- Welcome back, Lunicorns.
In this video, I wanna take
you through the eight steps
that anyone can take towards
starting their own business.
In step one, it all starts with an idea.
We all have the good ones,
and some of us have bad ones.
But the reality is if you wanna create
a business out of an idea,
it needs to have some form
of sustainable business
somewhere within the idea, right?
Ideas come in all shapes and sizes.
And ways of getting them,
whether you think you have
that light bulb idea or not,
is to do this simple exercise,
which I think is valuable for both cases.
Is there a problem that needs
a solution in the world today?
I'll give you an example.
The taxi industry, only 10 years ago,
you would call via landline,
and there was no availability
when you needed one.
So Uber came along and
digitized that industry.
What Uber did was bring
an existing technology,
an emerging technology, mobile commerce,
and apply it to an old
industry, ordering a taxi.
And there you are today.
They have a multibillion-dollar business.
So that's one way of looking at an idea
and how to create a
sustainable business out of it.
Another idea is, is there
anything in your day-to-day life
that is a problem for you
that you think you could come
up with a better idea for
in solving whether it be
using technology or not?
Hardware or software,
whatever the component,
an idea should be turned into reality
through a sustainable business model.
So that's the idea.
Step two, now there's one thing,
and this is not so much of a step,
more a consideration that
I think every individual
who wants to become an entrepreneur
or start a small business of
any kind or a large business
needs to take into consideration.
And that point is consideration,
because when you start out,
the big difference between
people who give up too soon
or basically get a bit too
bogged down with this grand task
of creating an alternative income
and a new revenue stream for
themselves of a new business
is that they put too much pressure
on themselves at the beginning.
You should be realistic
with the amount of time
that you can dedicate towards this
because most people do this
while they have another job,
while they even have
two, three, four jobs.
So be realistic with your time.
I suggest that you look
at your day, or your week,
or your month, and
dedicate an hour a week,
an hour a day, whatever
availability you have.
But start smaller than the
time you think you have
because the worst thing is for this task
to then become a chore for you
and you actually end up hating it.
That's the nightmare, right?
You want this thing to be positive,
an enjoyable journey progressing you
towards your business
outcomes, aims, and desires.
Last point on action and consideration
is take it in small steps.
And one thing you'll
learn is the first step
towards entrepreneurship and
starting your own business
is doing this, doing the research,
understanding what the idea is,
is there a business available to it.
And actually, this is
the first test for you.
The first test should be your willingness
and ability to dedicate a
small amount of time every day,
every week, every month
towards this potential outcome.
You don't know if it's gonna
be positive or negative.
But ultimately, it's a learning.
If anything, it might even
just teach you discipline
to know that you can
dedicate one hour a week,
one hour a month, one hour a
year towards a cause outside
of your day-to-day life.
So that's it, action and
consideration as point two.
Step three is research.
I know it's one that
sounds a bit intimidating,
but research is arguably one
of the most important areas
because you should know the industry.
You should know the market.
You should know the numbers.
If it's not just for
yourself, it's also for anyone
who's ever interested
in joining your journey,
joining this as an
investor, as a co-founder,
as an employee.
You should know the numbers.
So at the early phases of the
business, do the research.
Now I'm not saying reading long reports
with technically worded
descriptions of things
that you might not know
or have a background in.
It's simply like googling things.
So one of the most basic forms of research
is just finding out, A,
if that product exists
in the market today.
If it does, how are they doing it?
There's one point I wanna make.
Pause this for a second.
If it's done, doesn't
mean it's done right.
So don't get disheartened or think,
ah, well, I can't do it now.
My idea was great, but someone's done it.
See how they've done it.
How could you do it differently?
Could you apply different technologies?
A great example of that is
social networking, right?
I think it was in 2004 Facebook launched.
But in 2002, social
networking already existed.
Friendster was founded in
2002, and Myspace, 2003.
Facebook only came late
to the game in 2004.
And by 2006, Myspace was
the largest social network
in the world.
And back then, when Mark
Zuckerberg in 2004 founded Facebook
and he looked at the existing solutions
that were in the market that day,
he thought he could do
it better, and he did,
and you could, too.
Another good tip for
research is letting tools
and softwares do the work for you.
I'll give you an example.
App Annie or SimilarWeb.com is a resource
where you can just drop a website's URL in
and find out how many active
users they get per week,
per month, per year.
So you can benchmark what
the other competitors
in the market are getting
in terms of traffic
and unique user engagement.
I'm gonna send a few resources down below
in the comment boxes for
you to start having a go at.
Feel free to send me any
questions if you have,
and I'll be happy to send
you some more resources.
Every country has their own data source.
For example, in the UK,
the office, the ONS,
the Office for National Statistics,
has lots of free resources
online for you to download data
on app downloads, on
demographics around the country,
so it's really valuable
resource for you to understand
how big is your market,
how big are your customers,
how much money do they have to spend
on your type of product?
Take a look and feel
free to check them out.
Send me any questions if you have,
and I'll be happy to send
you any more resources
that I know of.
