The First 100 Days of Starting a Company

Posted by Robert Norton on

The journey from idea to launching a successful company is a long and arduous one requiring thousands of good decisions and skills very few people possess. In fact, few people even know what those skills are and could list them. Even many successful Entrepreneurs who do it by nature, gut and experience lack an understanding of the process and cannot teach it to others. Teaching it requires a whole other level of analysis and awareness to document the process.

Most people that start companies have no clue how hard it will be to climb the mountain of corporate success. Almost no one has the skills needed when they first start. They are learned along the way and always have a price. The ones that survive are the tenacious, the creative and the smart that rapidly adapt to the feedback from the market and zero in on a product-market fit that is compelling. As well as messaging that makes for successful marketing. This can take many months, or even many years. However, the way to shorten this for sure is to spend the proper time up front researching, designing and planning a product, service or hybrid offering that is unique and bring high value to the customer. For this to be sustainable you must also design in some barriers to entry, which means “Sustainable Competitive Advantage”. There are literally hundreds of ways to do this and hundreds of potential niches for any product or service in general. The trick is seeing these and selecting the best ones where you can enter a market without any direct competition, not attract the attention of larger players that could copy you and crush you by scale of marketing and methodically add other target markets, niches or products with the cash-flow generated by your first offering. Few companies will survive long-term on a single product unless they have some lock on it via a patent or through distribution.

Our university education system does not teach these skills well and successful Serial Entrepreneurs who figure this out rarely teach others or document their path to success. The retire on a Caribbean beach or do their next one. 

Most entrepreneurial education out there today is anecdotal and about isolated parts of a journey instead of a comprehensive framework for success. Pitch events, webinars with stories, looking at past successes from the outside, without insider information on what it took to get there.

No amount of interviews with Richard Branson, Bill Gates or Elon Musk will prepare you for this journey. Or make you into a top Entrepreneur. It requires years of study and experience. Anecdotal learning is good but does not provide the roadmap needed for success. A disciplined process is needed.

Even top MBA programs lack the practical tools and experience needed, and generally focus most on the financial aspects of companies and strategy. Elon Musk has stated there are “too many MBAs running companies today”. They are usually obsessed with numbers instead of the product and customer experience. And the marketing needed to scale well. They do not have the focus on the innovation and customer value creation that is necessary to create a successful new enterprise. And are often not the most creative people. Innovation and good marketing are the root cause of success and good numbers. Financial results are the after effect of good product, positioning and marketing combined. No focus on financials will ever create a good customer experience, strong word of mouth or strong differentiation.

This is why The CEO & Entrepreneur Boot Camp was created. To arm Entrepreneurs with the practical training, tools, models and roadmaps needed to build a valuable enterprise. This article will discuss the steps needed to design a successful business, where most fail early on and do not know it and go on for months or years in the wrong direction, doomed to bankruptcy.


This article is about the first 100 Days of a venture and designing the business. Ignore this process at your own peril! No one can skip this process and expect to be successful.

Even top MBA programs lack the practical tools and experience needed, and generally focus most on the financial aspects of companies and strategy. Elon Musk has stated there are “too many MBAs running companies today”. They are usually obsessed with numbers instead of the product and customer experience. And the marketing needed to scale well. They do not have the focus on the innovation and customer value creation that is necessary to create a successful new enterprise. And are often not the most creative people. Innovation and good marketing are the root cause of success and good numbers. Financial results are the after effect of good product, positioning and marketing combined. No focus on financials will ever create a good customer experience, strong word of mouth or strong differentiation.

This is why The CEO & Entrepreneur Boot Camp was created. To arm Entrepreneurs with the practical training, tools, models and roadmaps needed to build a valuable enterprise. This article will discuss the steps needed to design a successful business, where most fail early on and do not know it and go on for months or years in the wrong direction, doomed to bankruptcy.


This article is about the first 100 Days of a venture and designing the business. Ignore this process at your own peril! No one can skip this process and expect to be successful.

 

A systematic effort has been going on since about 1989, when I first became a CEO, to collect all the best practices of entrepreneurship and organize them into a comprehensive framework for launching successful companies. No doubt this desire for structure comes from my training and experience as an Engineer having spent the first eight years of my career developing software products. The state-of-the-art has been pushed not just by curating all the best ideas, models and systems but also by inventing tools and models that help Entrepreneurs get over high risk areas of creating new businesses. This mindset and discipline says there is always a way to organize and improve processes to make success repeatable.


