How to start a business? All you need to know for a successful start.

Perhaps, if you opened this article, you are thinking of becoming an entrepreneur, or maybe you are already one. There are many things to consider before starting your business. To build it up in the right way - you have to conduct extensive research and then put it nicely together.

To help you with structuring, I created a self-check list with all prerequisites for your business. This framework will help you to build a solid foundation for your business and your future growth strategy.

This list consists of value proposition, business model, targeted personas, pirate funnel, and one metric that matters for your business - all of these components you need before starting. Now, let's dive into each one.

1. Value Proposition

It is a simple and clear statement that demonstrable benefits consumers get when buying a particular product or service. A value proposition should convince consumers that the company's offering is better than others on the market. Every value proposition should speak to a customer’s challenge and make the case for your company as the problem-solver.

In case you're straggling with writing, I advise you to use a copywriting tool called Copy.ai (not sponsored). Read more about how to use it in my previous article about handy marketing tools.

2. Business Model

No doubt for a successful operation you must have a plan. In the business world, such a plan can be written in a business model canvas. It is a plan of your business for making money. It’s a detailed description of how you deliver value to your customers at an appropriate cost. This includes descriptions of the products or services you plan to sell, who your target market is, any required expenses, and all parties involved in the company operation.

The business model helps entrepreneurs experiment, test, and structure costs and revenue streams in different ways. For those just starting, exploring potential business models can help to determine if a business idea is viable, attract investors and form your overall management strategy. For established businesses, it works as the basis for developing financial forecasts, setting milestones, and setting a baseline for reviewing your business plan.

I prefer to use the Business Plan Canvas. Have a look at what it consists of and fill it out for your business to see what you have on point but what is missing.

Once you have finished with the business model you can move forward to your persona segments.

3. Audience persona

The next step is to think about your customers. You can have a great product, but if you do not know how to reach your audience, then no one will know about it. Likewise with trying to reach "everyone", as it again puts you in danger of appealing to no one.

However, even a narrowly-defined audience can still contain wildly different types of people. "Male millennial office workers living in urban areas" can include managers, marketeers, part-time workers, coffee lovers, Mercedes-Benz owners, and more.

It can be difficult to reach an entire target audience without resorting to insignificant generalisations. That’s where audience personas can help.

Personas are invented profiles that represent groups of similar people in a target audience. They can help to figure out how to reach people on a more personal level while delivering the right messages, offerings, and products at the right time.

Persona framework should include geographical data, behavioral data, channels where you can reach your customers, frustrations, goals and personality type. This framework will help you to understand your customers better and in a long run reach them easier.

Once you finish with finding our value proposition, structuring your business model, and researching your persona, I have to congratulate you - you have reached market product fit. Meaning, that startup will be ready to finally create a product that has value for consumers. But of course, that's not all.

Your next step would be creating a sales funnel. You can choose customer lifecycle framework or pirate funnel. I prefer pirate funnel.

3. Pirate funnel

The Pirate Funnel (AARRR Framework) is a way to map your entire customer journey and discover where your business is missing out on growth.

Little background. In 2007 Dave McClure, Silicon Valley investor and founder of the company “500 Startups” noticed that entrepreneurs often rely on vanity metrics: number of likes, followers, or impressions. Therefore he decided to create the AARRR framework to ensure young companies:

1. Focus on metrics that directly contribute to the health of the company and

2. Companies use the right data to measure what’s working well about their product and their marketing.

Later on, in 2017 Growth tribe decided to add the Awareness stage right before Acquisition to make sure that all business models companies can benefit from the framework.

So now the Pirate Funnel includes six steps: Awareness, Acquisition, Activation, Retention, Revenue, Referral. You can read more about all the stages in my other article about AAARRR.

Awareness

How to reach your potential clients? Awareness is about how many people you reach in total via different channels.

Acquisition

How many people visit your site?

At this stage you are getting to know each other.

Activation

How many people take the important first step? Sign up, purchase, download an app. In this stage, customers must experience the wow moment or aha moment.

Retention How many people are coming back?

Once you have a customer you want them to come back more often, make repeat purchases and buy upgrades.

Revenue

How many people become paying customers?

Eventually, your business will need to make revenue so you look at how many people become your paying customer.

Referral

How many people recommend your company to their friends?

A referral program is one of the easiest ways to attract new customers. Nothing is better than making your current customers tell others about your product/service. So make sure you have a program for this.

It is also important to mention that each stage may be in a different order depending on your business model.

OMTM

Last but not least is OMTM. It stands for One metric that matters.

The concept of OMTM states that any company should focus first on optimizing only one metric that matters at that particular stage of the product’s lifecycle. The one metric that matters keeps changing as the product progresses through various stages and maturity levels.

This concept was developed in 2013 by Alistair Croll in his book Lean Analytics. Alistair while working with different startups, noticed that quite often they get distracted by "vanity metrics". As a result young companies are missing out on growth.

A type of metric depends on the growth phase of a company and its goal, but the example could be the following:

- Monthly active users

- Returning users

- Churn users

- App store reviews

- Facebook and Twitter posts

The benefit of an OMTM is that it helps to dedicate all your time and energy to one thing, so you get a lot more done with that one thing, versus many little steps across different things. It is important to note that your OMTM can change every 2 to 4 months after you have achieved your objective. Then you can set a new metric.

And remember:

“What gets measured gets managed.” Peter Drucker

Summary

Most of the time business development will require being structured and savvy. It is much easier to be so with handy frameworks and tools in hand :) So keep going and remember these steps:

1. Tell how unique your product/service is in your value proposition.

2. Analyze your business with a business model canvas to make sure it is efficient.

3. Create customer personas to learn more about your customers and approach them better.

4. Structure the customer journey with the AAARRR framework to make sure it is smooth.

5. Identify metrics for faster success.

Good luck!