Flawed Business Advice is Everywhere

Aspiring entrepreneurs are often seduced by the idea that starting a successful business is a linear path from A to Z. Reasons are many - education, mainstream media, and articles written by people without any real business experience.

Don’t get me wrong; it would be awesome if we could plot the path and ride it till a successful IPO! In reality, building a startup is messy and unpredictable. Rigid step-by-step plans rarely survive first contact with customers and you need an iterative approach with a hint of scientific lense rather than a step-by-step plan.

As Mike Tyson famously said - "Everyone has a plan: until they get punched in the face."

Let’s look at the typical advice you'll find on many generic websites focused on entrepreneurs and building businesses, like Entrepreneur.com, and why it is flawed and can get you into trouble.

Not good advice

It typically looks like this summary: Here are the 12 steps to start a business:

1. Evaluate yourself to determine why you want to start a business and what type of business matches your skills, passions, expertise, and lifestyle.
2. Come up with a business idea by looking at emerging technologies, fixing things that bother you, applying your skills to new fields, or providing something better/cheaper/faster.
3. Do market research to see if anyone else is already doing something similar and why.
4. Get feedback on your product or service from people outside your network.
5. Make it official by choosing a business structure, registering your business, getting licenses/permits, trademarks, etc.
6. Write a business plan to outline your company description, market strategies, competitive analysis, product development plan, operations, and financing.
7. Finance your business through bootstrapping, investors, grants, crowdfunding, bank loans, or other sources.
8. Develop your product or service, potentially outsourcing tasks but retaining control and implementing checks.
9. Build your team by stating goals clearly, following hiring protocols, and establishing a strong company culture.
10. Secure a location for your office or store based on demographics, accessibility, infrastructure, and costs.
11. Get sales by listening to customers, asking for commitments without being pushy, accepting "no," and making sales a priority.
12. Grow your business through marketing campaigns and customer retention strategies.

You see, the thing that's wrong is that it takes you about 12 steps to get your “thing” to the market to find out that most likely nobody wants it. I mean, damn, this is criminal!

It should not be allowed to give people such bad cookie-cutter advice.

Better approach to new business

The 12-step plan above reflects outdated thinking. It focuses almost all of your energy on internal activities like writing business plans, getting financing or trademarks and not enough on engaging directly with the outside world. You should never waste months crafting intricate strategies or building elaborate infrastructure, let alone hiring people and establishing LLCs.

Make it easy on yourself and talk to customers ASAP. Run small experiments to validate ideas. Seek external data to reduce uncertainty and be flexible - it means adapting your idea, changing it, and looking for new ones. That’s the correct cycle to start with.

The Lean Startup methodology pioneered by Eric Ries provides an ideal framework for launching new ventures. Instead of perfecting a product in isolation, you should take a "minimum viable product" (MVP) to market as quickly as possible to test assumptions and get real-world feedback. That's the only feedback that counts!

This build-measure-learn loop will automatically help you adapt to customers' needs.

Sure, passion and conviction are important, but combining them with curiosity and scientific rigor is even more powerful. A good way to think about it is that you want to build your startup like a scientist runs experiments (flexible), not like an architect designs buildings (rigid and slow).

One more great thing about build-measure-learn is that it will serve you forever. I really mean forever. Even the largest businesses use build/measure/learn constantly to stay resilient and relevant.

When you’re small, try to go through the cycles as fast as possible. You should care more about speed than a perfect plan. Move in loops, not lines, and your odds of success will dramatically improve.

I wrote more about Lean Startup in - 9 Concepts from Lean Startup Book and also in 5 Frameworks for First Time Founders.

If you’re not sure how to start in the most effective way, just sign-up for the advice published in my newsletter;

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Till next time...