Whether you have incorporated or not, the first steps to getting started involve figuring out what you plan to do as well as how you plan to go about it.
This section answers questions on where to to go looking for ideas. How do you figure if it has potential and how to build evidence of existance of market. This will be able to get you off the ground and into the market.
Very often aspiring founders seek out ideas for their business. We often hear people at our meetups say – ‘I am looking for an idea to pursue’. An idea is a wrong place to start.
Almost every business that is out there is a solution to a problem. We have gotten into the habit of calling this solution – an idea. The genesis for any startup is from the identification of a problem.
Problem identification is probably the most crucial part of starting a startup. Unfortunately, it is also something on which people do not spend a lot of time. Most people identify problems from personal experiences.
There are two types of problems that you can identify. I would refer to these two kinds with the help of an analogy that someone had once provided to me – Businesses are either pain-killers or vitamins.
Pain-killer as the name would suggest is something pressing that needs a solution. Is the problem that you plan to tackle pressing? Are there few to no alternatives available for issue that you plan to address? Are the existing solutions extremely poor? If you find a problem of this kind, you have a business that can be a pain killer. You need not sell your solution too hard. You just need to able to offer the solution to a customer who is in need. These are the kinds of thing for which you need not incentivize the users to change their habits. They will happily do the same.
Eg. – Think about E-Mail for a moment, the alternative was to send a post which would take days to reach the other end. When E-Mail was offered as a solution, no convincing was required. It was a clear pain killer.
By comparison, Vitamins are those solutions that sound good but are not really things that one cannot do without. This in turn results in getting into a place where you are required to convince, sell and even incentivize the other person to buy the solution that is being offered.
Eg. – E-commerce in India today has penetrated and created a space for itself. Even so, almost none of the people who utilize e-commerce are willing to pay for the service that is being provided – Delivery. It is a convenience but not so great that you see the value immediately. (This is a highly simplified way of looking at it, but it should get the point across.)
The first step to building a good business is to find a good problem. The only way that you know that you are onto something good is by actually asking the people who face the problem.
VALIDATE THE PROBLEM.
Often we tend to assume a large number of people face the same problem just because the problem afflicts you does not mean everyone thinks that it is a problem. It is important to find out if the problem is for real. The best way to do this by asking the people you wish to serve.
This will vary vastly depending on whether you are targeting a B2B customer or a B2C customer. In the case of the former it is important to find ways to engage with people across the spectrum of the organisation in order to understand those who feel the pain as well as those who take the buying decisions. Whereas in the latter one needs to be engaged with the consumer. Talk to people you do not know and ask them if the problem is real enough for them to want to spend money to solve it.
This will make it clear to you if the problem is real or not and also how much value resides in solving it.
This probably more critical than figuring the problem out. If you are selling to the wrong people you are quite certainly going to face a lot of disappointment. Knowing who to sell to is just as important as knowing what to sell.
Every entrepreneur starts with a hypothesis of who the customer should be. Such as – Students seem to face these problem and they would find it really useful; People who travel a lot tend to have this issue, my product would be able to solve it.
Part of the validation process is to verify this hypothesis and also to create new ones with regards to the type of people who face the problem and need the solution. In this process of elimination you need to find the segment that feels the pain the most and target them first.
Birds of a feather flock together. This is the real reason you should go after a very specific and highly defined market. Even though in total size it may be small, it is easier to target.
When you are starting from zero, even one customer can make a lot of difference, hence market size does not really matter at this stage.
Since your bandwidth in terms of team and resources is also low, it makes sense to focus on a specific group that is easier to access.
Targeting college students is easier than targeting all students; which is still easier than targeting everyone between the ages of 14 and 30.
Don’t bother too much about market size at this point, build a product and go after a specific audience. Build something that they just cannot say no to. If you start hearing ‘No’s’ too early then you know that there are problems with the assumptions you have made.
As much as possible, try not to spend anything on marketing and using below the line (BTL) techniques to acquire customers.
Micro-payments was a big theme and a big problem in India back in 2010. A very specific segment that was facing the problem the hardest were pre-paid mobile users who used to recharge small packs – Rs. 50. Paytm, Freecharge, etc. targeted this specific user and built their initial user base.
Imagine the market size of those who made small recharge and had phones that could support apps. Smartphones were not as prevalent back then. It was a small market but expanded as time went along.
Find the smallest segment that you can cater to, in the most meaningful way. That has to be your starting point.
Understandably during the early days most founders are tight on cash. Once it is important to use any form of Below the Line marketing to drive early customers.
Any form of marketing that does not utilise traditional media and/or mass media is considered below the line marketing.
Forms of BTL marketing include:
– Social Media Marketing (Unpaid) – If you have a social media asset that is able to garner a great deal of interest, it can be powerful tool to market your offerings. When you start out, you obviously will start by inviting friends and people known to you, but the need/solution will define how widely it gets shared and how much it drives people to you
– Email Marketing – Perhaps the most boring form of marketing; Email marketing is actually still very effective if you ensure that you maintain a clean database and reach your consumer by acquiring their permission.
– Content / Blogs – Content is the new oil. We are living in an attention economy and all forms of social media is about acquiring the attention of the person. Good content can provide invaluable engagement and sharing. Blogs, sites like quora, etc can be powerful tools to promote yourself if you have good quality content to offer.
– Pamphlets / Brochures / Paper Inserts – Very cheap and very powerful. Bulletin boards in cafes and restaurants, apartments, schools, etc. are seen by many people. One of the entrepreneurs I know used to leave his pamphlets at the reception in all of the offices he would visit. Did not matter if it was a customer or an investor. He landed his biggest investment when an investor discovered his pamphlet at one of those offices!