My framework for starting a new business
After building up Lead Cookie & Content Allies to a decent state, I am beginning to look at building up a third company with a business partner this time.
As I am doing this, I realized I needed to look back on what worked with my two successful companies, and what failed in the many attempts I made on other ventures.
I’ve tried a lot of things before Lead Cookie, while running these companies, and I even made a lot of mistakes in the first couple of years of Content Allies.
So this post… well it’s kind of for myself. To document what I have learned so I don’t repeat these same mistakes on my third company.
But hopefully you find some value in it as well.
My Business Starting Framework
Pre-Launch: Choosing what business to be in
Look for growing markets - Everything is easier when you can ride the wave of a growing market.
Do Market Research - Seek out an emerging niche where you see the opportunity to become one of the top 3 players in the niche within a 3 year period of time.
DON’T try to come up with some genius idea from scratch. Copy what others have already succeeded in.
Check your choice against the RESCUE framework (Thanks Alex McClafferty)
R - Recurring - Will revenue be recurring? Does it solve a recurring problem?
E - Emotion - Does the problem you solve elicit emotion. Do people get it or get worked up about the pain point?
S - Scaling - Does this business have the ability to scale? Can this achieve the income goals I desire for this business
C - Cost - Is there a cost to people not solving this problem?
U - Urgency - Is there an urgency to solve this problem? Or can customers just do nothing?
E - Excite - Am I personally excited about this project?
Build a quick financial model - Based on the information that you have now, does this business make sense? Do you estimate that it will make at absolute minimum 20-30% margins (and ideally more because you will miss-estimate some costs)
Ask the Ray Dalio Question - If I started this business 5-10 years ago, would I be happy with that decision today? If I start this business today, will I be happy with that decision 5-10 years from now?
External Risks - Are there any major third-party players who could cripple this business or drastically impact our ability to succeed? (Ex. Platforms like Linkedin, Google, Microsoft, etc.)
Create a rate card with 3 packages - Put a rough series of packages together, start trying to sell to clients on a call. Look for feedback in terms of
What do they care about? What do they really want?
What additional things are they asking for? (Build these into higher-priced packages)
What objections do they have?
Validation: Testing the hypothesis
Build a simple Squarespace site within 1 week
Start running a LinkedIn & Email outreach campaign to cold prospects to test the value proposition & messaging.
If you can get cold leads to engage with your value proposition, then you are on to something.
Reach out to my existing network or past leads / customers and try to make sales.
Initial Traction: For me personally, I know that there are enough people in my network that I should be able to make 3 sales within ~30 days.
If I can’t do that while actively pursuing my network, then it is likely I am going down a wrong rabbit hole.
MVP: The Hustle Ops Phase
If I completed the previous steps properly, then I will have just sold something that I know I can deliver on, but I have done zero work in preparing to actually deliver it.
Any time that I started work on operations or backend before selling I found myself in a giant pit of wasted time.
This is the phase where I just signed myself up for a few months of hustle… It’s now time to begin building the operations to support the customers that I just told.
At this stage, I hire someone full time who is a swiss-army knife style team member who I can just throw tasks at. I build and document systems (Most likely in Process Street going forward) and hand them over to this person. This person will likely grow into the head of operations for this new company.
Did I really validate it?
I don’t know what I don’t know.
I can often sell something, but it turns out to be way harder to implement than I thought. Or customers churn off and don’t like it.
I went through this iterate multiple times with Content Allies as we tried different offerings. I would sell something, deliver it, and then months later realize “this feels like pushing a boulder up a hill."
The ideal win is “Sell something, deliver it, and feel progress.” It will be hard, there will be resistance, but it shouldn’t feel like pushing a boulder up a hill.
Typically 2-4 months after the initial sales of the service, it’s worth going back and asking
Do I still want to do this business?
Did I have any assumptions that were incorrect?
Am I trying to sell this to the wrong person right now?
This is a big one. I have had a great service at many times and I abandoned it because I simply had the wrong people in my network who I sold it to. While network can be great for early sales, your ideal customer is often not someone in your direct network.
If the idea is not validated, then return back to the beginning and start over again…
If the idea is validated and growth is happening… then buckle up and get ready for a growth train. Build operations and systems. Keep marketing and selling. And GO!