A creative’s guide to starting a new business

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Have an idea but don’t know where to start? Here’s a step-by-step guide.

This guide was originally published in The Creative Independent, a resource of interviewswisdom, and how-to guides for creative people. Illustrations by Jeremy Nguyen. 

Thinking about crafting a new business with concern for the larger systems at play–all while considering your personal bandwidth and well-being–can feel pretty daunting. For this reason, I work with individuals and teams in their early days to explore what forming a business can and will look like for them. For people who go to biz school, the steps to getting a business off the ground are laid out. For the rest, it can feel completely overwhelming, or worse, it can feel a little bit like selling out. The good news is that formalizing a business can actually be a highly creative–and even energizing–undertaking.

As a consultant specializing in business innovation and sustainability, I work with people every day who are looking to turn their work or ideas into a functioning business. Although they’re all smart and experienced in their particular field, most of them need help mapping out the process, making a business plan, and kicking it all into action. Over the years, my consulting work has revealed a pattern for the building blocks of a successful business. If you’re considering starting a new venture or taking your work to the next level, but feel unsure about the steps, I hope this guide will get you going.

[Illustration: Jeremy Nguyen]

THE IDEATION PHASE

Step 1: Answer a few key questions
As you think about getting a business idea off the ground, considering a few specifics can help lead you through the ideation process. Make some space to write your early ideas down, and get started by answering these questions:

  1. Who are you, and what will your business offer? You can take this literally, or have a little fun with your answer to this one.
  2. How are you different? Brainstorm all the ways your business offering will be distinct from others out there.
  3. Are you filling a need, solving a problem, or creating something beautiful? Get clear on your offering.
  4. Who are you selling to? Identifying your ideal client or customer is essential to planning the launch of a new business.

Keep working on your answers to the above questions until you feel good about them, because everything you write down will help you in the following steps.

Step 2: Get all your ideas out with a mind map
A helpful approach for the ideation phase is “mind mapping,” a free-flowing process for thinking through the bigger picture of your business. To make a mind map, you’ll start with your core business idea in the center of a large piece of paper, and then add branches exploring and connecting the various ideas and plans you have for your business–all by free association (i.e., don’t think too hard about it; instead, just let everything flow out of your mind and onto the page). Use symbols and draw pictures within the map if you’d like. Some people like to transfer their finished map to a “cleaner” digital version. This free tool calledMindMup can help you build a mind map right in your browser.

Brian Weller introduced me to “Massive Mind Mapping,” and I can’t tell you how much of a game changer this has been. I now use this method to take meeting notes, explore new ideas, and help others to develop their thoughts. It also allows your brain to remember so much more of what you’re exploring than if you simply take traditional notes. Mind mapping includes elements of Systems Thinking, which is sort of the old-school version of Design Thinking. If this piques your interest at all, check out Donella Meadows’s work.

Step 3: Make an empathy map
As you consider who your business’s customers will be, making an empathy map will allow you to easily explore a potential customer’s experience from a sensory and behavioral standpoint. Consider this process early market research, and also a method to imagine how you might thoughtfully connect with future clients or customers.

Here’s one explanation of how an empathy map works, with a tutorial and downloadable PDF.

Once you’ve thoroughly fleshed out your business idea through an empathy map and mind map, you still may find some gaps in your planning. This may give you sort of a “what now?” feeling, or a momentary lack of confidence. This is normal. Really going for it and making your business official will give you a feeling of credibility, but on the flip side, it leaves you vulnerable to the fact that you won’t know everything right off the bat, and even to the possibility of failing.

Yep. Failure happens. People fail all the time, but when we choose to see it as feedback for how we can improve or change, it really doesn’t sting so much. All the greats have failed. So go ahead and try for greatness, it’s worth failing for.

