how would you survey them to find out if they are interested?
I like the article and agree with it but I sometimes think its very easy to say survey your customers but not always as easy for someone trying to break the employee mould and move towards entrepreneurship to come up with ideas/methods of doing so.
That said, I’m making it a priority to create a “menu” for my web development company!
Pete
30. July 2010 at 10:38 am
I wrote this because the #1 question I get is a variant of “I have an idea; now how to do I monetize it?” or “I have 100 ideas; which one should I pick?” or “I have NO idea what business I want to start.”
I have been reading a lot of Ramit Sethi’s blog lately and I think it shows.
I also was looking back on the survey you all took in February. These were the two responses that inspired me to write this post.
My question was: If you had 30 minutes of 1-on-1 time with me on the phone, what question(s) would you ask?
Two particularly revealing answers:
“how do i find my ‘calling’. what i am passionate about and how can i make money from it instead of getting another j-o-b. ?”
“I realize that part of making any business work is being passionate and enjoying the work that you’re doing. What are some ways that you can recommend to help people discover what that passion is inside themselves?”
That mentality was what I really wanted to take on in this post.
-Erica
30. July 2010 at 10:40 am
Oh, and about the “menu” — the side of the menu is the perfect place for upsells.
You will find your clients probably spend *more* on average this way. Plus, it’s then easy to peel back the pieces and outsource. Most biz owners trap themselves by doing custom work for each client and creating a “job” instead of a sustainable business. I bet you can guess how I know this, and why I picked “web design” as the industry I highlighted in the post.
-Erica
30. July 2010 at 11:00 am
Hi Erica,
thanks for replying. The post absolutely makes sense and testing ideas is something I’ve struggled with. I think I found an answer (to the question of an idea) in web development with Drupal (at least locally) but a lot of my development is coming from a few customers and I’d like to branch out, I’m just not sure how though – I think my preference is mid to large size companies. I guess I was looking for hand holding
I’m definitely also in the midst of creating a “job” and not a sustainable business – it’s really easy to fall into that hole. I’m trying to parlay the “job” into a sustainable business but it takes time and patience – your posts on brain mapping developing business plans have helped. I browsed through a lot of your older posts yesterday and realized you’ve been maintaining the blog for a long time but for readers, it’s easy to think you started it yesterday and it was instantly profitable.
have a good weekend,
pete
30. July 2010 at 11:21 am
Erica,
You hit the nail on the head with this post and I’m realizing your words ring true more and more everyday.
Brandon
30. July 2010 at 11:21 am
Hi Erica,
Thanks for a good post on a difficult topic. I’d also add this method to generating ideas: make a list of every activity you’ve ever done in your life – everything from t-ball to sales. Pick the top three or five most interesting to you and then list out all the products/services that people in those activities use or could potentially want/need. Then research, research, research for each product/service until you find one that has a market and that you can execute.
On a slightly unrelated note: could you write a post about autoresponders? I’m building autoresponders now and would love some guidance about how you decided what number of days to space them apart, how you moved sign-ups down your product funnel, how you are dealing when people sign-up mid-way through the product funnel and not at the beginning, etc.
Thanks,
Amy
30. July 2010 at 11:23 am
I am in love with how objective you are, Erica.
Personally, all my successes stem from the times in life when I was the most objective about said ideas and outcomes. It’s when I analyze the situation for what it’s worth and disregard my emotions that I pull through and get what I want.
I really like your CMS/Hosting example because even though you may have been super excited about your development project, you saw a solution (with a ton of money to be made) in web hosting. And as we can all see, you took up hosting, made some cash and sold it later.
I’ve forwarded this to my best friend, who is constantly seeking his passion but has yet to find it.
thanks!
JC
30. July 2010 at 11:31 am
I just stumbled upon your site this week, and I think it’s great! I read the full manifesto the day I got it!
I’ve been trying to put together an idea for my first business. It’s definitely hard to stop and think things through before launching something because you are so excited, but it makes total sense. If I would’ve gone with my original idea, I may have ended up as some here mentioned, frustrated because no one understood or needed my site.
The more I think about my idea, the more it develops into something that will hopefully make sense for my prospective clients.
Thanks, Erica. Looking forward to continue to read your posts!
30. July 2010 at 12:00 pm
Yeah, don’t tell this to Steve Jobs though. He doesn’t care was his customers think, he will do what he wants. Winder if they’ll crash and burn…again.
30. July 2010 at 12:15 pm
This post was right on track! Thanks so much!
30. July 2010 at 1:03 pm
A thought provoking post Erica.
Another way to find a business is to simply look at some existing businesses and figure out how you can be a bit better, cheaper, faster or nicer. Competitive advantage in just one of these areas is enough to build a good business around.
Often, starting a business begins when you experience bad service from another business and start thinking you can do it either better, cheaper, faster or nicer – just as Erica did when she started her web hosting business.
30. July 2010 at 1:14 pm
I forgot to post a question…
What if you know people need something 100%, but they don’t think they need it, or may not want it?
Like…a child needs to brush their teeth every day, but he/she doesn’t know he needs to and doesn’t want to.
