10x Nation

How to Start a Business: The 10x Guide to Commercialization


How to Start a Business: The 10x Guide to Commercialization

Have a great idea for a product, but don’t know how to start a business to bring it to life? …this guide is for you.

One of the most common questions I hear from aspiring entrepreneurs is: “I have a really great product (or product idea), how do I build a business around it?”

Building a business around a product is often called the commercialization process — which is a great place to start an entrepreneurship journey.

So let’s explore what goes into commercializing a product.

Many people think that if you call yourself an entrepreneur, then you are inherently supposed to know how to start a business.

But the reality is that building a new business is an incredibly complex process that requires the coordination of a wide range of skills, disciplines, and strategies — not to mentioned all the minute details that need to be managed.

Tactics that will turn your dream into a business.

Building a successful startup takes a great deal of confidence, and a good portion of that confidence comes from knowing what to do and when to do it.

That’s exactly why we created our 10x Nation Startup Blueprint. A high-level step-by-step guide for turning your idea into an operational company. It’s based our 10x Nation Idea-to-Operations Framework.

This is the exact process we use for web/mobile startups internally and with our clients — think of it as a guided tour of the questions you’ll need to wrestle with to take your product to market.

Want to go exponential?  

And to make sure we’re on the same page, let’s clarify what we mean by startup

click to tweet

A startup is a temporary situation focused on proving a business model. So that’s what we’re going to do: start from ground zero — a brand new idea — and graduate it into a fully-functioning company positioned for long-term success.

How to start a business — 10x Nation style

Two of the biggest factors that can determine success for a new business are:

  • Doing the homework — getting a clear understanding of the market and where you will fit into it before investing time and money on execution, and then
  • Sticking to the plan

So that’s exactly what we’re going to do: Plan the work. Work the plan.

And here’s a quick visual of what we’ll be working on…

Scale
Assemble
Underpin
Discover
Ideate
Operations
Marketing Personnel Contribution Space
Culture Customer Value Exchange Entity
Validation
Hypothesis Team
Be Unstoppable
Mindset Stability Journal

Starting at the bottom and then working our way up to operations — each layer building on the previous.

As we work through each section, we’re going to create a what I call a Launch Folder — a simple binder full of all the information you gather during the startup process.

Recommended Reading:  

One of the overarching philosophies here at 10x Nation is to do more with less — so we take every opportunity to speed up execution and minimize workload.

So throughout this guide we try to use plug ’n play methodologies or model an existing success story whenever possible.

We’re also going to front-end as much of the research and validation as possible — to minimize repeat work and reduce potential pivots.

Note:  This guide is intended to be high-level — to walk you through each of the major components. To drill down further into individual sections, be sure to read through the “Recommended Reading” links as well.

Be unstoppable

I want you to build an amazing business — a business so good, you can’t be stopped.

No matter what the world throws at it, your business just powers through.

And that power comes from remarkable customer relationships, a rock solid business model, and bulletproof construction.

But all of it starts — and ends — with you.

Step 1: Establish your startup mindset

A ship is only as good as it’s captain.

So right off the bet let’s make sure you have every tool you need to lead your startup through treacherous waters and reach your destination quickly and safely.

And that comes down to mindset.

Specifically, the ability to make the right decisions at the right time, and lead your crew in such a way that the ship steams full speed ahead smoothly and powerfully.

Developing traits like:

  • A high capacity for self discipline
  • Maintaining a positive attitude
  • Managing your perspective on various situations
  • Breaking up large problems and tasks into easy-to-digest chunks
  • Staying aware of & open to new opportunities
  • Knowing when to make things easier or harder in order to achieve a desired result
  • Experimenting and learning from failures
  • Growing & maintaining your social support network
Recommended Reading:  

Step 2: Lock in stability

For some reason, this doesn’t get talked about much, but stability can be one of the biggest factors for success in an early stage startup.

Takeaway:  When it comes to a startup, stability is critical — financial stability, stability at home, stability in the direction you are headed.
click to tweet

For example…are you going to pursue third-party investors or will you be bootstrapping the startup? If so, what is your quickest path to revenue?

Tip:  I always recommend avoiding third-party investors whenever possible, but if you do need to raise outside capital, try to find ways to secure and pay it back without giving up equity.

Basically what it comes down to is making sure you have all your ducks in a row.

  • Do you have clearly defined goals — for the business and yourself?
  • Do you have a clear understanding of why you’re doing this? What’s your motivation?
  • Do you have enough money to pay whatever bills need to be covered for you personally? (to keep yourself in a productive frame of mind)
  • Do you have the capital to pay for the actual startup? Production costs, inventory, administrative fees, etc.