CREATING A BUSINESS PLAN

Step 1: Get clear on a few key points
Once you’ve gone through the ideation phase for your business, drafting a business plan will help you sort out and get more specific on many aspects of your business idea. Here are a few key ideas to consider including in your business plan (and, good news: Much of what you worked on in the ideation phase will be helpful here):

  • What do you do that people want to pay you for? What is your key asset? What is your advantage that will draw in customers?
  • How do you know that your product is fulfilling a need or want? Some simple market research will help you answer this. Look at other people or companies who offer something similar and take note of what seems to attract their customers.
  • Who are your customers and where will you find them? What are their behaviors and activities?
  • Who are you up against and what can you learn from them? This will open up the opportunity for more market research. Keep an open mind as you learn from your competitors and imagine how you might improve upon their offering.
  • What trends or upcoming changes might impact your offering? It’s valuable to do some research and think about the long-term position of your service or product. Try to be hypothetical and forward-thinking here.
  • What are the different paths you could take to find customers? Think about all the ways you can reach a potential customer. This could be social media outreach, markets, festivals, digital marketing, press, referrals, etc.
  • What financial relationship will you have with your customers? Do you want to sell your product in person, online, by subscription, or via barter, cash, or credit card?
  • How much should you charge? Again, do some market research to try and find out what your customers are generally willing to pay. Include your own costs and time (!) to roughly come up with how much you’ll need to charge to make enough money. You can’t keep doing the valuable work you do unless there is enough income or exchange to sustain your needs, and some of your wants.
  • Who will you work with to make this happen? Who can you bring on board to help you deliver your product or service? Do you need a partner or team? What can you do on your own, and what will you need to outsource or get some help with?
  • What will your business need to be uniquely good at in order to thrive? Are there any key offerings or approaches your business will need to make or take to ensure success? Do you have the skills and motivation to make this happen?

Most of the time when working with a client, we’ll have some blanks when trying to answer all of the above questions. When that happens, we reach out to friends and colleagues, or do a bit of research to get everything filled in.

Step 2: Make a “Business Model Canvas”
The Business Model Canvas (BMC) is literally a one-page business plan. These days, the BMC has taken the place of the 100-page traditional business plan (which does offer a much more in-depth analysis, but also tends to put people to sleep and is a real pain to write). It’s not to say that careful consideration isn’t still at play in a one-page plan—rather, a super concise plan forces you to become extremely clear on your plan, and articulate it as such.

For more on how to make a BMC, simply Googling “business model canvas” will lead you to a thousand tutorials and YouTube videos. Here’s a pretty good BMC walkthrough that includes a downloadable PDF. For those looking to build a nonprofit, this one’s for you. And, if you’d like to make a more illustrative BMC, here’s how.

When I make a BMC, I like to make boxes in painter’s tape on a large wall or white board and use Post-it Notes to start. This makes it easy to pull things off, add them in other places, and get input from multiple people at once. Then, once I feel good about where everything stands, I type it up. The BMC is never 100% “final,” because it’s meant to be an evolving document that can be updated as your business grows or changes.

As you work on your BMC, it’s always a good idea to invite others to contribute ideas to your draft. Get feedback from people you respect, and from those with differing experiences and perspectives. It’s okay to have a few gaps or blanks here and there—that just lets you know which areas may need additional research, ideation, or attention as you move forward.

If this one-page approach to writing a business plan seems too good to be true, trust me when I say that most people are familiar with and beginning to prefer the BMC. However, when I work with clients on a BMC, I do like them to hyperlink certain areas where more info may be valuable. This allows your reader a deeper dive if desired, without overloading them if they don’t need all the nitty-gritty detail.

SURVEYING THE PLAYING FIELD

Step 1: Make a SWOT chart
To make a SWOT chart, divide a page of paper into four squares: strengths, weaknesses, opportunities, and threats. Fill it out, and see if this enhances or informs any part of your ideation or business plan phases.

As you do this, the main objective is to get clear on areas where you can improve your plan. Again, ask others for input here. This process is meant to be collaborative, since more people’s perspectives will only strengthen your approach and awareness. We don’t always see every aspect of our own impact on the world, and gaining insight from another person’s perception of what you do/make/have to offer can help as often as hinder, so take it at face value and then move on to the next step.

[Illustration: Jeremy Nguyen]

Step 2: Create a competitor analysis sheet
Now that you’re clear on the plan for your business (or close to it), spend a little more time looking at what you’ll offer, and how that compares to what others are offering. By researching the businesses that will be in competition with yours, you’ll know what you’re up against.