Is this a matter of having the right marketing strategy for a product, or should the product/idea be reconsidered altogether?
30. July 2010 at 4:13 pm
Great post! I am happy to hear someone say that if they hear “find your passion” one more time, they’d run over them over with a bulldozer. I love that your method allows for people who know they want their own business, and have a gazillion ideas to start somewhere without worrying too much about being passionate enough about the product.
This is such a refreshing way of seeing things, especially for people like me who a) can have way too many ideas in a single day and b) are hybrids with multiple passions and skills. If a person focuses on only one business idea that relates to a very specific passion or skill, there is also the fear that the passion will turn into something you’d hate later on because you’d spend too much time doing only the one thing.
30. July 2010 at 6:11 pm
Hi MP
To your last option, they could always sell up and start something else!!
Erica, this post has been very thought provoking. I’ve a bricks and mortor business, which I love to do and create with. I’m about to open an online tutoring site about setting up in my same business line of work, by using my learning experiences. So reading all of these comments, has been very helpful and interesting, and now I know that by posing the right questions, about why they would want to find my services, I hopefully should be able to attract the right customers.
I have probably done my business around the wrong way, (ie I’ve created my product first), but if I help and provide solutions to their solve problems, then I do hope that I will attract plenty of the right people. Actually I’m probably not looking for millions of people, only the right kind of people.
Thanks for your great ideas and thinking on this topic Erica.
30. July 2010 at 7:19 pm
Erica,
Great insight.
I’m going to play the ‘Advocate’ for a moment. I largely agree with the premise/methods outlined, as I have been on both sides of the equation. However, after selling a few successful dotcom companies, I now approach opportunities differently.
To point #1 – It is and should be about finding your passion. If you don’t love it, it’s nothing more than work and you may eventually resent the fact.
I cannot tell you how many hours, days, weeks, years that I had spent working for “What clients want” – for if this is the strategy, you will never be happy. Moreover, one would be creating nothing more than another job for oneself in a constant battle trying to figure out what customers want. Without over statement of the obvious, not one really knows what they want (Which takes us back to square 1).
So, my suggestion is to figure out what YOU want (Ultimately) and then find a way to make it happen – first – and then go about figuring out the market and the value that you can bring to the table.
The key to finding your passion or “A” passion is simple – it’s that one thing that you most enjoy doing so much that you could do for the rest of your life and it would not even matter whether or not you got paid – For that is indeed your passion…
Thank you for the inspiration within every post!!
30. July 2010 at 7:54 pm
I tend to agree with Val, but it’s more of a close difference. I think it’s like investing, one is a fundamental investor (base on underlying principles and passion) and the other is technical investor (market sentiments). Both aren’t wrong on their own, but has their pros and cons. Example is sometimes our passion doesn’t sell. Sometimes what people want isn’t something we want to do. Then how?
The idea is to find out a list of what we do like, and what we are slightly or more competent in, do a market survey and test to see what people will buy, and fine tune from there. Still, it’s a process and journey more than just a destination.
But one is thing is for certain, you brought it up but I think more emphasis can be put on it:
It is the significance of your first step.
30. July 2010 at 10:49 pm
Love this post, Erica.
And what a great timing, I am just on my journey to start my own whole new service for developing photo gifts. I have been sharing the progress as I iron out some issues on my blog and my readers have been so supportive of it all.
I also think that business ideas should come from our own ‘wish list’ or ‘why can’t they just do *** when giving me @@@’. We can always test if there are others thinking the same thing as getting *** along with @@@ and take up to fill that gap.
Something that I am trying to do with my service. When I first came across ZoomIn, I wondered why they could not provide an option for a “real person” to do their photo gift designing. (The automated designer needs some more intelligence, says me.) So, I decided to fill that gap. Took an affiliate program from ZoomIn and on top of it I am offering to design gifts for people. I get my affiliate commission and my customers get personalized design. I am in the last lap of the launch and already a few people have shown interest in buying what I have to offer.
http://naari-thewoman.com/2010/07/times-to-treasure-and-my-ouch-moment/
I know since this is my first time, there are bound to be some hiccups, but I’ll take them in my stride, give my best to my customers and see how it goes.
With blogs like your to guide people like me, I think I am in good company and will get support in case I get stuck
Thanks for a resource as wonderful as this blog!
God bless you,
~Varada
31. July 2010 at 5:07 am
Hi Erica, after reading through your blog I’m severly impressed.
Esp. about realty-bizz: how do you know all that stuff, perhaps without knowing Peter Schiff, the Austrian School of Economics etc.?
(It contained the best summary of criteria to evaluate a property I ever came across on the web)
I really wonder: how did you figure all that out, seemingly all as a side-’track’?
Nevertheless, I want to introduce you to this remarkable guy, on the other end of the world. A kindred spirit, I suppose.
http://bosanchez.ph/you’re-surrounded-by-an-ocean-of-miracles/
Greetings from Germany, David.
(The world becomes a village, thanks to the web!)
