Latest / The Life-First Solopreneur / 46. A List of Things to Keep In Mind While Planning Your Company Of One
Transcript
- Carly Ries (00:00): Figuring out who your customer is takes a lot of time. You need to do your research. You need to interview people. You need to look online, find the forums. We're going through it fast, but it can't just be the idea of who you think they are. It has to be actually well vetted, well-researched so that you know that's who you're targeting rather than just a hunch. Intro (00:18): Bigger doesn't always mean better. Welcome to the One-Person Business podcast where people who are flying solo in business come for specific tips and advice to find success as a company of one. Here are your hosts, Joe Rando and Carly Ries. Carly Ries (00:36): Welcome to the One-Person Business podcast. I'm one of your hosts, Carly Ries. Joe Rando (00:40): And I'm Joe Rando. Carly Ries (00:42): Today we're going to continue our series on the Solopreneur Success Cycle. Just a reminder, these episodes can be consumed individually, but we highly recommend listening to the entire series to get the most out of it. You can find the links to previous episodes in the series, in the show notes, or you can start listening to episodes 26, 28 and 30. Last week we discussed how to envision your business. We're going to build upon that today and dive into actually planning your business. Joe, why don't you take it from here? Joe Rando (01:09): Alright, so you found the intersection of your skills and passions that you think you want to pursue, and that's awesome, but you don't have a business yet. You just have an idea. In this step, you're going to plan your business and be forewarned, you may find it doesn't work and need to rethink it, but that's okay. It's better to go back to the drawing board than to start building a flawed business. I'm going to use a couple of tongue in cheek examples here to keep it light. Carly Ries (01:36): We're going to go back to the ferrets again. Joe Rando (01:39): I never had a ferret, but I don't know, sounds like fun. So the first thing we want to talk about is defining your product. To do that, you want to start with what problem are you solving? You want to think about the problem you solve at a base level. Why do people need what you provide or plan to provide? Let's give a couple of examples. The first one, people can eat fast food burgers when they drive, but they can't eat pizza safely. But I believe that people want to eat pizza while they drive the same way they eat other fast foods when they drive. So that's one, that's a problem. Not one I've ever run up against myself, but. Second one, ferret owners want portraits of their pets, but animal portrait artists won't do ferrets because they're too hard to handle. Another problem. So now you've defined your problem. Let's go on. What are we going to sell? Is it a physical product, time? Carly Ries (02:35): Joe, do you mind if I jump in there really quick? In terms of figuring out the solution you solve, this isn't just for this phase of your business. You'll be referring to the problem that you solve in all of your marketing and all of your pitches. That really is the core of your business. Your messaging is going to revolve around it. So don't take it lightly because nobody will care about what you actually sell. They'll care about the problem that you solve. So really dig into it Joe Rando (03:02): Said like a true marketer. Thank you. (03:06): Okay, so what are you selling here? Is it a physical product? Is it your time? Is it content? What is the actual product? Solving the problem, right? And as Carly said, you're going to want to talk a lot more about the problem you're solving than about the product itself. Let's use our two kind of silly examples. The first one, I make pizza in a cup. It lets people eat pizza safely while they drive. Or I'm a ferret expert and talented artist, and I paint portraits of ferrets. This is what's being sold by these two potential businesses. That said, you have to think about who's your customer? Who are you selling it to? If your answer is everyone, definitely go back to the drawing board because targeting everyone means reaching no one. Focus on some kind of niche. For the first example of the pizza guy, I sell to people who want pizza while they're driving, particularly to and from work. (04:04): Or, I sell my portrait painting skills to ferret owners that wish to create a lasting memory and family heirloom of their wonderful pet ferret because they love their pets. Very good. We've definitely defined a couple of niches there. The next question, defining your customer. Where are they? For the first example of the pizza in a cup, they're driving by my kiosk near the Route 95 exit 23 highway on ramp. Great. So we've got a geographic specification that's really great for a lot of businesses. You specify a geography that you're serving. In the second example, another geographic example, they live in my home state of Montana and they are visiting ferret websites. Okay, good. So we know where these people live and where they go on the web. Next question, how are you going to reach them? In the first example, I will have a sign on my kiosk visible from the road that says, "Eat and drive, pizza in a cup." I guess that gives the message. I can eat my pizza and drive safely. Or for the ferret guy, I will advertise on ferret websites and ferret Facebook groups targeting users that live in Montana, assuming that that person lives in Montana. Carly Ries (05:13): Let me just dive in here really quick. We're going through this pretty quickly just for podcast sake, but figuring out who your customer is takes a lot of time. You need to do your research, you need to interview people. You need to look online, find the forums. We're going through it fast, but it can't just be the idea of who you think they are. It has to be actually well vetted, well-researched so that you know that's who you're targeting rather than just a hunch. Joe Rando (05:36): Definitely, we will definitely cover that shortly. So next, you have to define your competition. Again, you got to make a list. And if you think there's none, think again. How are people solving the problem? Now you have to be honest with yourself about this because it's uncomfortable. The question comes down to if they can't get a of their ferret painted live, maybe they're sending a photograph of the ferret to an animal portrait artist who's then painting it from a photograph since the artist can't