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People who are considering starting a company often ask me, "Where do I begin?" These aspiring entrepreneurs may have a great business idea or have created a useful product, but they sometimes do not know how to evaluate their ideas against current market trends and demand. It is the evaluation process and business development that is often missing from many early-stage businesses. This lack of focused time on evaluating an idea to determine if it can be a true business opportunity is frequently the reason why many companies fail before they get off the ground.
Over the course of the past six years, I have helped build iContact from scratch to over $12 million in annual sales. During this period, I developed a 10-step process that has consistently worked in helping my businesses achieve the goal of $1 million in sales. The process covers everything from deciding on what to sell, to how to best utilize the Internet for your online marketing campaigns. In my book Zero to One Million: How I Built a Company a Company to $1 Million in Sales&ldots;and How You Can, Too, I explain each step of the process in detail, as well as recount my personal experiences about creating iContact, an email marketing company for which I am the full-time CEO. I recommend using all these steps as a guide while you are in the process of creating or improving your businesses:
- Find your core motivation
- Evaluate your idea
- Plan for success
- Raise funding or bootstrap
- Develop your product
- Develop your marketing and sales strategy
- Launch your web marketing strategy
- Build your team and become a manager
- Build strong systems
- Scale the business
Step 1: Find your core motivation
The initial step in creating a successful business is determining the main reason why you wanted to become an entrepreneur in the first place. It takes at least five years to build a successful company, and if you are going to be spending this much of your life pouring your energy and resources into a business, you must know the reason why. Maybe you aspire to have a certain lifestyle, gain respect, create an innovative product, contribute to your community, or be free from your old job. The first step is to find your core motivation.
I have been fortunate in finding my core motivation for becoming an entrepreneur. My motivation comes in knowing the fact that 2.7 billion people in our world live under $2 a day, and that nearly 50,000 people die everyday in developing nations from preventable diseases and starvation. I became an entrepreneur so I could give back to my community by creating dozens of local jobs, and in the process help create products that make a difference, and eventually work to build a stronger society and world.
Step 2: Evaluate your idea
Before you can create a successful company, you must decide on what you will sell and how you will make your money. As you brainstorm business ideas on your own or with a business partner, allow flexibility for your ideas to be refined or modified, and leave nothing off the table. More frequently however, ideas do not come through brainstorming sessions, but through experience in an industry or from people you know. Continuously be aware of way you can improve products you use everyday, and always look for networking or franchising opportunities.
Once you come up with an idea, you must determine whether it is a true business opportunity. To do so, you must evaluate your idea against the current market to decide whether it is feasible in the marketplace. I developed the Market, Advantages, Return (MAR) Model in Zero to One Million to provide a screen through which you can pass your business ideas and establish that there is a need for your company, a ready market, and the ability to provide a solid return on your investment.
Step 3: Plan for success
During the initial stages of your company’s development, it is important you formally outline your business plan and strategy. You should create an Executive Summary, which highlights exactly what it is you are selling, how you will succeed, how much money you will need to launch, and expected return on investment. You should also create a company mission statement that summarizes the overarching goal of your business, as well as a Corporate Values Statement.
At this point in the process, there may be several documents you will need in order to protect your business idea, such as contracts and agreements between the founding employees. If your company is based in the United State , you may wish to secure any Intellectual Property such as patents and copyrights through the U.S. Patent and Trademark Office. While this may seem like a small step, you must do this in order to protect the integrity of your ideas.
Step 4: Raise Funding or Bootstrap
Once you have a good business service or product and have incorporated, you may need some money to get off the ground. Depending on how much money you are looking for, you’ll most likely have to turn to banks for loans, angel investors, or even venture capital firm. Zero to One Million includes a 15-step process of securing venture funding if you are looking to create a larger company. First time entrepreneurs often have to bootstrap, and closely watch their finances and expenses to make sure they are staying afloat while growing their customer base.
Step 5: Develop your product
Your product will be a huge factor in whether you succeed, so it must be perfected before releasing it to the public. The product should fulfill a need or want in the market, has either a niche market or mass-market appeal, and be able to be easily sold. Constant improvement of your product will allow you to be able to expand the scale of your marketplace, and keep your customers happy at the same time.
Step 6: Develop your marketing and sales strategy
Marketing is everything you do to place your product or service in the hands of potential customers, and get the word out about what you are selling. Effective marketing requires a great deal of market research and resources. It is essential that you create a system to determine the lifetime value (LTV) of your customers, so you know how much you are spending to acquire these customers over time. It doesn’t matter how good your product or service is if nobody knows about it.
Step 7: Launching your web marketing strategy
Your web marketing strategy should be a key component of your overall marketing and sales plan. My book includes the top twenty keys to online marketing, and also deals with Cost-per-click (CPC) and Cost-per-mil (CPM) advertising. These keys can also be found on my Email Marketing Tips and Advice blog at StartupNation.com.
Step 8: Build your team and become a manager
A large part of your company’s success and growth will come from the core group of people you assemble to lead your business. When you can afford to bring on your first employee, do so. If you never hire anyone, you’ll be just creating a job for yourself instead of a sustainable business. There are certain key employees you must hire, such as a CTO, CFO, and Marketing Director, depending on the size of your business. You should put effective systems in place to fight bureaucracy and make sure your company is running smoothly.
Step 9: Build strong systems
As your business grows, you should concentrate on building strong systems and processes, and attempt to automate as much as you can. Systems are formalized rules, policies, and procedures that trained individuals are able to repeat time and again as your company expands. You will also need to do payroll, ensure compliance with Human Resources laws and regulations, and create automated reporting mechanisms if possible.
Step 10: Scale the business
There are a few main methods of scaling your business, including: investing more in online or offline advertising, opening up offices in other cities or countries, franchising your company, expanding your sales team, or selling part or all of your company to a larger company or private equity firm that can help you expand. Regardless of the method, if you have the right systems in place beforehand, your life will be much easier.
Beyond the One Million Dollar Level
To conclude, if you have been able to create a successful company with paying customers, an in-demand product, an experienced team, and solid systems, you will be well on your way to reaching the $1 million mark in sales. Once you hit that goal, your business will take on a different character than the one it had when you began and new challenges and opportunities will open up to you that were previously hard to fathom.