All right, so we've been
through three steps,
which have been idea,
action and consideration,
and research.
Now one of the most
important ones is business.
We need to find out what
the business case is here.
And one way to do that is
understand who your customer is.
Who would be buying this product, service,
or whatever you're selling?
So before I move on, get ready
for your first business lingo
buzzword bingo, B2C and B2B.
This is when you find
out whether your business
is selling direct to customers
or to other businesses.
Guess which one those are.
B2C is, yup, you guessed it right.
It's business-to-customer,
business-to-consumer.
It's when you sell an
item or a service directly
to customers, individual
people who aren't businesses.
And then the other side is
B2B, yup, you guessed it.
It's business-to-business
is when you sell a service
or a product to a business.
I'll give you an example.
A B2C, or a business-to-customer
organization, is a brand.
A clothing brand is a
business-to-customer organization.
Louis Vuitton, they sell
items that they create
with their own brand to customers.
They're business-to-consumer.
A B2B example is a software company
that sells a software to other businesses.
Microsoft is a B2B company.
They're also a little
bit B2C, to be honest,
'cause they sell to customers, too.
But we'll ignore that because
the term remains the same.
They sell enterprise
software to enterprises,
to other businesses.
They're a B2B business.
So once you know which one you are,
it should define how your
organization should be set up
because pricings differ, long-term value
of customers differ.
Another important thing to learn
when you're going
through the business case
is are you in a hot sector or an industry?
Because investors, when they're looking
at your potential company
to invest in, will look at
is your industry a growing industry?
Is there about to be a big change,
a big growth in that industry?
I'm gonna link above to
a video that I've made
which should give you some
more practical how-tos
in how to find out the business case,
the total addressable market,
and what I think what a CAGR is,
another buzzword business
bingo that you need to learn
when presenting your company to investors.
So that's step four.
Step five, now this is
when you wanna think
about co-founders, building a team.
If you're a single founder, that's great,
but this is a tough game.
You don't wanna be alone.
There's a famous saying
that I'm sure you've heard,
"If you wanna go slow, go alone.
"If you wanna go fast, go together."
So it's actually quite important
that you find someone
who you can team up with.
And they can be an old
friend, an old colleague,
someone maybe that you've worked with
for a long period of time.
What investors or people from the outside
who look at your company
to invest in or be part of
or look at is the relationship
between the co-founders.
Because ultimately,
co-founders should have
complimentary skill sets.
One of the worst examples
is when you see a
business school graduates,
six guys starting a company together.
I'm sure some of them are very successful.
But in a lot of cases,
investors would prefer
that you would have a
technical team member,
a legal team member,
someone who knows business,
someone who's an idealist.
And in the best cases,
I'd only ever really recommend
two to four co-founders.
Because when you start to get
more than four co-founders
and you're splitting equity,
the shares in a company, equally,
you start to get smaller
stakes per person,
which means that there's
more people to fight
and less to fight over.
So I highly recommend that you
find at least one co-founder.
Three is okay.
Four is really pushing the limits.
And more than five is actually something
that investors won't invest in.
Equally, one co-founder or
one founder is also a worry,
because if you lose your
interest, the idea dies with you.
So single co-founders are as
bad as six co-founders or more.
So the sweet spot is two
to four founders on a team.
If I'm completely honest, two
to three is the golden nugget
and splitting your shares equally.
If you're worried about splitting shares
and how to split shares
to bringing in founders
who've come in later
if you're the person
who started the company,
there's a link to a video above
about splitting co-founder equity
where I share some thoughts and ideas
about the best ways to do that.
Unfortunately, it's always
a difficult conversation
for everyone, but I
think this will help you
find a common ground
with your co-founders.
Point six, I mean, (laughs)
is formalizing things, right?
You've found a co-founder,
you've done the research,
you've got the business
case, the idea's been proved.
What do you need to do?
You need to name it, you
need to buy the domains,
you need to register the companies.
See if there's any licenses
you need to acquire
to be able to operate in that industry.
These are things that you
should do at this phase.
With your co-founder, formalize things,
make a company presentation.
Now the reason we did things in this order
is because when you wanna
make a business plan,
which is something that
you'll give to investors
as a proof that you've done the research,
there's a market opportunity,
the team's put in place,
you've tested some very early
versions of the product,
this is a business plan that
you use to get investment.
But all the steps we've done previously
up to this point now,
six, will go into that.
So the idea, thrashing
out what the vision behind
what you're trying to do is, the why,
the why you're doing
it, the market research.
This is the size of the market,
this is its growing rate.
We believe that we can
capture 1% of the market
in the next 10 years, which
is worth a billion dollars,
or whatever it might be.
You've done your homework,
you've done the research,
you know your domain.
And that's something very important
to get going very early on
is to know the domain you're going into.
So formalize things, put
it into presentations,
put it into documentations.
Make that pitch presentation,
make that business plan.
Use the research you've done
to inform that documentation
because you're in a really
good place now to go to market.
Point seven, now this is a
point that I urge any founder
to try and do if they can.
