I am a big fan of sharing. I worked in an incredible collaborative environment most of my career. And when I see great things happening in startups an open attitude to knowledge is always a part of it. I also know that no-one person has a monopoly on the best ideas. And luckily a whole lot of smart people love to share their best thinking.
One of the themes of this website is sharing the best ideas I find. You can see this in action in my SaaS Pricing section. The focus is SaaS and startups. But from time to time I will wander into other areas. I pick up ideas all the time from blogs and newsletters. I also share ideas generated in discussions I have with great founders and startup teams. For example the SaaS Scotland Group.
You can see these in real time by following my twitter feed. One theme at this early stage in 2016 has been guidance on some basic and early stage stuff.
As a startup founder or leader you will be asked to cover a bizarre range of skills and disciplines. Technical and sales of course. Strong marketing is obvious. But also finance, HR, procurement, strategy and planning, operations and many more. At the same time you must be an inspiring leader and a great manager. Make tough decisions. Take the right risks. Find and persuade investors. Contribute to the ecosystem. I could go on but it gets scary.
No-one has all these skills. So in this post I am sharing the articles and guides I have found to a whole range of basic skills. If you are just starting out on the startup journey you should find some help here.
I also read and reread some of these posts. When I was young (a long time ago) I played chess a bit. And I was always struck by the attitude of the Latvian former world champion Mikhail Tal. He told an interviewer once that he always watched the chess lessons for beginners broadcast on Soviet TV. (Proving the USSR was a real fun place.) As far as he was concerned it always helped to be reminded of fundamentals.
I think the same applies to business. Things can get complex. But it is easy to forget the basics. Keep your eye on the simple things. And keep doing them right. You will go a long way to succeeding.
For many entrepreneurs the move from idea to a real business is the hardest step. You meet lots of people in everyday life who have a great idea for a business. They may be unwilling to take the risk. Yet the biggest obstacle is often just not knowing how to start.
Regular readers of this blog or my newsletter will know that I am a huge fan of the Crew blog. The writing is excellent and the content is consistently thought provoking. So I love this collection that forms a complete guide to building an online business. It is great for first steps and goes quite a bit further as well.
If you prefer a more dynamic, rock’n’roll approach then this quick and dirty guide is also excellent.
As in many walks of life, the best way is often to learn from others. In this blog post the founder of a classic B2B SaaS business tells his story. ToMo is an employee onboarding tool and this is how they got from idea to tangible product fast.
A big challenge for many founders is tech skills. It can feel as if only programming geeks know how to create a software company. Or people who have lived on their X-Box for 10 years. This is far from accurate. Many great tech companies have been built by non-tech founders. HelloCompass tells the story of building a tech startup without tech founders.
Accelerators have become a popular option for startups worldwide. The original and many would say the best is Y Combinator. This series of lectures put together by Y Combinator founder Sam Altman. He has pulled in many of his friends and Stanford University. You need a bit of time. But How to Start a Startup takes you through the whole accelerator journey with some of the most inspiring speakers you can find.
Making the leap
The mechanics and methods are fine but you still need to take the risk. Most businesses fail. Wherever you look. In every country. All types of business. Any strategy or none. The chances are your business will fail. Yet so many people believe there has never been a better time to try. I agree with them. Perhaps one of these articles will help you make the decision…but remember no-one else can choose for you.
Let’s start with Ash Maurya. Ash is one of the gurus of the startup scene. And his book Running Lean is one of the best practical guides you will find. He also supplements the book with regular videos and posts to encourage real action. He gathered some of this philosophy into the Bootstart Manifesto.
Nonetheless you will probably fail and this article explains why. SaaScribe by the way is a great regular collection of interviews and articles. With a specific SaaS focus. The team are also involved in SaaS meet ups and conferences in Europe. Full disclosure - I also write for them on occasion.
Continuing the SaaS theme. In this article another SaaS guru, Jason Lemkin, explains that it takes 24 months to succeed. The time is not a fixed point. But he is dead right that perseverance is one of the qualities need to build a business.
If there is one practical step you can take before jumping, it would be validating your idea. You need to feel confident that here is a viable, paying business for what you are trying to do. This is no guarantee. You still need, talent, execution and a bit of luck.
Will anyone pay you money?
This is the first of 3 sections with money in the title. The order is customers, profit and loss, investment. This is deliberate. Tackle the money in this order. Too many founders jump straight to fundraising. Too many seed investors fall for this and give them cash. Bootstrap your way to early customers. And have a clear idea of a viable business model. Then raise funds if you need them. Always in that order.
My first selection is about what not to do. This just such a fundamental point. I see lots of business plans that talk about great markets. Yet have no mention of real customers. Aiming for the sky is awesome. Finding the first users and customers is indispensable. Your market plan must build from the bottom up as well as the top down.