Ultimately, the goal is to create peace of mind.

Startup is stressful enough as-is. So let’s try to eliminate — up-front — as many other potential problems from adding to that stress as possible.

  • Create a rough timeline/schedule
  • Clearly define your “why” for doing this
  • Create a startup goal
  • Create a startup budget — are expenses covered?
  • Create a household budget during the startup? — are expenses covered?
Recommended Reading:  

Step 3: Start your business journal

Keeping a business journal is an extremely powerful, yet incredibly underutilized tool.

But just like a captain’s log, it serves a vital role in your startup — a written record of lessons-learned and decision-making considerations.

It allows you to leave a valuable trail of breadcrumbs. A trail that you can use to track progress, or turn it over to a CEO if you decide to step aside when the business is running, or use is fuel to help raise investor capital. The possibilities are endless.

Develop the habit and create an entry for each work day, including:

  • What did you learn?
  • What did you accomplish?
  • How will you build on your accomplishments?
Tip:  Your business journal entries can be written, audio, or video — whichever is most convenient for you.
click to tweet

And be sure to review your entries frequently, it’s a great way to track progress and spot trends.

Recommended Reading:  

Ideate

Next let’s start laying down a solid foundation for you to build your fledgling new business upon.

Step 4: Crystalize your hypothesis

To start, capture a snapshot your business concept — your core idea for the startup — so we can start wrapping a business model around it.

Tip:  Ideally, you want to stay somewhat flexible here. Focus on a particular problem space, and don’t lock yourself into any one solution. Shoot for a product that is 10x better than the existing option(s).

At this point, all you need are best guesses for the following:

  • What is your product idea?
  • Who are your target customers?
  • How will you deliver the product?
  • How will you reach out to customers?
  • How will you generate revenue?
  • What important resources do you need?
  • What partnerships do you need?
  • What are the critical activities required for the business to function properly?
  • What are the production and operational costs?

And you can put these into a business model canvas…

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments
Key Resources Channels
Cost Structure Revenue Streams

This is a simple one-pager, to clarify and capture your high-level thoughts about the business — no long descriptions required; just keep it succinct and flexible.

Note:  If you’re not familiar with a business model canvas, consider it a precursor to you business plan. We’re going to completely flush out your business model using the canvas, and then use the final canvas to create your business plan.

Give yourself an easy starting point here as well. There are thousands of examples on the Internet you can use for reference, just Google “business model canvas examples.”

Recommended Reading:  

Step 5: Plan your team

Armed with a clear view into what your startup will be working on, you can better determine which skills you need — and then who you need on your team.

Put together a checklist of the skills needed to execute the business.

With this checklist in-hand, it becomes pretty easy to map out the roles:

  • Do you need co-founders?
  • Any required partners?
  • Which service providers do you need?
  • Do you want an Advisory Board? Who will be on it?
  • What about a Board of Directors? Potential members?

When defining roles, be sure to include full responsibilities, business equity (if applicable), and time requirements — to ensure everyone is on the same page.

In the end, you’ll want to compile a full team list for your startup: company founders, service providers, Board of Directors, Advisory Board — everybody you can think of that may be required.

Tip:  The necessity for clarity cannot be overstated at this point. Make sure everyone — from co-founder to attorney — is extremely clear on their role and what they’re getting in return. Many promising startups have been destroyed mid-stream by misguided expectations.

What about your family? Are they on-board with the time, money, and resources the startup will require?

Recommended Reading:  

Discover

Now let’s dive into the meat of the build-out — finding product-to-market fit.

Step 6: Validate your business model

Most entrepreneurs pin the success of their startup on hope and a prayer — so it really shouldn’t be a surprise that most startups fail.

But obviously you’re working smarter than the hope and prayer crew — you’re taking the time to read guides like this.

click to tweet

So let’s get right to it and completely flush out the information you captured in the business model canvas — to prove or disprove your initial guesses.

Warning:  Don’t get buried. Many entrepreneurs like to over-complicate this step and end up getting caught in analysis paralysis. If you feel yourself getting stuck in a rut, remember the mindset stuff we spoke about above and follow the data — the numbers will tell you whether or not you should persevere or pivot.

Overall, the goal here is two-fold:

  • To uncover what you don’t know you don’t know — to expose your blind spots, and
  • Demonstrate that customers will pay for your product.

And you can accomplish both of these by doing some market research, and most importantly, actually speaking to potential customers.

Tip:  When talking to prospect customers, rmember that you’re not trying to sell anything, you’re just trying to get information. You are a student, not a salesman.

