The purpose of this article.
Outline what an early stage startup requires to understand the potential customers, users and the competition. Too many startups fail because:
- They start to build something (e.g. “a cattle ranch”) and then discover there is no significant market demand (e.g. discover that the potential customers are “vegetarians” and will not every buy, regardless of the changes they make to the sales pitch.)
- They don’t realize the breadth of skills, experience, networks, and tools required to understand customers and users.
You may download a PDF of this article from: Education skills and tools for an early stage startup V1
What is a startup?
A startup is a temporary organization designed to search out a repeatable, scalable, and profitable business model.
A startup needs to organize its knowledge and resources. The founders need to have, learn, or get access to skills, experience, tools, and networks.
There are 12 sets of education, skills, and tool to enable understanding of customers.
#1 Find people to guide and advise you in your journey
The critical action is for the founders to create relationships with people they can learn from. These may include: coaches, mentors, advisors, incubators, accelerators, etc. The challenge for the founders is to find those people who can truly enable success. There is a shortage of talent that can help founders learn how to succeed.
#2 Education and Learning – courses and books
I recommend the Udacity free course “How to build a startup”. This will provide founders with an overall framework on how to organize their knowledge and actions for launching a startup. Take notes. If you don’t take notes, there is limited value in taking the course. https://www.udacity.com/course/how-to-build-a-startup–ep245
#3 Business Model Canvas
The BMC (Business Model Canvas) is the foundation of your startup. The BMC describes the value a startup can offers its customers, why they buy from you and illustrates the capabilities and resources required to create, market, and deliver this value and to generate profitable, sustainable revenue streams. What customer problems are your solving? What customer needs are you addressing? What benefits and value are you enabling customers to achieve?
The BMC is a one-page document. The Udacity course will guide you with creating the BMC and has many examples of the one-page document. The following is a template you may use.
The BMC is the central hub for everything the startups is learning. All the facts, analysis, and assumptions in the pitch decks are from the BMC. All the supporting information is linked to the BMC.
You manage the point-form information in the BMC:
- All assumptions in italics. On day one of launching the startup, it’s likely that all of the entries will be assumptions.
- When assumptions are invalidated, due to input from customers, users, and other fact-based analysis, the assumption is crossed out, with a footnote referencing the document which contains the rationale for invalidation.
- When an assumption is validated, there is a footnote referencing the document which contains the rationale for validation.
There will be multiple versions of the BMC over time. You won’t be able to show all of the invalidated assumptions. New assumptions will be made. Only the most important validations will remain on the BMC. Less important validations will be dropped from the one-page BMC. You may decide to keep an appendix which contains all the of the invalidations and validations.
#4 Interviewing customers and users.
- The Udacity course makes clear the need to interview customers and users right from the start up the launch. The need to interview customers is also outlined in this article:
- Talk to 100 customers before you launch https://medium.com/build-something-cool/yes-you-should-talk-to-100-customers-before-launch-afa1962f5c7
- Some ideas on how to structure interviews and an interview guide are in the following book:
- Chapter 15 “Stage One: Empathy” from “Lean Analytics – Use data to build better startups faster” by Eric Ries. Available on Amazon
- Some thoughts on how to analyze interviews:
- You must do a thematic analysis and code the interview response.
- Possible software to help with interview analysis
- Excel pivot table can analyze the coded interview responses. This should be sufficient in the early days of the startup.
- There are also software packages.
- The team needs to have or learn the skills needed to:
- Plan for an interview. The objective is to validate or invalidate assumptions.
- Conduct an interview. Not everyone has the skills and personality to conduct interviews. Two people should be in an interview. One person is taking detailed notes.
- Produce a one-page summary analysis
#5 Surveying customers and users
- The team needs to have or learn the skills needed to survey large number of potential customers and users.
- Planning for the survey.
- Conducting the survey
- Analysing the survey
- Survey software is helpful to reach out to and analyze responses from a large number of potential customers and users.
- The final outcome will be a one-page summary analysis
#6 Managing the large number of relationships
You will be interviewing, surveying and meeting hundreds of potential customers, users, and others.
You need a process and tool to keep track of these relationships and help you manage them.
- A CRM (Customer Relationship Management) software tool is very helpful.
#7 One-page Gannt chart, showing critical milestones
- You need to have a timeline, showing the future milestones of your startup journey. A one-page Gannt chart should show these milestones. The following is a link to some example one-page charts. https://blog.hubspot.com/marketing/gantt-chart-example
- The following is a link to my article regarding the startup journey. This may give you some ideas regarding milestones, as well as the Udacity course. https://koorandassociates.org/the-startup-journey/what-does-the-startup-journey-look-like/
- The milestones and time frames may well change often, as the startup validates the BMC.
#8 Your startup is a project.
Project management processes and software may be helpful. When there are just a few founders, the very early project management may consist of:
- The one-page Gantt chart with milestones, likely done in a tool like PowerPoint.
- One page showing key tasks for the next 7 days.
- A meeting at the beginning of each day to outline what will be done that day.
- A meeting at the end of the day to discuss learning and issues.
#9 Collaboration is needed, especially with teams not in one physical location.
- Collaboration may include: working together on documents and sharing them, messaging, team meetings (phone and video), virtual whiteboards, etc.
- Collaboration may occur among the startup team, advisors, and others.
#10 Monthly cash flow forecast
- The cash flow forecast helps the startup identify what is being done with cash, where revenue will come from and when additional cash is required from the founders, friends and family, governments, or 3rd party investors. The founders need to ensure the startup manages its cash to survive.
- The monthly cash flow forecast will be detailed. It will be summarized in one page.
#11 Virtual data room
- The startup will be generating a variety of documents with many versions.
- These need to be organized into a single data room, shared among the startup and 3rd
- It’s crucial that each document’s file name contain the date the document was created or last modified. The content of each document must also contain the date and page number, to enable discussion among the startup team and 3rd
- The data room must also be backed up.
#12 Creating presentations, documents and videos
The startup will be creating presentations, and videos. A single set of integrated tools is helpful.
Your next steps
- Find people to and advise you in your journey. They could be mentors, incubators, accelerators, etc.
- Create your plan to understand your potential customers.
- Determine and acquire the necessary education, skills, and tools.
- You are focused on creating five one-page documents:
- The business model canvas, which describes what you will build to solve customer and user problems.
- One-page summary of customer and user interviews – identifying and validating customer and user problems.
- One-page summary of customer and user surveys – validate or invalidate of the assumptions regarding customer and user problems.
- One-page Gannt chart illustrating what you will accomplish and by when.
- One-page cash flow summary illustrating the cash needed to accomplish the milestones in the one-page Gantt chart.
- It’s likely that you may replace many of the tools as your startup grows and transitions to a business. It is not appropriate to have the tools needed to run a billion-dollar global company on the first day that you launch your startup.