handle the ferret. The pizza in a cup people, well guess what? They're eating breakfast sandwiches or burgers or whatever. So you do have competition and you have to think about that and take that into account as you build your business. As you do that, then ask yourself, how do you compare to the competition? Do you have the skills and resources to deliver a product in a fashion that's going to compete? (06:29): You have to be honest about this. Again, are you average, better than average, worse than average? If you don't have something that lets you shine above the competition in some way, try rethinking the plan to make you the best or at least above average. In the pizza comparison, again, competition is not other pizza places, it's fast food, breakfast sandwiches in the morning and burgers at lunch and evening. But some people really want pizza. So we have ourselves a niche. In the case of the artist, my competition is animal portrait artist that will work from a picture of the animal because they can't handle ferrets, but I'm the only one that'll do it live. Some people will truly appreciate the authenticity of a portrait painted from the subject and not a photo of your ferret. Then you have to ask yourself, how are you priced compared to the competition? (07:16): Important here, while being a low price leader can be a really big competitive advantage, it's only practical if you have some way of delivering the product at a lower price than your competitors. Otherwise, you're just basically going to wind up losing money. So think through how you're going to compete. There's lots of dimensions there, it depends on what you're doing. But a very important aspect of this process of planning is to understand how you're going to deal with the competition. So now we've got that done. Now you need to define your business. (07:47): First. What makes you special? We've identified the competition, we've identified how we're going to compete. How do you define that way that you are special in a way that can be conveyed very easily? For the pizza guy, "Provide the only pizza at exit 23 of Route 95 that can be eaten safely while driving. " (08:11): Or "I am the only live ferret portrait painter in Montana." Good niche, but again, you've defined your market position, this is where you are and you aren't anywhere else. That's what you're doing. Now we move into the details. We've got the kind of big picture, the 20,000 foot view of the business. Now we've got to get into the details. First is what are you going to name it? What are you going to call it? You need a name for a legal entity as well as to tell people what you do, or at least distinguish yourself from those competitors. Try to have fun with that. Then you have to ask yourself, what do I need to do to set up this business? That can vary on the type of business. I won't make an exhaustive list here. We'll probably talk more about this stuff in the actual next podcast on this subject, which is on setting up the business. But things like incorporating. The pizza guy might need to sign a lease for that kiosk at exit 23, Board of Health permits, equipment. The ferret painter must set up a website and find a way to capture leads and have a lawyer draft a contract. There are all these things that need to do, and you want to have at least an inkling of this before you start the next process. Carly Ries (09:35): I want to dive back into the business name really quick and then we'll continue down the list. But for the business name, you can think of something fun. It can do whatever you want, but depending on the business you're going in and the competition, you also should consider, again, speaking from a true marketer, search engine optimization. Will people know what they're talking about? Is somebody else with the name? It could be a fun name, but you may want to think of a name that will also benefit your business too, in terms of marketing and in terms of people understanding what you're doing. I just wanted to throw that in there. Joe Rando (10:07): That's a great point because some names aren't easy to search on Google because they're too generic. I always think about that email client product, "Hey". It's clever, but boy, when you Google, hey, it can be tough. It can be a lot of work. They have a big budget and probably are doing fine in search engine optimization, but if you're not, you definitely don't want to not show up when somebody searches for you, Carly Ries (10:36): Right. I'm glad we agree. It could be fun but also let them know what you're doing as soon as you can. Joe Rando (10:44): Going back to kind planning the details, or at least envisioning the details so we can go to the next step. What are all the different jobs involved in running the business? Make a list of the different jobs. You want to look at those. First and foremost, you want to go through to make sure you understand the scope of what you're taking on. You also are going to want think about which ones you may want to outsource. You might not want to do everything. Bookkeeping and taxes is a great example of something that's certainly often left to a professional as opposed to somebody that's trying to run a one person business. But there are lots of places where these things can be outsourced. So it's good from that perspective. Also, as we heard from Zane Tarence in the podcast about selling your business, having this kind of a perspective can really help you when you go to sell because the potential buyers can understand the scope of the business and what it's going to look like as they expand it from a one person business. (11:39): A lot of good reasons to do this and kind of maintain that list going forward. The next thing is, what will you need to run the business in terms of what's your day going to look like? What will you need to devote to this? Let's go back to our example. From the pizza in a cup, I will need to be in my kiosk from 6:00 AM to 7:00 PM every day. I'll need to prep my pizza on weekends and freeze it for use during the week, and I will do my bookkeeping every two weeks on the weekend. With regard to the artist, I will collect a deposit and then travel to ferret owners' homes and spent four to six hours painting. Then I will take the portrait home and finish it off. Finally, I will deliver to the owners and get a final payment. (12:25): So that's kind of what the business looks like. Once we do that, we got to start thinking, "do we see any non-starters"? Let's look at the whole big picture. Now that we've kind