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Perspective. Analysis. Insight. Mindfulness. Discipline. Vision. At Change Catalyst, I help clients perfect their business mechanics, strengthen their mental game, and finally develop the ninja skillz of discipline and ‘upright’ habits that pave the way to excellence in every aspect of their life.

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Advice for First-Time Entrepreneurs

I’m doing a Friday business Q&A. To ask your question, email me here

[This writer is a young programmer whose specific ideas have been redacted]

The way I figure it, I need my startup to make 40k/mo in order for a good enough valuation when I sell it that I can gain the capital to start [this other business idea]. Do you think [this idea] is worth 40k?

I think given your experience, betting on any idea being worth 40k a month to you is likely to end in tears. That’s not to say it’s not possible, but I wouldn’t want to play those odds.

What I would do instead is take a good idea (with ‘good’ defined as an idea with an 80% chance of paying its own way), give yourself a month to test it: see if people are willing to pay for it.

If that checks out, give yourself 6 months or so to make it viable. You should be able to get at least a minimum viable product to market, and then proceed to test and tweak the software while optimizing business processes (E-Myth Revisited has a good explanation of how to go about this.) It might take you a while, but eventually you’ll have a business that runs with very little intervention from you.

And then you can start another one.

 

big business idea lightbulb 300x300 Advice for First Time EntrepreneursI know that you want your 40k idea to raise a bunch of capital for this bigger idea, but the problem is statistical: You have let’s say a .1% chance of getting a business to hit this target, and since you’re building it to sell, if you miss, you’re very nearly back where you started.

In addition, working with that much capital is very much a confidence game, and you’d have to be ballsier than me to not feel like 10 times the gain equals 10 times the risk. It doesn’t– but it’s hard not to feel that way when you’re throwing that many zeros around. It’s really something that takes some time to wrap your head around.

I personally recommend picking a good idea and grow it as far as it can go. Some ideas have a growth ceiling, and it’s hard to know what they are until you’re really in the thick of them.

Pick an idea, optimize the hell out of it, getting it as passive as you can. Then pick another and do the same. (Amy Hoy at Unicorn-free is a great example of this). It might take you longer to get to your capital goal, but you’ll definitely get there. Gambling on a single idea will most likely mean several false starts, an extremely demoralizing prospect. 

 

 

 

[This writer is a young entrepreneur whose first two business ideas turned out to be non-viable, and is currently on the hunt for the next one]

Well, In a nutshell I’ve been working on several business ideas and mostly failing a lot haha.

Spent hundreds of hours on a couple projects in the past 6-12 months that failed and it was time to pivot or ditch. And now I’m working on a project with a friend/business partner who is living in Russia — his computer got smashed and he’s acting a little flakey now so I don’t know if he’s going to follow through with our current project (kinda sucky, seeing as I’ve invested 1-2 hours a day for the past 9 months).

So I’m slowly working on that track record, but I guess I suffer from the same wantrapreneur-based illnesses that everyone else has — what specific skills do I have, what do I start a biz about, what skills do I need to learn, etc.

And yeah I can’t honestly make products to free people from the rat race, because like you said, I haven’t done it myself. And there’s that whole sleazy trend on the internet of people making money off teaching people how to make money. Totally retarded.

In any case I don’t see the point in starting another generic SEO/Online consulting business even though it’d be easy. Unless I end up meeting people in person and they really need help turning a brick-n-mortar into an online business.

Basically, I’m just in detective mode at the moment. Any advice?

 

philanthropy Advice for First Time EntrepreneursWell, I have no idea of your particular aptitudes, and I think the best business ideas tend to materialize in a blast of inspiration, but I will say that in my view it’s not so much about the skill set as seeing an opportunity to fill a need. When you build a business around a skill, you’ve built a business around your own needs. When you build a business around a market opportunity, you’ve build a business around your customer’s needs.

However, as the person who has to do all the work, the business needs to meet your needs as well.