This entire entrepreneurial journey is always a marathon, never a sprint. It will generally take five years or more. And must be planned out and the entrepreneur must gather the collective talents of several key people, and skills from many more to create any company that has a chance to grow rapidly. And change the way things are done in an industry or niche or invent a totally new way to create value for customers (disruption).


This diagram shows the entire journey but in this article, we will cover only the “Business Research & Design” portion (oval on bottom left). This is where the magic happens that can set you up for success and too many people think they just “know this” when they cannot without doing the work. I think at least 70% of failures happen in this stage by deciding to build the wrong business (model) and wasting all the Entrepreneur’s time and money going in the wrong direction. Often for years!

Of course, the time to complete this will vary based on the team available, full or part-time attention and many other factors but with a full-time effort it is likely you will need no less than 60 days and more likely 100+ days to perform all the needed tasks to prepare. Short cutting this to try to get to revenue quicker is essentially a form of slow suicide. It is why 85% of startups fail and forty-three percent fail because they build a product that there is no demand for in the marketplace. Unless you lived in the industry, as the prospect, and have been thinking about this for years you will need to do all these steps to guarantee success. Some will be quick and other very time consuming depending on your knowledge and experience in the field.

This first stage is where you validate what the market wants and needs and begin designing a business model (not just product) that can generate a profit from solving the problem.

The order in which these are done can vary, and in fact the cycle here is iterative and requires repeating. However, as you have more and more information and team talent looking at the problem (input) the speed at which you can cycle through this will increase dramatically.

Idea/Problem

The first thing to understand, that is a common misconception is that ideas are literally worthless! Ideas cannot be patented or protected, so by definition they have zero economic value. You cannot get financing for any company based on only an idea. This is a naive and false belief. It waves the big red flag saying “I am an inexperienced amateur so please do not finance or trust me”.

A company only gets a valuation to invest in after you have developed a plan, team and/or product offering. Never try to sell an idea alone. You will fail 100% of the time. You can prove an idea is worth nothing by looking at the royalty on patents. A patent is a “protected idea”. One you have an exclusive right to use. A way to prevent others from doing the same thing, though they may accomplish he same result in different ways. Even if you have a patent you will likely only get two percent to five percent of the revenue on that patent. This is a typical royalty. Ninety-five to ninety-eight percent of the revenue will go to the team, investors and other stakeholders in the company to produces the product and delivers it to the market.

The first step is making sure you have a problem that enough people struggle with, and causes enough pain to be worth paying money to solve. And hopefully being able to find the people with this problem easily. This may change and evolve but must do so early on before product development starts really. It will define the “Core” of the vision which should almost never change. It is what James Collins, the Author of Good To Great, calls “The Hedgehog Concept”. You can invest money and time in this because you are certain it is a huge problem worth solving. This is mathematical proof that an “idea” is worth virtually nothing. The CEO Boot Camp teaches several ways to rank and evaluate business ideas objectively. And many ways to turn bad business ideas into better ones.

Market Research

Market Research means gathering all the data on the space, potential customers and alternative solutions to this problem, so you understand the scale and need of the solution and its potential market size, as well as many other things. It also means understanding the trends in the industry and developing a vision of what the future will likely look like, especially if you can create that future.

This is one of the most time-consuming steps in the phase of business design, as there could be literally hundreds of companies, products and solutions out there already that are either directly related or a partial solution to “your” problem and idea. Market research should always guide both product design and business model design. Hence this needs to be done early.

Competitive Intelligence

This is about gathering all the data you can on current competitors, and understanding how they offer and deliver a solution. Some may be tangential to your offering, but these are still important. Of course we can never know about others already operating in stealth mode or in a garage somewhere. However, we can be well informed. There is no better way to kill an investor’s interest that to not be aware of a close competitor.

Every business has competitors, even if it is just do nothing and live with the problem. That also has a cost or price associate with it. Good Entrepreneur know their space better than anyone.

Restaurants compete with supermarkets that have prepared food. It is foolish not to understand all the possible solutions to the problem you want to address. You need to fully understand their pricing, marketing, messaging, target market (niches or verticals) and exactly how they market to, sell and close customers. The more data you have the more you can design your business to be differentiated and to beat their offer for some well-defined market segment (niche). And every startup must start with a niche. No startups should ever compete in a large market on day one. This is another false belief perpetuated by “success stories”. Believe me every success started in a niche. Facebook = universities, SalesForce.com = traveling salespeople, Tesla = High-performance, electric (green) car, etc.

