How I’d Start a Business in 2024 — Insights From 40+ Years of Entrepreneurship
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Question: What would I do now if I were starting a business today?
Why me? Because I’ve been immersed in startups for four decades.
I started two businesses in the 1980s, another in the 1990s, another in 2012, and yet another in 2015.
Two of them live on, and three failed.
Meanwhile, I’m still very involved with startups today. Not a day goes by without an email, online note, or discussion. As an angel investor, I have invested in more than a dozen startups.
So, if I were to do it all again and start a new business right now—these are the steps I would take (and you can take too).
1. Find an idea that fits
I don’t believe an idea has value on its own. I think it’s silly to list good business ideas and even sillier to talk about million or billion-dollar ideas.
The first thing I look for in a startup is not the idea as much as the fit between the idea and people.
Fit between the founder and the idea
I look for startup founders so immersed in the idea that they can’t stand the thought of not starting that business.
For them, it’s the burning idea, the obsession, the drive that makes it almost impossible not to pursue that startup. They have deep connections with:
- The problem this new business solves
- How it solves it
- Why they are the best to solve it
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Fit between the business model and expectations
I also believe that startup founders should understand, from the outset, their version of success.
This is another element of what I call “fit.”
I don’t think every new business must shoot for the stars in ways that excite outside investors. I very much respect businesses whose goals include founders wanting to control their own time, work from home, or prove their assumptions.
It’s not all about dollars.
And the sense of ultimate goal and purpose is part of the fit between idea and founders.
Fit between the business and actual customers
I don’t look at a business idea in a vacuum, as if it could stand alone without regard to its who and why.
I do believe, however, that some ideas are stronger than others.
Business ideas need foundations in potential markets, underlying economics, and a likelihood of success. I don’t buy the tired clichés that link ultimate success to passion or persistence.
What matters is whether enough people will pay enough money to cover costs and expenses and ideally earn some profits. Businesses that offer value and solve real problems are more likely to succeed than those that don’t.
Hint: How do I evaluate this more practical side of the business idea?
I go straight to my next step: breaking uncertainty into its component parts, which I also call lean business (or growth) planning.
2. Create a forecast
I tend to look at key numbers first.
I understand a business better when I sit with a spreadsheet and break it into rows like sales and costs over the next few months or years.
These give me an early look at possible profits or losses.
Find what drives sales
My goal is to identify my sales drivers, which will be specific to your business.
For example, web traffic is a key driver for many online businesses. Emails sent, opened, and clicked might be drivers.
Other examples might be (always depending on business specifics) conversions, posts and clicks, butts in seats, or foot traffic into a physical store.
I want numbers that can be tracked and relate directly to sales.
Follow up with costs and expenses
Then, I’ll look at sales costs, usually as a percentage of sales. Lastly, I’ll look at expenses, such as employee salaries, rent, marketing expenses, etc.
These are essentially all educated guesses.
You won’t always have the luxury of exact numbers; but if you know your business, you ought to be able to make reasonable estimates for key expenses.
The best way to figure these out is to start asking questions:
- How many employees (including yourself), and what will you pay them?
- What insurance and other benefits do you need, and what will it cost?
- How much space and what will it cost to rent?
- What are reasonable marketing expenses?
If you have no idea, then slow down, get more information, and maybe partner with somebody who has more specific experience.
If you aren’t comfortable estimating expenses, get a clue. Maybe it’s too soon to launch.
Get into the details your way
While I like to get right into the numbers, you are not required to. You might go conceptual first and leave numbers for later.
It’s a matter of style.
I’ve worked with people who need to understand high-level concepts, such as their mission statement or marketing strategy, before getting into financial data.
For example, you may have a product idea that applies to a lot of people. But not everyone can be your target customer. Plus, having a market that includes everyone will make it tough to market your business.
In this case, figuring out who is in your target market and who is not, can help a lot.
I’ve seen people work with milestones first. In this case, they think through milestones like:
- Launching the website
- Opening the store
- Releasing version 1 of the product or service
For what it’s worth, I’ve found through the years that I subconsciously incorporate these concepts as I do the initial numbers. By the time I’m putting numbers into a sales forecast, I’m also absorbing strategy, tactics, market, and other factors.
Again, it’s a matter of style, not substance.
If I start with numbers, I will circle back to the other concepts soon enough. If you decide to start with concepts, you’ll get to the numbers. Thinking these things through and scoping out the full idea requires both.
3. Get to a simple business plan
Whatever your order of focus, the goal is to break down uncertainty into manageable parts. And ideally, start rounding up this information into an actual plan.
By the time I’m done, I will have essential numbers and a simple outline for strategy, tactics, and milestones.
The essential numbers include projected sales, costs, expenses, profit or loss, and cash flow. Short bulleted lists fill in the key points for strategy, tactics, and milestones.
For what it’s worth, I call this first collection of details an initial lean business plan. I’ve also seen it referred to as a startup plan.
4. Look for reasons to give up
Does the idea and the fit still pass the reality test? Does it still look like a good bet on risk and uncertainty?
If this early review stops you from launching a bad business, it’s done you a great favor.
Look for the fatal flaw
I mentioned above that I’ve started multiple businesses, including some that failed.
I’ve lost time and money with failures. In several cases, after the failure, I’ve identified some factors that I should have seen from the beginning. They had fatal flaws that could not be overcome.
What’s a fatal flaw?
It might be:
- Unseen competition
- Overestimated market size and sales
- Production problems that prevent business from getting up and running
Or a variety of other reasons.
It all depends on the type of business. But I can say that fatal flaws are often masked by the entrepreneur’s enthusiasm, which becomes a special kind of blindness to the negative.