As you research other businesses, remember to keep an open mind. Always try to be as unbiased as possible, and consider the perspective of the patron/consumer (versus your own perspective), who may place a different value on certain offerings of each business. Running through a mini SWOT for each competing business will really help you familiarize yourself with the other players in the space, and how each of their offerings are slightly different.

The columns in your competitor analysis can vary, but some standard fields to compare are:

  • Product or service
  • Price
  • Location (both physical and point of sale)
  • Web presence
  • How long they’ve been around
  • Look/feel

Your competitor analysis will showcase your qualities and help you speak to the uniqueness of your offering. It also helps an investor or someone interested in partnering with you to see who you are relative to the other players in the space.

VISION, MISSION, AND VALUES

Some people like to jump into articulating a business’s vision, mission, and values earlier in the process. I prefer to save it until right about now, since at this point you’ve had some time to expand on the various aspects of your endeavor. I also switched up the order for considering these three things based on a recommendation from Jane Baxter of JBL Strategies. Considering your vision before your mission and your values will help you shoot the moon a little, and gives you space to dream about a future–and a sense of impact–you can get really excited about.

To create your vision statement, imagine how the world will be different in 5, 10, or 50 years if your business is successful in accomplishing its goals. In the same statement, try to articulate why this vision matters. The youth entrepreneurship nonprofit I work for has created this vision statement, based on how its sees itself impacting the future: “Because life happens beyond the classroom, we envision a global culture of independent, resilient, and socially aware individuals who are invested in shaping the world.”

To create your mission, craft a clean, clear statement about what you do. Great mission statements are short and to the point. It can take some time to distill your ideas into the right words, so share your drafts with others and keep tweaking until you feel you’ve clearly conveyed the offering of your business in an authentic way.

I’ll use the same organization to provide an example of what a mission statement might sound like (this one could be shorter, but I’ll share it anyway): “Shaping the world by cultivating entrepreneurship to broaden youth perspective and enhance life skills through community connection and experience.”

To articulate your business’s values, jot down a dozen qualities or attributes that are important to you and those you work with. When I tackle this part, I like to imagine what words and ideas feel foundational to the business’s existence. Once you have a list, group together similar words and narrow it down to between three and five core values. And, just like that, you have your values.

DECIDING TO FORMALIZE YOUR BUSINESS, OR NOT

Now that you’ve thought in-depth about your business idea, you’re left with two choices: go for it and formalize your business, or hang back. You can always offer services under your own name as a sole proprietor, and for this, while you do pay income taxes on any financial gain, you don’t need to register anything or apply for a license unless certain foods or beverages are sold directly to the public. Whichever route you decide to take, there are pros and cons to consider.

The cons of getting started with your own formalized business include, well, ownership. Once you own a business, you also own all of the liabilities associated with it, and are accountable for everything that happens with it. Additionally, getting a new business off the ground takes hard work and long hours. It also may require venturing into unknown territory with regard to legal and financial requirements. It can be a lot of pressure, and it may take longer than you’d like to turn a profit.

On the upside, when you own your own business, you are the boss. You set your own hours. It’s also easier to bill someone for your product or service when you have an EIN number (something you can only get when you’re registered as a business). Also, as a small-business entrepreneur you have the opportunity to take advantage of some nice tax perks. You can write off many expenses like travel, food, phone bills, portions of car payments/insurance, and more. And, certain businesses qualify for government incentives. Being a minority, veteran, or female-owned business are examples.

Consider the pros and cons, take stock of all the information you’ve gathered, and decide to formalize your business (or not).

If you’re still on the fence, answer the below questions as you consider whether or not to go for it and make your business official:

Will a formal business designation . . . 

  • Increase your income?
  • Give you more credibility?
  • Legitimize your creativity?
  • Help you from a tax perspective?
  • Create an opportunity to take safer risks?
  • Make you eligible for more funding/grants?
  • Motivate you to get organized about your work?
  • Serve a need or fix a problem for your customers?
  • Help you segue out of a career that you don’t enjoy?
  • Allow you to become more independent career-wise?
  • Allow others to more easily hire you (because you have an EIN, etc.)?
  • Enable you to legally hire—and potentially offer benefits to—employees?
  • Let you offer something better than or unique to what’s currently out there?