You can read the theory of this in detail in Steve Blank’s book Four Steps to the Epiphany. In many ways this is a terrible book. The prose is clunky and jargon laden (pot calling the kettle black I know). The author describes a business far removed from a typical 2 or 3 person startup. Yet the ideas are essential and universal.
Who do you sell to first? Friends and family are a start. But you need to get out into the wide world at some point. In B2B this can seem daunting. Try this guide to finding your first leads.
The founder of the company also contributed this piece to SaaScribe. How to find your first 20 customers.
In the early days you are not trying to make sales. Your first job is to figure out if your product is right for your market. If not you need to change the product. Or choose a different market. Or a bit of both. In this post the Lean Startup team looks at this process. Known in startup speak as product/ market fit.
For a simpler guide try this from yet another SaaS guru, Tom Tunguz. Finding the right answers is often about asking the right questions. The 8 in this post are relevant to anyone.
At some point you will feel as if you are reaching a good fit. Then it is time for another giant leap. Paying for some marketing. Dropping money into the wide blue ocean to see if anyone bites. This is a bit more technical. But a good guide to spending those first advertising dollars - the first $10k to be precise.
Just buying advertising is a crazy strategy in today’s world. You need to drive demand in other ways to. Here Drifft offers a 7 step process covering the whole product launch process.
And don’t be afraid of something new. I found this site recently. It offers practical tools for every step of the process. From defining a market and prices to checking out the competition. It is a paid SaaS product with a 30 day free trial called Edison Plan. Would love to know if it works.
Can you make money doing this?
First you find a market i.e. some real people prepared to pay real money for your product/ thing/ stuff. Next, will this make a viable business? This can be tough for founders without a financial background. Or even sometimes for startups with good finance knowledge. Building a financial model which reflects your business model is essential. You need to understand how your business will make money. If it makes money at all.
Begin with a plan. You will need accounting soon. But step 1 is to make a plan. Model some numbers and see if there is at least a chance of making money. That is the subject of this post. It also has links to some handy free resources like example spreadsheets.
On the other hand you could try building your own. This is nice guide to the basics of making assumptions and assembling them into a financial model.
I also think this is an excellent example. Written by top European SaaS investor Christoph Janz. It includes another free model and lots of good ideas about planning.
In similar vein check out this post. It is in effect an interview with someone who spent 20 years building this type of model.
Peter Reinhardt is a recent discovery of mine. Almost anything he writes is useful and in this post he covers the accounting basics you need to know.
It is also worth understanding some accounting concepts. Focus on those that are most relevant to your business model. For SaaS and many others this boils down to many different ways of measuring revenue. If you think cash being paid into your bank account is revenue its time to think again! Profitwell explains what this means for SaaS here.
Let me close with a link to the next section. When you start a company your biggest concern is going to be running out of money. Once you start fundraising this mutates into asking how much money do you need. The amount you spend every month is known as the cash burn. If you know this, you can figure out how many months your cash will last. Back to Tom Tunguz for some ideas on figuring out how much cash you should burn.
Where can you find the money to build your business?
I cannot say often enough that raising money is not the objective of a startup. Building a great business is. However, chances are you will need outside investment at some point in the journey. So here are three posts to help you on the way.
Back to Y Combinator. They run an excellent blog called the Macro. In this item they have included a podcast covering all the basics of legal and finance. Some of the legal stuff is US specific. But there will be an equivalent in every country. Essential basics to avoid being trapped by more experienced or unscrupulous investors.
Philipp Moering has written a good post on the fundraising process from an investor point of view. What do investors focus on? How does the early stage process work? What should you do to get ready? Includes a key message. Get to know investors before you start asking for money.
If you live in Scotland there is a proven source of some free(ish) money for your startup. The Scottish Edge awards round 8 has just opened up.
Final post is a collection within a collection. Another blogger I follow is Alex Iskold. He has put together this article with 25 of the best posts about fundraising. Some great choices.
Some help with other things
There is no complete answer to all the things you need to cover when you are running a business. To round things out a couple of links to places you can find help. Addresses a wide selection of other business and management questions.
You are not alone. These are the top 15 areas where startups most often ask for advice. If you are not asking these questions, maybe you should be!
Or maybe you just need a place to go and look for help. Founder Centric is startup focused and has some nice free tools on some key topics. Management Help is much more traditional business. On the other hand it has a more comprehensive collection of useful guides.
Nothing is a complete answer. I will keep sharing ideas. And writing blogs or developing tools which share my own experience. You can download a couple of free things on this page. I also share a small selection of the best ideas every week via my newsletter. No matter what you read or what you do, we all make mistakes. If you sign up below, I will share the best posts I know about on founder mistakes in next week’s newsletter.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.