Competitive Strategy

This is about positioning your company to be 100% differentiated. Ideally no one should be able to say (truthfully) exactly what you say about your value proposition. “Differentiation” is literally the most important criteria for a successful company for many reasons. A great example, true when they started, but not now, is Federal Express is embodied perfectly in their original tagline: “Absolutely, Positively Overnight”. They created the first real overnight delivery service.

All good things flow from being differentiated: pricing power and profits, lower marketing costs, cooperation of distribution channels, lower sales costs and free word-of-mouth advertising. The competitive landscape map is the key tool to show this visually for both design and communication of your market positioning. Without differentiation you have a very weak business. One that will not attract capital or quality people either.

Business Model Design

I believe this is the most underestimated and ignored part of this phase of a business’s birth. This is an art. Most people try to overlay some existing business model they saw elsewhere on their new business. Big mistake! If you are truly differentiated you should have a completely different, customized, business model, pricing and value proposition to offer the customer. Something that no one else can provide. Hence, you should be able to charge more because no one else does that same thing (in that niche market at least) as well as you will/do it. This is art and requires both vast experience in business and creativity. And that is why most fail here.

Marketing and Branding

Of course, this is really two things, but you are doing a “quick and dirty” job of it at this stage. Just a stake in the ground to narrow the company’s focus and assumptions so you can cycle through this process multiple times, successively getting better each time. I believe one of the most valuable things you can do at this stage is develop a brochure to show prospects to get feedback, ideas and to validate the need, and the price you can charge for solving this problem.

Of course, marketing is an art (subjective) and your work here will depend on the talent you can tap. This step will also help determine what specific messaging resonates with the prospect. As companies can fail and succeed on good messaging alone sometimes. Often the Entrepreneur is too close to their own product to do this work and requires outside perspective and talent. Hence the existence of marketing and advertising agencies.

A quality contractor with strong marketing experience, not just advertising or online marketing, is worth their weight in gold here. They should be someone that understands marketing, branding and direct sales also. Most graphics design people call themselves market but they are just graphics designers. Few understand marketing, sales and branding. This usually requires a career with ten to fifteen years’ experience in the marketing field.

Risk Mapping, or Analysis

I have developed a proprietary tool for this process using concepts developed in other highly valuable tools called the Risk Landscape Map™. It is the first thing I apply to prospective angel investments in my mind. It shows visually where the risks are and where the company cannot control those risks and allows the business model to be adjusted to de-risk the business model. It is quite simple but surprisingly not taught in MBA programs. I lectured on it to MBA classes back in the 1990s when I had just invented it. It answers the question: Is this business in the control of the Entrepreneur, or dependent on many factors outside of their control?

Team

In startups everything comes down to the key team members. A good team will turn a bad idea into a good one and succeed. A bad or mediocre team will fail at executing even a strong idea. Recruiting the right team is also an art that requires ether great experience and talent or lots of trial and error. No one will be successful at hiring one hundred percent of the time. However, the right mindset, process and skills can get you to eighty percent success rate. Hiring fails can kill startups. So, lots of effort must be put in up front to ensure you have the right people. With so few people on the team one bad hire can doom a startup to failure.

Intellectual Property

Every company, without exception, should have a plan to develop and protect its intellectual property (IP). I would estimate about eighty percent of companies fail miserably here. They fail to understand the value of their IP and protect it property, letting their hard-earned knowledge leak out into the world to their competitors who will use it against them. Understanding patents, trademarks, copyrights and trade secrets is a key skill set every CEO and Entrepreneur must learn early on in their career. Failing to do this well, and design this into your business model with certainly cost you millions in lost revenue and profits.

Summary

Each of these steps, really each is a process, can make or break a startup company. Few, if any, Entrepreneurs possess all the skills and experience to do all these things. Even after thirty years as a CEO and Serial Entrepreneur I would never attempt to build a company without bringing on highly experienced people that know far more than me in areas where I am not expert.
So now you have a roadmap to design a business that can grow. This is just the start as doing these things requires experience and talent, not just book study.
Check out the full video tour of The Entrepreneur’s Journey here. Taking The CEO and Entrepreneur Boot Camp is the best way we know to at least triple your chances of success launching a company. We believe it is better than getting an MBA because it is faster, cheaper and more practical. I hope to meet you there someday in our online classes and coaching sessions.

 

Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
Call (619) SCALE06 or email info@AirTightMgt.com for a complementary strategic consultation.

Share this post



← Older Post Newer Post →


0 comments

Leave a comment

Please note, comments must be approved before they are published.