What do I need to know to start a business?

What schools don’t teach about starting a business!

Why would anyone start a business before they knew what put other new start-ups out of business? I did and I had businesses that failed because of a couple of the same problems that other businesses had. What it boils down to is that many entrepreneurs believe they know what they need to know to start a business but there are things we don’t know that we don’t realize we don’t know!

Then last year I was at a conference, having lunch with a venture capitalist, a banker, micro-loan director, angel investor and two successful entrepreneurs. As I talked to them, I wanted to find out what they had to say about these business canvases. I was surprised that they said they were glad entrepreneurs were moving to them but then the Venture Capitalist (VC) said that those canvasses only go part of the way to get the entrepreneur ready to ask investors for money.

The VC said that he could tell if presenters, at his “Shark Tank” type program, were using the canvasses and if they should listen to the rest of what they were presenting. He said if they were able to answer three questions he posed, he knew whether they were really ready to be listened to.

The questions were simple. They were:

1. Can you give me your Business Purpose Statement?
2. What type of business entity (corporation, partnership, LLC, etc.) are you going to be using for your type of business and why?
3. If I invest money today, what would the value of your company be and can you justify this figure? Most people had guesses or pie-in-the-sky estimates.

He went on to explain that there are several other things that are missing from those canvasses but these three questions illustrated that they had only worked with one or both of the canvases and thought by completing them, they were ready to get financed.

The banker then chimed in to say that with the Lean Canvas, he found that these new startups were only 40% ready to start a business. With the Business Model Canvas they were about 50% and by doing both, they were about 60% ready, he said.

As the table of people discussed this further, I realized that there are many things that aren’t taught by either of the two main canvases and that some schools that say that they teach business students how to start a business or be an entrepreneur, miss many of the same things. They had all adopted the Lean Startup programs or one of the two business canvases to teach about. These are important to know but missing the key components to starting a business.

I discussed this with one of my partners in another company, and he said he had the same experience. He pulled out what he called Blueprint Canvas. As I looked it over, I could see it was 90% of the way to teaching what was needed to both know and do to get started in business. We worked on it for a few months, adding in the pieces that were missing and then began validating it.

Here is what we found:

• Between the canvases, they address:

  

• Customer segments
• Market pain
• Market solutions
• Value proposition
• Channels to customers
• Key resources
• Key partners
• Essential metrics (KPIs)
• Cost model
• Revenue model

 

But most were missing:

• Business Purpose Statement
• Lean concept testing (one used taught about this too)
• Competition and what they offer
• Milestones
• Creating MVPs (Prototypes)
• Testing and refining MVPs (one used taught about this too)
• Product Specifications

 

Other considerations that should be incorporated into training programs and should be learned by prospective entrepreneurs that are essential to starting a business include:

• Structure and strategy
• Mentors and advisory boards
• Marketing planning – strategy vs tactics
• Entity type and operating agreements
• Funding options and financial planning
• Team evaluations for discussion later – Who’s on the bus and in which seats
• Accounting and bookkeeping
• HR issues and division of labor – When is the right time to hire someone else and what will they do?
• Structuring a continual business learning program
• Legal documents to be considered and paring down the 44 possible ones that your company will need
• Stakeholder evaluations
• Founders and their roles
• Market value of company
• Key personnel and their roles
• Creating the customer service environment
• Financing the company
• Leadership style decision
• Location, finalizing the structure and strategy

 

 

What happened with the discussion? I’m glad you asked.

The VC from that table discussion was delighted to see it and is now using it. The banker is lobbying to have it adopted for use with those new startups that are looking for a business loan from his institution. Two other VC and angel investing groups have been so impressed that they are going to require candidates to go through Startup Blueprint before allowing them to present to them. Another VC group has already adopted our program as the basis to begin discussions with their candidates.

 

What does Startup Blueprint Canvas have to offer to help you build a better business?

The Startup Blueprint Canvas is the next generation of business canvas. But more than that, it teaches entrepreneurs what they need to know and do to not just start a business, but to be successful and profitable at it. It is about validating, something the other canvases tell you that you should do but don’t teach or require you to do. Startup Blueprint Canvas builds in the validation process and teaches you how to do it. To complete the canvas, you have to answer questions that show that you have done the validation and that you have pivoted as needed. Pivoting is when you find that what you thought would be correct wasn’t so you change your direction. More about this in the Failures and Pivoting section.

The best part about the Startup Blueprint Canvas is that when I look at the top 10 reasons that startups have failed in the first year (I have listed them below), they are all addressed. Only about 50% of those reasons are addressed by the other canvases. None of the other programs that I have found address all of the failures.

Knowing what has caused others to fail and then having a program that will help you overcome those problems is a great way to plan for business.

 

Failures and pivoting

I must also say that not all businesses will launch after working with the Startup Blueprint Canvas. Through utilizing this tool so far several entrepreneurs have realized that there was no or little market for their product or service (see the #1 reason businesses failed). Others have found that while there is a market, it isn’t big enough to start a new business around. In one case, they took their product and partnered with another company with similar products and are succeeding that way.

Failure to start doesn’t mean failure in business. It means that you found out before you launched the business that there was something wrong. Now you have the opportunity to “Pivot” or re-evaluate the idea. It may be that you need to change directions. It may be that it is a good idea but it just can’t be made viable. That’s what these business canvases and other startup programs are supposed to help you figure out.

An acquaintance had a product that he felt homeowners would love. They did, but he discovered they weren’t willing to pay a fair market price for it. Fortunately, he found that churches, schools and other places that served children loved this product and would pay for it. He has now sold about half a million of them. This would never have happened if he had launched to homeowners. The business canvases can help you be better prepared for business and help you find the customers. The Startup Blueprint Canvas will do that and then prepare you to start a better-structured business.

If you decide to take on building a strong business by working with the Startup Blueprint Canvas, it will take time and you will have homework to do. You’ll have strategies to plan and you will need to get out and talk to people about your ideas, your prototypes, what they really want and what they are expecting. You will also need to take a hard look at what you want to do and honestly evaluate its viability and timing.

Want more information about Startup Blueprint Canvas?

 

 

Download the report and watch the videos about the top ten reasons businesses failed in the first year of business.

Click here.