My last post was about knowing which direction you’re going in. I can not over state how important it is to be clear in your mind what it is you are trying to do. The clearer you can define your proposition the clearer you can define it to others. This feeds into everything and will make designing, building, marketing, recruiting….EVERYTHING so much easier.
The first thing to define is your idea. There is a lot of talk of the ‘lean startup’ but this normally assumes you’ve actually started building something. There is a whole stage before you’ve started building which is defining your idea. This stage is crucial and I propose taking a lean approach to planning.
The traditional thing to do is write a business plan but business plans take ages to write and there’s no way you’ll stick to it, so at this stage avoid writing one.
1.) Google ‘what questions do VCs ask’ and compile a list of standard questions. Answer them as honestly as you possibly can.
2.) Build a simple financial model
3.) Create a Facebook ad
You do not need to write an essay when answering these questions, a one-liner will normally do, but the important thing is have an answer that you believe in - remember these are just for you. I have my own list of questions gathered from learning the hard way - this is my list of questions in the next post.
This might sound intimidating if numbers aren’t your thing, but frankly you need to man up and face the reality that as an entrepreneur you need to be in control of your finances. If you don’t know how to build a simple financial model then learn how to, it’s really not hard to build a basic model and it will be invaluable. Good financial models are built upon a load of key assumptions, all of which should be inputs that are the drivers for the formulas - you should aim to have the model formula driven and have a ‘control panel’ of your key assumptions which you can easily change. This approach will save you a lot of time and allow you to quickly test how effective the business model is. You don’t need to go into too much detail but basically work out what your costs will be and how much money you can realistically make. If your income exceeds your outgoings then carry on. If not then make yourself a cup of tea and have a rethink.
Go and create a Facebook ad. It doesn’t even have to be a real one, just play around with it - what you’re doing is forcing yourself to think about so many of the questions you need to ask yourself:
- You have 1 line to to describe yourself in, thereby forcing you to think of what people will be interested in
- You have to have an image you think represents you and that will attract people to read your 1 liner
- You have to select your target audience with highly specific parameters
This will put things nicely in perspective for you. You know you have probably never once clicked on an ad on Facebook in your life, so you start to realise the enormity of the task ahead!
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