Here are some of the implications of formalizing your business:

  • The act of formalizing your business will take some work, and some money.
  • There is also an ongoing fee to keep your LLC or corporation registered (this fee is usually incurred every one to two years, depending on the state you register with).
  • Will having to either “do it all” yourself or hire and train employees be more stress than benefit to you?
  • Is having to produce things in order to meet the demand for your offering going to work out well for you?

At this point, if you’re still ready to move forward with formalizing your business, let’s go.

[Illustration: Jeremy Nguyen]

MONEY, MONEY, MONEY

The costs of getting your business formalized
Whether you need licensing, permits, or an LLC to get your business going, it’ll require a little bit of money. For example, some food sales can fall under Cottage Law (meaning you won’t need a permit), but often, simple things like selling coffee and even lemonade will require you to get a food-related permit. Visit this site to see what kinds of permits or licenses you may need.

Many people will officially launch their business by establishing an LLC. For an outline of what’s entailed in forming an LLC, go here. You can register your business as an LLC pretty painlessly online, or you can work with a CPA (certified public accountant) to do it on your behalf. There are plenty of online sites that will do most of the work for you for a fee of around $500-$600 dollars, and most lawyers or CPAs charge between $100-$300 per hour.

If money is a real barrier to forming your own business, ask a few accountants or CPAs if they are interested in a trade for filing your LLC paperwork. If this sounds crazy, know that it’s not! The CPA for the nonprofit I help run is an art lover, for example, and has been open to trading her time for artists’ work.

Overall, the formalization step is simple but trips up a lot of people. Understanding what you need when you don’t know what you don’t know can feel frustrating. If you feel stuck, call your local Small Business Association and ask for help in whatever area is holding you back.

Financial modeling: It’s not so bad
Here’s a secret I wish I knew years ago: “Financial Modeling” is nothing more than an educated guess about what your numbers will be based on the information you have at hand. Here are a couple of links to some pretty standard excel forms (A and B) that can help you model out your costs and income. Use these types of formulas as a loose guide to structure your planning, and tweak them to suit your needs.

Here’s a step-by-step video guide to financial modeling, which may be helpful for visual learners.

In your financial model, include every expense you can possibly think of. There are always unexpected costs, such as:

  • Shipping costs
  • Transportation
  • Increase in rent, utilities, storage, coworking memberships, etc.
  • Higher food bills (buying convenience food because you’re busier than usual)
  • Higher prices when you can’t purchase in volume
  • Outsourcing for things you don’t do but need
  • Registrations for events, conferences, etc.
  • Employee benefits or perks to keep volunteers happy and engaged
  • On average, 6% to 10% of physical products for startups are lost or damaged (who knew!)
  • The list goes on . . .

As you work to list out your total costs, my advice is to create one last column that multiplies your total cost numbers by 1.2. This will challenge you to aim for a 20% cushion (as you plan how much income you need to generate to cover your costs), and accounts for some of those unknown factors.

Now, I’ll be honest here: Excel spreadsheets can bring a spark of delight to the eyes of some, but that’s not me. I have to sit down with a really open mind and chip away at financial models in 20-minute segments. It’s not fun for me. However, it IS empowering and really valuable for me to have control over my finances. So, I muddle through this stage–and it’s worth it for all new businesses to at least give it a try, too.

For more help with financial planning, read Lewis Weil’s guide to financial planning for artists.

GETTING EVEN MORE STRATEGIC AND OFFICIAL

The pitch: It’s not just for finding investors
A well-crafted business pitch tells potential partners, customers, future employees, naysayers, and anyone else exactly what you’re up to. Crafting your pitch is a process that challenges you to become succinctly clear and compelling about who you are, what you do, and why it matters. Can you communicate this in a couple of sentences? Wordsmithing and really consciously constructing your pitch is invaluable.

