Just about a year ago - early 2018 - I decided that I am ready to quit the job and build a business of my own in the wild. I won't go through the details of how I came to that and what happenned next - the important part is that after 8 months I have found myself running out of cash and not knowing what I can do except to look for a new employer.
By the end of 2018 I have successfully landed a job - a great one, by the way. So now I am safe and already had some time to contemplate my attempts at business. Here are the key conclusions that I made from the analysis of what I did and how that led me to the failure:
1. If you go into business, you absolutely have to design a sales proposition that would clearly show your potential customers what you are offering, how much it costs and exactly how much they would benefit from it. In other words, you have to present your customers a cost-benefit analysis of your offering. Once you have it, advertise it a lot and do be ready to pay for the ads.
2. Be sure to prepare a financial model of every business project that you are trying to build. If the model shows adequate income, don't abandon it even if you see only modest earnings per unit - you just have to scale it properly.
3. Your business model doesn't have to be cool or show few competitors, but it absolutely must allow for reasonable net income in the target market. Other things do not matter much.
4. You have to be ready to overcome difficulties, do something when it's not clear what to do and ask other people for help at solving the problems of your business. The only allowed reasons to abandon a business are poor cash flow or the act of discovering why your model can't generate proper income. No other difficulties can be a valid reason to quit trying.
5. You have to go and sell your product in each and every possible way - including those, which are least comfortable (or even painful) for you. You must not stop trying to sell until you understand why your attempts fail and why you can't fix that for an acceptable price.
6. Your work must be focused on closing the key needs or problems of your customers in the first place - not on something that you find important or cool. Whatever you add to your product or service must be helping you sell it. Of course, you have to start with identifying what are these things crucial to your existing and future customers.
7. It is important to extrapolate your positive experience and translate every successful deal into a clear offer that would be interesting for a wider market. Once you figure out how to adapt what you have done for one client to the needs of many others, go and sell it to them.
8. Focus on just one or two (absolute maximum!) projects at a time. Don't dive into any new shiny projects until you finish the current one. Remember, there is one good reason to abandon a project: either it fails to generate adequate net income or you absolutely can't find a way to live to the moment when it would finally start bringing that income.
These thoughts look obvious, but when it came to the actual work I managed to violate each and every one of them. I learned the lesson the hard way, but the next time I venture into something new, this will be a good checklist to validate what I am doing on a daily basis. If, on the other side, you are just about to start a business of your own, this may help you avoid the mistakes that I made.
By the end of 2018 I have successfully landed a job - a great one, by the way. So now I am safe and already had some time to contemplate my attempts at business. Here are the key conclusions that I made from the analysis of what I did and how that led me to the failure:
1. If you go into business, you absolutely have to design a sales proposition that would clearly show your potential customers what you are offering, how much it costs and exactly how much they would benefit from it. In other words, you have to present your customers a cost-benefit analysis of your offering. Once you have it, advertise it a lot and do be ready to pay for the ads.
2. Be sure to prepare a financial model of every business project that you are trying to build. If the model shows adequate income, don't abandon it even if you see only modest earnings per unit - you just have to scale it properly.
3. Your business model doesn't have to be cool or show few competitors, but it absolutely must allow for reasonable net income in the target market. Other things do not matter much.
4. You have to be ready to overcome difficulties, do something when it's not clear what to do and ask other people for help at solving the problems of your business. The only allowed reasons to abandon a business are poor cash flow or the act of discovering why your model can't generate proper income. No other difficulties can be a valid reason to quit trying.
5. You have to go and sell your product in each and every possible way - including those, which are least comfortable (or even painful) for you. You must not stop trying to sell until you understand why your attempts fail and why you can't fix that for an acceptable price.
6. Your work must be focused on closing the key needs or problems of your customers in the first place - not on something that you find important or cool. Whatever you add to your product or service must be helping you sell it. Of course, you have to start with identifying what are these things crucial to your existing and future customers.
7. It is important to extrapolate your positive experience and translate every successful deal into a clear offer that would be interesting for a wider market. Once you figure out how to adapt what you have done for one client to the needs of many others, go and sell it to them.
8. Focus on just one or two (absolute maximum!) projects at a time. Don't dive into any new shiny projects until you finish the current one. Remember, there is one good reason to abandon a project: either it fails to generate adequate net income or you absolutely can't find a way to live to the moment when it would finally start bringing that income.
These thoughts look obvious, but when it came to the actual work I managed to violate each and every one of them. I learned the lesson the hard way, but the next time I venture into something new, this will be a good checklist to validate what I am doing on a daily basis. If, on the other side, you are just about to start a business of your own, this may help you avoid the mistakes that I made.
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