And if it was just about solving a problem and getting paid for it, well, a lot of companies have an SEO problem.  There’s an intangible that you want from your business that probably has something to do with helping people along the road to self-actualization. But only you can answer that question.

 

Like these Q&As? Want more? Email your question to feedthespark /@/ gmail.com

16 Responses to Advice for First-Time Entrepreneurs

  • Do I like these Q&As? You betcha! Do I want to see more of them? You betcha!
     
    There’s wisdom in your words that we wouldn’t get otherwise about a topic that every single person needs to care about: business (their own or others). Words like, “When you build a business around a skill, you’ve built a business around your own needs. When you build a business around a market opportunity, you’ve build a business around your customer’s needs.”
     
    I mean, that’s the kind of practical advice I think people need to hear.
     
    To prove I’m serious about seeing more Q&A Friday’s, here’s a potential question for you to tackle in a future Q&A:
     
    How much is too much to pay for upgrading your skills, learning new technology or traveling to a conference with unknown value (both in the content and type of people who will be there)? OK, that was a lot of questions wrapped up into one sentence so feel free to chunk something out that’s relevant to the community here.

  • I love ‘em too.
     
    And I’ll publicly embarrass myself with a question: how in blazes do you even find out what people need? How do you find a need to fill? 
     
    I’ve asked my clients, friends, prospects, total strangers on the street, peers, lots of questions, and the only consistent answer I ever get is “I need more people to pay me for what I do.”
     
    Well, boy howdy, that’s brand new special and unique.
     
    If I had to learn to weld stainless steel or perform complex chemical analyses or shovel horse manure in order to have a more stable income (ha! stable income) I think I just might do that, if I really believed I was filling a genuine need which people would continue to pay for. I can write in the evenings and weekends, but not when I spend my whole life worried about money.

    • @spinhead “I need more people to pay me for what I do.”
       
      I wonder if that’s the reason so many people become marketers… :-)
       
       
       

      •  @sarahemily Well, it’s one reason I started writing about marketing and doing business coaching back when I discovered Seth Godin a decade ago, but nowadays, it feels like a lot of people are creating businesses by teaching others how to create businesses teaching people how to create a business . . . maybe I’ll write a book called Matryoshka Marketing Madness.

        •  @spinhead “Marketing Matryoshka Madness” ~ That sounds like something right up your alley, Joel – back to the “Business Heretics” concepts!

        •  @Karen J I’m reimagining that site’s content from scratch. It’s a concept I want to get back to.

    •  @spinhead It tends to just be a hole: something people would hypothetically pay for, but they can’t find anyone to do it (either because no one is doing it, or it’s too expensive, or it required too much commitment, or some other barrier).
       
      I know a person who started a concierge business… her first customer was someone who needed someone trustworthy to run errands for her, but didn’t have time to research and find someone. Voila, a business is born, along with some powerful word-of-mouth marketing.
       
      I started my contracting business when I discovered none of the city-based contractors were serving rural areas. 
       
      Often these are ‘niche’ businesses simply because larger businesses left a gap where they couldn’t efficiently fill a need.
       
      The second concern, of course, is to make sure that people are willing to pay you. Ramit Sethi says the test is ‘three paying customers’ (Coincidently, I find that three paying customers also allows me to gauge whether *I* want to do this business)
       
      Hope that helped!

  • I can definitely identify with what you’re saying- about building a business around your skill. That’s pretty much what a lot of us bloggers have going for us. And while it’s a good thing if our skill is something that we love, but it really only leaves us open to doing digital products that bottle up our skill. 
     
    I read eMyth a long time ago, and I think it’s time for a re-read.  I wonder how well it resonates with the blogging business model…

    •  @ethanwaldman I find E-Myth to be incredibly useful simply in terms of “If I had to teach someone to do this, how would I do it?” and figuring out your vision is essentially hammering out your brand. Honestly, I don’t know how I managed to bumble through business without it. :)

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