As you edit, tweak, and further refine your pitch, ask more than one person to hit you up at random for your spiel. Be ready to fumble through and miss several elements for a while. This one is bigger than it sounds–you’re distilling all the information you want to share about you and your product or service while also fitting in why it matters to your potential customers, or to anyone else who you want to believe in you. So give yourself grace here and try out multiple versions until it feels authentic.

Getting the word out through marketing
Now that you’re “official” and have your pitch down, get ready to build or freshen up your marketing efforts. Marketing is how you let new people know that your business exists, and entice them to consider using your service or buying your product. In short, marketing is how you build up an engaged audience and customer base for your business. As a starting point, you can read this creative person’s guide to thoughtful promotion. And, here are a couple of additional articles (A and B).

As you get going with a marketing plan, be sure to make use of those free trials out there. In-Design and other tools are great resources if money is tight and you want to try to design your own marketing. Most email services, e-commerce sites, and others offer free trials, allowing you to play around with different options before committing to any one specific marketing tool. Just remember to set a calendar reminder to cancel it in time, in case you don’t end up loving it.

[Illustration: Jeremy Nguyen]

Developing a long-term strategic plan
A strategic plan breaks down your business goals into bite-size pieces so that you’re able to take small, reasonable steps toward achieving a long-term vision. There are many ways to go about this, and some people don’t worry about it until they feel more established. However, I like to plant these strategic seeds early because setting goals and planning for how to reach them will get you to where you hope and dream to be in a reasonable timeframe.

To start conceptualizing your strategic plan, pick three categories that feel most important for your business (examples might be community, funding, research and development, design, etc.) and figure out a reasonable goal for year one, year two, and year three. Then go ahead and shoot the moon a bit for your year-five goals.

After you have a sense of your goals for each category, go back and write down everything you can think of that needs to happen in order for you to get there.

  • Name the tasks associated with each goal.
  • Assign each task to yourself, someone else you’ll be working with, or an expert you’ll need to hire.
  • Add anticipated completion dates if you can.

Follow up on your plan
Try to review and adjust your plan as you move forward. Just like your BMC, this can be an evolving document that shifts as your progress and priorities shift. As you work toward your goals, reflect and share the outcomes. Celebrate your successes and talk through the gaps or missed milestones.

Plan time to work toward your strategic goals
Building a business from the ground up can feel like a lot (or even way too much) when daily life continues to happen, so plan one day a week (or even a half day) to chip away at the action items detailed in your strategic plan. Make it a regular time when you don’t schedule any meetings, respond to emails, or even answer your phone, so you can get in the habit of really focusing on progress.

I would love to put this entire section in all caps. Nearly everyone I work with (myself included) will insist that there just isn’t time for this, and that the big picture will have to wait because there are a hundred other pressing things to do each day. As the saying goes, don’t lose sight of the forest for the trees. Being too caught up in the daily details of your work means you won’t be able to make strategic progress toward your valuable and important goals, so carve out at least one hour a week.

Work with a mentor to add some accountability
If you’re working on your business solo, find someone you can talk with for an hour or so each week to review your progress, bounce ideas off of, and keep you accountable. This person doesn’t need to be a business expert–it could be a friend, or even a family member. As long as you have someone to report your progress (or lack thereof) to, it’ll be a huge help.

If you have a partner or team, start each strategic-plan work session by checking in on any action items from the last time you met. If something is blocking an action item from being completed, take time to address it and come up with a plan for how to get unstuck.

IN SUMMARY

This guide is a rundown of the path that many successful businesses have taken. It’s true that you could go a different route and still be successful. Some attempts at starting a business will “fail,” but again, failure is just feedback. If you’re hitting a rut, go back and tweak your business using the tools and approaches in this guide, because iteration is the key to innovation.

I spent many years on the other side of business (i.e., as an employee instead of a consultant), and often felt more like business was happening to me rather than me participating in the business world. Looking back, this was my reality because it was my mind-set. So get in there, take control, and play the game. There is room for everyone, and often the only way to figure it out is to jump in and try.

This article first appeared in www.fastcompany.com

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