There’s no simple rule to reveal fatal flaws.
Try to jump outside of yourself and see the idea from a more objective point of view. And if you have friends, relatives, or mentors you can trust, ask them to review it.
Don’t fall for the myths of passion or persistence
People will tell you that if you pursue your passion, you can’t fail. Or that if you just stay persistent, you will succeed. Both of these are myths.
They are stoked by survivors’ bias.
Encouraged by people who made it through the maze telling you that all it takes is passion and sticking with it no matter what.
The reality is darker.
Failure hurts. You lose money. Just trying harder doesn’t solve things if the fundamentals are wrong.
But how can you tell if your business won’t work?
Unfortunately, there’s no real checklist that helps you verify whether an idea is sound. However, a good guideline is to watch your cash flow and check often to ensure that cash flow indicators remain positive.
5. If it still looks good, get started
At this point, if:
- The idea holds up
- It fits the founders and their definition of success
- The details look good
Get going.
Don’t wait for all the lights to be green before you leave the driveway.
In my experience, there is no algorithm or simple formula for telling us when to jump and when to keep studying.
Research and thoroughly prepare, but don’t think you can entirely reduce uncertainty. Don’t hang back too long waiting for more data. Don’t spend too long delaying the launch while improving the plan. Look for a good balance between risk, data, uncertainty, and action.
If you start, review your progress regularly and revise your plan as your situation changes.
If it’s not working or the outlook is poor, don’t hesitate to pivot or even close and start over. That’s not failure; that’s saving yourself from a lot of heartache.
Each startup has its own path
At this point, you could take a number of traditional startup steps. There’s no dedicated order, and some you may do all at once.
Some common next steps include:
Gathering your team
Talk to people you trust who might want to be involved. Consider collecting the right skills, including product, marketing, and administrative experts.
You might need a chef or a web programmer. It depends on what you want to do and your gaps.
Explore, research, and reserve your domain name
Most businesses need a web presence. See what names are available and how much they cost. You might also want to consider buying a domain that already exists.
Start the legal entity
You can register a business name locally, in the county, and maybe state for a small fee. You can explore starting an LLC or corporation. Details depend on the nature of your business.
Formalize your plan
Remember that with business plans, form follows function. Tailor your plan for its specific business objective.
For example, if you have no business reason to show a plan to outsiders (like an investor or bank), a simple 1-2 page plan is enough. You don’t need to include things like section summaries, detailed descriptions, and team backgrounds.
On the other hand, if you’re developing a plan to show to potential investors or to support a business loan application, you probably need a more in-depth business plan.
The point is to do only what serves your business needs.
I recommend setting it up in LivePlan so you can access it often, review and revise, and keep it updated.
Example of how I would start a new business
Let’s put my recommended startup steps into practice.
As an example, pretend that I want to start a business offering online entrepreneurship training, based on my Silicon Valley experience, to entrepreneurs in other parts of the world.
The deliverables would be a collection of training materials, heavy on online video, plus certifications.
Following my steps above, I’d start with idea validation. Proving there’s real interest in what I intend to offer.
In my hypothetical case, I would be gathering friends with expertise and asking them to help me review the idea. I’d ask them to think about the:
- Market need
- Hypothetical price points
- Marketability
- Deliverables
I’d ask them how much need they think there really is, where the need exists, and in what countries and languages. I’d ask them to guess how we’d reach the target market, and what might be realistic estimates of online traffic, marketing expenses, and sales.
And — this is important — I would listen to their answers and keep an open mind.
If this initial idea test goes well, I’d look for ways to validate without risking too much money.
In this case, I’d start by gathering the team together. If I cannot get some key people interested in joining me and working on the early preparations—before there is money to spend—that might reveal a fatal flaw and a reason not to pursue it.
If I did get the people, then I think we’d set up an initial video-oriented landing page with links to pre-order or pre-register.
Meanwhile, we’d work together on the early sales forecast, cost and expense estimates, and essential strategy, tactics, and milestones. We would simultaneously work together on establishing the legal entity, reserving a good domain name, and establishing the early website.
At this point, we’d start drilling down on the cash requirements. We’d hone our plan to focus on initial cash, the early months of cash flow deficits, and the feasibility of getting founders’ money together to make progress.
If and only if our early numbers seem good enough, we’d start submitting summaries to local angel investment groups.
Final point: Keep your business nimble
You’ll notice, even with my example, if I were to really start this business, I wouldn’t necessarily follow the steps I recommended in a linear order.
Finding an idea, forecasting, planning, and looking for issues can happen multiple times.
You don’t just finish, check it off, and move on. You need to revisit, poke holes in your business, and adapt until you find what works or what doesn’t.
You need to be nimble.
Recognize your reality. Some businesses have an open market window, a good shot at landing investors, and high growth potential.
Others require starting small and managing expenses as you grow slowly.
The process has to stay very sensitive to results along the way. The path is full of abandonment points, where you get the team together, take a hard look at results, and make course corrections.
In the best case, where things are going well, you reallocate resources to optimize what’s working. In the worst case, where things are going poorly, you see whether the actual results merit continuing the process.
Invest in the right support
LivePlan is a perfect tool to organize the ongoing process.
It’s easy to:
- Get in and out for small ongoing changes.
- Share with team members.
- Add comments on sections as you make changes.
- Add important financial assumptions in the correct financial form
Plus, it can tie to your accounting software to generate automatic plan vs. actual and this year vs. last year comparisons.
Try it out today risk-free.
It’s the perfect tool to start, plan, manage, and grow your business. And if I were to really start that new business today, it’s the tool I’d use to do it.
