I spoke with a friend today who is exploring an entrepreneurial pursuit. As we discussed the business plan concept I eventually couldn’t help myself but to start drilling in on the economics. So I asked the important question of how many units needed to be sold to replace this person’s current salary? This is a useful question to determine if the business model is initially viable. If you need to sell 10,000 units and only have the capacity to produce 500 per month you immediately can find the curbs in the business.
My friend paused for a moment to ponder my question and then quickly said that it was not the goal to quit his job. This didn’t surprise me as I know they love their current livelihood.
So Why Are You Doing This?
Every startup doesn’t need to be for the sole purpose of quitting your job and sailing off into the sunset. There are many reasons to pursue a startup. Knowing this reason is important though as it will shape the success or failure of the venture. Without a clear direction on Why you customers will notice the incoherent messages your operations will have. This will lead to wasted time, money, and increased frustration for everyone — including your customers.
It is okay to say “I want to make a ton of money from my startup” but don’t stop there. Continue to push deeper — Why do you want a ton of money; what will you do with it. How will a ton of money change your life. Next you will want to break each part of your down into distinct steps so you have clear measurable goals. It might turn out that all you really want is a new sports car which cost $65K. That is a much different and more attainable goal than “a ton of money”.
Now you can say “I want my startup to earn $65K so I can buy a sports car of model z”.
Do your customers care?
This is nice that you desire to own a sports car but your customers could care less. Why does your startup exist? Why this startup? You could find many ways to fund a sports car purchase but how is the world going to be better off because you came up with this great idea? How is your startup going to change the world? It is not about the overt features of your product. It is the benefit that your customer receives from the features of your product. If you sell drill bits, your customers are not buying the drill bit. They are buying the hole your drill bit creates. Your lower cost drill bit that is 10x stronger than the competition allowing 5x greater RPM….etc….etc… really means 300 more holes drilled at a 42% lower cost to your customer.
My startup exist to continually increase the efficiency of drilling holes in metal
Which means to you…..
By increasing the efficiency of drilling holes in metal I’ll attract more customers and increase profits to earn $65K for my sports car.
Now you have a focusing question
Everyday ask the question is this going to further the WHY of our business. Is this action going to increase the efficiency of drilling holes in metal? If it is not, then don’t do it. Keeping yourself focused on the primary driver of the startup will keep you energized.