Obviously, depends on the business case
that you're trying to take to
market, but this is testing.
You've done all the research,
you've know the audience.
If you're lucky enough that
you're developing a product
that's maybe just an online e-commerce,
an e-shop, channel of some
kind, you can test this.
Is there an actual need?
Will customers pay for your product?
You can do this very
basically by doing a survey,
a questionnaire of some kind.
I'll put a link to below to some examples
like Google Forms or Typeform.
They're free online services you can use
to do user testing
and actually to see if
there's a need, a requirement,
or a desire for the
product you wanna sell.
Unfortunately, if you're
dealing in a hardware industry,
that might be a little bit
more difficult for you to test
because you might have to make a prototype
which might cost time and money.
If you have that, great, do it.
But if you don't,
then try to do some
other kinds of testing.
In this phase, the dream
case is to build an MVP.
Ready for another buzzword bingo?
A minimum viable product.
What this means is a
product that's basic enough,
you can test in front of
a small group of people.
Whether they're friends
and family initially,
they'll always tell you
what you wanna hear, though.
So be careful about that.
We're using friends and family too much.
But also, they're also quite good,
because if you test them at every phase,
they will see the growth and progression.
Ideally, you'll find a small
group of anonymous individuals
who'd be willing to test your
product in the early phases.
So I highly recommend doing an MVP,
a minimum viable product, something basic
that you can push out to a
small group of customers.
We call them pilot customers.
Typically, this is for free.
In a dream scenario, these
can be paid pilot customers.
But stick with free for now
because you're not probably
providing as much value
as you think you are in the early days.
But this is where you learn, so test this,
because this MVP phase,
this testing phase,
is so important 'cause the
next phase, phase eight,
is all about raising money.
And investors love more than
anything to see traction.
And the most golden nugget of traction
is desire and need from customers.
And step seven is so
important for the next phase.
Step eight, getting investors.
Now investors love more than
anything to see traction.
They like to see how
your customers respond
to your early products.
That's why phase seven is very
important for phase eight,
because you can say, hey, investor, look,
we tested with all these customers.
They love it.
Save those emails when
people say they love it.
Also, save them when they hate it
because you should use
that to improve things.
But don't show the investors that.
Investors wanna see customer quotes.
They wanna see recommendations
that you would recommend
it to your neighbor.
You would recommend it to a family member.
And actually, what you
wanna see progress and grow,
because one tactic I've
seen being used in the past
to win over investor is to say, hey,
we got this comment from a customer.
This customer said they love this
but they would wanna see this.
So we need to raise that money
to build this for this customer
because we know that
there are 150,000 others
like them out there today.
And we can get them if we
do this one small change.
It'll cost 1/2 a million dollars.
That's what we're here for today.
That shows that you're smart
enough to know your weaknesses,
but you're also smart enough
to know how to improve on them.
So that's a great one for investment,
using the traction and the research
that you've gained today.
Another area about investing,
now I've made a video about this.
I'll put the link above to how
to actually face investors,
what type of investors, angels and others.
But the short answer for now
is there are different types of investors,
and there are different
types of businesses
which require different
types of investment.
So in this link above I talk
about equity crowdfunding,
angel investors, venture capital.
But for now, what I'll say is this.
If you can self-fund an
organization for a period of time,
it's a good thing 'cause it
shows you have skin in the game.
The buzzword for that is
called (imitates drum beating)
bootstrapping.
Yes, that's correct.
That's when you use a
form of your own income,
a small percentage.
Say you earn $50,000 a year,
and every single month, you
take 10% of your paycheck
and you put that into funding this idea,
growing it and developing it.
This shows to any investor
later on down the line
or even a co-founder
that you wanna bring in
that you're really committed to this.
You are actually putting your
own money and your own time.
And actually, there's an
opportunity cost to this.
You could be spending that
time and money on other things,
but you're dedicated to this.
It's a good omen.
That's a good sign.
And that's one form of self-funding.
Another way is soft funding.
This is where governments
provide you with grants.
If you live in Norway, for example,
Innovation Norway is a great example.
They give lots of money
to early stage companies
if you tick a few boxes.
Most countries and most cities have these.
Some more than others, of course.
Another aspect is, of course, FFF.
What does that stand for?
Drum roll, please, another buzzword bingo.
(imitates cymbal crashing)
Family, friends, and fools.
It's a derogative term typically meant
and referred to the early people
who give you money out
of their own pocket.
They're typically not
sophisticated investors.
They're your auntie, your uncle,
your mom, your grandfather,
your sister, but hopefully
not too many people.
Because that's why the fools comes in.
Usually, they give you
the money out of love
and they wanna see you succeed.
Try not to take too much
money from too many people.
Try not to take too much
money from one person as well.
Be smart about this.
Don't lose friends over this.
Make sure they all know
the risks involved.
So that's it for my eight steps
towards starting your own business.
I hope it was of some value to you.
I know it was quite high level.
But if there's anything missing,
please leave a comment down below,
and I would more than happy
to make a longer-form video
about it for you.
Thank you so much for watching.
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insight from The Lunicorn.
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