Become a Small Business Owner #2

Entrepreneurship Foundations
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Write a business plan
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= a formal statement defining your business goals, the reasons you think they can be achieved and how you are going to achieve them
- elevator pitch
- pitch deck
- written proposal
think like a CEO
Checklist:
- what will you sell?
- what problems will you solve?
- what will you charge?
- who will buy your product?
- how will people find about you?
- how will you make the product?
- what will it cost?
- do you have competitors?
- why will customers prefer you?
- or are you disrupting another company?
- does this business play to your strengths?
- what are some challenges and obstacles?
- by when will you start?

Your plan will change in time!

Business plan is about: idea generation, prototyping, data collection, analysis and learning


Setting prices
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- ask customers what they pay for a similar product or service
- benchmark against competitors:
    if your product is better, demonstrate it, and charge more
    if your product has fewer features, acknowledge it, and charge less
- err on the side of pricing too high (you can always lower them, but difficult to change after you published them)
- you may experiment with prices
- anchor around value: if your product gives the customer $100 value, charge them $30...$40
- payment promote satisfaction
9 = value ($4.99)
0 = quality ($50.0)
- whatever the product costs you to make, market up by a hundred percent
- consider what you need to charge to make money
- pricing shapes customer perception



Financial model:
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= track costs, monitor cash + se eif you have a viable business
1. Revenue = price x volume
2. Calculate your costs:
- costs to make and market the product
- employees
- office space
- cost of acquiring customers
3. Solve for the profit (or loss)
- sell more at a lower price?
- less at a higher price?
- lower the costs?
Be patient for growth, but impatient for profits
4. know your burn rate
costs: $20k/month, have $160k in the bank, then you have 8 months of runway
CASH IS KING!


Protecting intellectual property:
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- trade secrets (business plan, design, customer list, pricing, procedure, ...), NDA
- trademark (names, words, slogans, pictures)
  check: domain registration, google the name,
- copyright: original works of ownership fixed in a tangible medium of expression
- patent
- rights of publicity

Bootstrapping:
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- short on money?
- short on time?
- lack of expertise?


III. Building a team
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Going solo? Have enough what you need, you want 100% equity, like to work alone
Deciding on a co-founder
Hiring the right people: hire for expertise, not for credentials
Getting the right advisor board
Tapping into networks of expertise: you need to network, use the weak ties

IV. Marketing your business
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1. Telling your story
- craft a rhythmic catchphrase people can repeat.
- use familiar slogans in fresh ways.
- startle with specifics

2. Building a website
- usability! (simple menu, easy navigation, clear text, any browser, any device)
- structure
- optimize for lead and conversion (hubspot marketing grader)
- tools for building your own site (wordpress, squarespace, shopify, big cartel)

3. Chasing customers until you catch them
- marketing tools:
* blog
* social media
* lead generation: convert visitors of your site to leads (eg. make the fill a form in return of getting something)
* brand ambassadors
online ads
online affiliate programs

4.Serving your customers
Do you love your customers?
- you love customers, because they pay you money OR you love your customers and sometimes there is a transaction
Showing customer love
- find the "yes" in a request
- be responsive
- learn to apologize
- follow up
70-80% of customers are generated from word of mouth

5. Refining your business idea
Examining the sales:
- where do your customers come from?
- are you solving the problem you thought you would solve?
- selling more or less than you thought
- what about the price point?
Examining metrics:
- what percentage of your visitors are returning visitors?
- what percentage of visitors are converted to leads?
- is this percentage increasing or decreasing?
Cohort analysis: divide your customer to related groups
Examine costs:
- are the costs higher or lower than expected?
- what about the cost of customer acquisition?
- which source of customers is most cost-effective?
- which will be easiest to scale?
- is the cost of customer acquisition increasing or decreasing?
Examine relationship with your co-founder
Examine employees
Examine spending: how is your burn rate changing?
Examine self: are you still enjoy being an entrepreneur?

6. Becoming a thought leader
people want to hear what you have to say
blog, social media, speak at conferences

V. Scaling your business
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1. Use the right metrics:
- acquisition:
how many visitors do you have?
bounce rate: customers who visit your site, but leave without completing a transaction (~30% visitors)
- activation: stay 10+ seconds, read 2+ pages (ideally 50% visitors)
- retention: provide you contact information (should be 10%)
- referral: ideally 1% of all visitors refer one other person
- revenue: conversion should be min. 1-2%

2. Negotiating tips:
- signal when you are transacting
"This is what m company does. Here's the problem we solve for customers."
- learn to sit on both sides of the table (look for a win-win)
- avoid for ultimatums
- consider the whole deal
- think about the longer term
- watch for wanting a deal too much

3. Minding your cash
Check how much cash you have once a week
Do a 3 month cash flow forecast (expect unexpected expenses)
Close your books

4. Put failure in its place
Did I fail to a black hole or is a failure a tool helping me to build a successful business?
Dealing with failure:
- acknowledge the emotional effects: there are ups and downs, like the stock market
- ditch the shame

5. Managing stress
- give yourself a break (it's a marathon, not a sprint, gradually improve your stamina, rest 1 day a week)
- take care of your body (sleep enough, exercise, ...)
- maintain connections
- don't underestimate your mind power

6. Document processes
Everything you do is an experiment: something works well, others not really
How you do what you do
Start with 1 process, interview the people involved (observation is key)
Create a 1 page visual representation of the process
Engage in an IF-THEN exercise
Review the document with all impacted parties

VI. Funding growth
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1.  Understanding capital options
- work from home
- use low cost service
- lease rather than buy
- delay compensation
- use temporary personnel
- barter
Startup financial debt: loans from family, friends, credit card debt, personal loans
Equity investors:

2. Crowdfunding: good place to interact with potential users
3. Pitching investors
4. Valuing your company
5. Reaching a deal: get a lawyer for the company and for you