of defined this thing and gotten a little bit into the details, jdo we see any non-starters? From the pizza guy perspective, the schedule will be grueling, but I will eventually offload the pizza in a cup production to a contractor. Then I'll use my profits to automate the kiosk. Then I will only have to fill the kiosk with frozen pizza in a cup every day and deal with malfunctions. So this person has a vision for how this business is going to become a lot more hands off, which makes sense because the schedule that was defined in the last section would burn somebody out pretty quickly. Now let's look at the ferret painter. (13:11): Only 0.27% of households own ferrets. He found out from doing research. If I need to do three ferret portraits per week and I get 10% of the ferret owners in my area to use my services, I'm going to need to cover an area of over 550,000 households per year to fuel my business. Since I live in Montana, I'll need more households than is in the entire state. I think there's about 450,000 households in Montana, but I don't like to travel. If I use pictures of work from home, I'm just like everyone else. Maybe it's a bad idea. Here's somebody that's gone through this process to find the business and come to the conclusion that it's probably not going to work for them, at least not in the form that it's currently imagined. So, once you've got your business fleshed out enough to be able to talk about it intelligently and you've decided that it's worth pursuing, talk to potential customers. (14:05): Get some feedback. That way you can talk about it from a realistic perspective, not just, I got this great idea, I'm going to put pizza in a cup, or I'm going to paint ferrets, or whatever. You've got a business that you can talk about in a somewhat fleshed out way and get feedback from people and you can process that feedback and those suggestions and concerns in a context of saying, "Gee, how's that going to impact what I think I'm going to be doing?" Make sure that your idea is fleshed out in a way that as you modify it, based on what you learn from your market, it's still going to work. Carly Ries (14:43): That can be kind of a nerve wracking phase. To talk to customers and actually hear the truth and everything. But it's something that people need to get really comfortable with because it's not just going to be in the planning phase. You are always going to be wanting to talk to your customers to get feedback throughout your business. So just start getting comfortable here. Joe Rando (15:00): Such a great point. It's so uncomfortable for a lot of people. It's scary. You don't want to hear negative stuff. You're going to seek out people that you think are going to say nice things and not tell you the truth. So watch for that. Also, and I've talked about this before, but there's a certain portion of the population that thinks their idea is so amazing that if they tell anybody, any living soul that's going to get stolen. Don't fall into that trap. Businesses are much too hard to start and get up and running and be successful for people to just go and steal your idea. That's not going to happen. Get feedback, get feedback, get feedback. Now let's say we're at the point where we've got a plan, we've vetted it with people, we feel good about it. You've got to ask the question, and obviously you've got a general idea that you think you can make this profitable, but you better get detailed now. (15:55): Now that you know how the business is going to run, you need to get detailed. You don't want to start off with a plan, execute the plan. Everything goes according to plan exactly the way you wanted it and you don't make money. You've got to make sure that the plan that you wind up with as you go through this process is going to be profitable and profitable enough to make you want to do it. To make sure that what you're trying to do has the potential to be profitable, you got to think about the fact it's going to cost money to get started. You're going to need some equipment or legal fees or whatever it is, and you're going to take some money to get it profitable, get it up and running. You've got to think about that. This is a difficult exercise for a lot of people because there are a lot of things to think about and what they cost can be sometimes not a hundred percent clear. (16:40): Using spreadsheets and things isn't always comfortable for some people. This is a place where investing in an accountant, a business consultant, or a certain financial planner, could be really helpful to make sure that you're on a good track here. Maybe if you're not, figure out some ways to tweak the plan to make it so that you are. I really think this is a good spot to get some outside help. Once you know what the numbers look like, the last question, at least in this section is planning how are you going to fund your startup? How are you going to get the money to get what you need to get started? How are you going to fund yourself and your life and your business as you grow it into profitability? Hopefully you have enough tucked away to do this and it's not a problem, but it might not be. (17:26): You may need to go to friends and family or the small business administration. There are lots of information on that that's beyond the scope of what we're going to talk about today in terms of the SBA. But depending on what you're doing, that could be a good resource. This is the process of planning. This is a very difficult, challenging thing to do. And so worthwhile. So worthwhile. I have started a number of businesses over the years. I have literally spent three months planning a business because I've not spent time planning a business and been sorry. So I highly recommend that you work through this. I think you'll be glad in the end that you did it. If you find that you don't want to go forward and that makes you sad, I understand. But nothing will make you sadder than going into a business that doesn't work out. So thanks for listening. Carly Ries (18:21): Well said. We will be back next week with another part of this series. And if you like what you hear, be sure to visit lifestarr.com/podcast to listen to previous episodes. Or you can find us anywhere you subscribe to your shows. We'll see you next time. Closing (18:40): You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes running a one person business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures. At LifeStarr, we're creating a one-person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com