31. July 2010 at 7:35 am
… as for the Austrian School of Economics … what exactly is it about? … well, let’s explore … by this ‘Fear the Boom and the Bust’-Rap. Nice behind the scenes-story to it. And a great startingpoint for further exploration.
http://econstories.tv/home.html
have fun! (… which it is: great economics in a very funny way … acording to David from Germany @ least). Greetings.
31. July 2010 at 10:37 am
Hi Erica,
Thanks for this post! I have been struggling with trying to figure out my idea for a long time. I totally did a forehead smack when I read your post, because it is so simple to start with the question “who are your customers”, and it SHOULD be obvious! However, it wasn’t obvious to me until now! You just made my life a whole lot easier. Muchas Gracias!
Asia
31. July 2010 at 11:34 am
I’ve always been driven by entrepreneurship! I started a petsitting business at 16 and did that all through college. At the time, I didn’t realize it was a “business”. Then I moved on the the next business concept, and while I’ve had the idea for a number of years, this is the first year of seriously creating it. I loved the post on Ramit’s site about getting the first YES! Keep going and keep asking! And always be (at least appear) brimming w/ confidence!
One of the most important thing I’ve learned is creating copy w/ the word “you” instead of “We do….”
And off I go with my website http://www.speciesspectrum.com
Thanks for your great articles!
31. July 2010 at 4:41 pm
I’v heard that two great ways to find a market is:
1. If you survey people about your product and they said they’d buy it – tell them you have it and they can. If they don’t, they’re probably not nearly as interested as it sounds on paper.
2. Run small ad campaigns or a few test runs on eBay. If people are buying you can see that there could be a bigger market.
Great topic to touch on – I have some projects coming up which this will help.
5. August 2010 at 8:44 am
Actually, you can also take a look at Google Trends as well as hot buys on Amazon and eBay too. =)
31. July 2010 at 9:13 pm
Your first point hit it right on the nail. I see too often that aspiring entrepreneurs do not identify their stakeholders, including their customers, which can be a recipe to disaster.
By knowing who your stakeholders are, you can easily see how you affect the market and in turn how you can affect your customers’ decisions on purchasing your product or service.
Knowing exactly who your customers are also help when you are shaping your first marketing and advertising strategies. I always tell entrepreneurs to never be scared of being too specific when defining customer groups — you cannot be too specific. The more you know about your customers, the more you can tailor your message for them.
1. August 2010 at 12:01 am
Thanks insightful read as usual.
It helps to study well documented big failures and their causes. Principles of failure just like success remain the same.
Notable reads:
Adolf Hitler and Nazi Germany.
Iridium™
Airbus™
Coca-cola™ [new flavor]
Definition of failure here is not bankruptcy but loss of time / money or delay.
Write down the causes and cross check with your business plan.
Remember customer decides both product / service and the price!
Another simple book I recommend is Sun Tzu’s Art of War.
1. August 2010 at 9:38 am
That’s straight to the core business advice, Erica !
But I have to disagree with ditching your passion and concentrating on what OTHER people need.
Rather than finding what people need, think about what you need. If you have a thought like this : Gosh, I wish they had this option / boy, why can’t there be a cooler website about this topic…” it usually means you on to something hot.
When you create a product or service that you’d like to have, then you can be sure that there are a couple of peeps out there who have just the same need.
2. August 2010 at 5:28 am
I find it very amusing that this came out the same day as Richard Branson decided to wax lyrical about being “In it for fun, not just money.” I think you’re both right. The trick is to find the intersection of the two – other people’s needs *and* your own aptitudes/”passion”.
http://www.virgin.com/richard-branson/blog/in-it-for-fun-not-just-money
2. August 2010 at 10:03 am
Great distillation.
For #2, what’s the most effective way where your customers feel like it’s a win-win vs. just having them provide their information?
4. August 2010 at 2:39 am
I’d tweak #1 just a hair, to “Figure out who you want to serve”. Deciding what kind of client you want to work with, who you find joy in helping, is a great place to start. Mark Silver wrote an excellent blog post on this a while back: http://www.heartofbusiness.com/ode-to-diapers
I found that asking myself that question helped me stay close to what I was passionate about without getting stuck on “what is my purpose”.
Thanks for stressing “Always have a menu”. It’s important.
6. August 2010 at 10:53 am
Thank you Erica. I really like your point of view. In order to succeed, we need to love what we do, not necessarily the other way around. So let´s be passionate about whatever we do putting our clients first.
Regards,
16. August 2010 at 9:32 pm
The question here seems to be whether one should build a business from one’s passion or by looking at satisfying a customer’s need. But let me ask you this. Is not the reason that we all want to build a business to give our life pleasure? If one follows one’s passion, obviously one does what one enjoys. But isn’t it the same if one looks at existing needs? Our main focus is still to find pleasure for ourselves, simply this time instead of passion it might be money or personal freedom that one seeks. Hence, whether one builds a successful business by following ones passion or by building on an existing need really does not matter. In the end, it is about finding a way to improve our own lifes.
25. August 2010 at 11:49 am
I have one question, I plan on monetizing my webpage and blog. Should I create a company to do this or can I do this as an individual and then pass it on to my future company down the road?
All points of view, pros and cons are welcome