Make sure your market is large enough to reach the goals you created above.

And build a prototype of your product to show (and use) with your prospects.

Tip:  If you’re building a software business, is there an existing open source application you can use to kickstart development?
click to tweet

While doing your research and interviews, you will learn new things that will change your original assumptions — update your business model canvas to reflect these changes.

Continue this cycle of research / canvas update until you have a scalable, repeatable, and profitable business model nailed down — validated with paying customers.

  • Ask “live” customers (100+)
  • Find your ideal customer
  • Validate you are solving their problem
  • Demonstrate they will pay you
  • Keep it simple...
Recommended Reading:  

Underpin

Congratulations! You have a fully vetted business model — and are miles ahead of the hope and prayer crew.

So now it’s time to define your new business’s core functions.

Step 7: Define your organizational culture

One of the first discussions I like to have when it comes to building out a new company is around culture, becuase it influences several of the following blocks.

Do you want to instill a specific organizational culture into your business?

Note:  Keep in mind that your company will develop a culture regardless of whether or not you do it intentionally, it’s just a question of whether or not you want to guide that development.

The question of culture has become popular over the last several years, as companies like Zappos and Google have brought it to the forefront.

If you do want to pursue a particular type of culture, I recommend finding an existing business as a starting point.

Most culture-centered businesses are relatively transparent and will openly share how they function internally and methods they use to inspire their respective culture. You can start digging by checking their blog.

Implement their methodologies where applicable and then let your unique culture develop as the business grows.

  • How will you inspire your employees towards your desired culture?
  • How will you train employees? And on what?
  • How will you develop leadership skills within the company?
  • Will you encourage extracurricular projects?
Tip:  Make sure your internal culture is completely aligned with your external brand (marketing) — transparency is inevitable in our 10x world and you want to make sure your customers see a consistent face.

Company culture can seem like a minor consideration, but as Zappos has shown us — it can have serious benefits to your bottom line.

Recommended Reading:  

Step 8: Understand your customer

Let’s pull out the ideal customer you nailed down in the validation package and start to develop some real understanding of who they are — what their wants, needs, and desires are.

Tip:  When it comes to the long-term success of your new business, empathy should be one of the most important words in your vocabulary.
click to tweet

And here is where we start developing empathy for your customers.

To do that you’ll want to build a fictional representation of your ideal customer, based on real world data — demographics, buying behavior, motivations, aspirations, worries, etc.

  • What are their wants and worries?
  • Where are the best places to find them?
  • What’s the best way to interact with them?
  • What keeps them up at night?
Recommended Reading:  

Step 9: Define the value you provide

Next we’re going to focus on why customers will give your new business money — specifically, maximizing the amount of value you provide them for that money.

And to best do that, let’s combine what you just learned about your ideal customer and the product (or problem space) you nailed down during the validation package — and use them to enhance the benefits your product provides (for your ideal customer).

Then create a roadmap detailing how you can grow that product over time.

Takeaway:  Use the deep understanding you have of your customer’s aspirations and worries to maximize the amount of value your product provides for them.
click to tweet

Think in terms of overall experience — what can you provide for your customer that would be valuable beyond your core product?

  • What can you bundle with your product that will boost its benefits or effectiveness?
  • How can the partners you listed in the Team package contribute?
  • How will your product improve over time?
  • How will you innovate new products and features?
Tip:  Be sure to fully document your product, including a roadmap — this is especially important if you plan to hand the reins over to a CEO or sell the company.
click to tweet

Once you have a clear view into everything your product is and does, it’s time to set up production:

  • Find your supplier(s)
  • Establish agreements with your manufacturers, distributors and/or wholesale suppliers
  • Set up an inventory tracking mechanism
Recommended Reading:  

Step 10: Establish your exchange process

Here we’ll develop the critical systems that allow you to make sales, take payments, fulfill, and provide sales support — effectively, how you will exchange your value for their money.

And we’ll do that by developing a roadmap for product sales and support and a decision-making matrix for your sales support mechanisms. Including...

  • What will your product(s) be priced at?
  • Will you have a (dedicated) online store?
  • Will you list your products on online marketplaces?
  • Do you need a dedicated sales team?
  • Do you need a dedicated support team?
  • In-house staff or outsourced?
  • How will you process sales?
  • What payment methods will you support?
  • Who are your payment processors?
  • What are your payment terms?
  • How is the product delivered? (shipping methods, download, etc.)
  • How will after-sale support be provided?
Recommended Reading:  

Step 11: Set up your business entity

Now let’s knock out some of the legal stuff and other formalities — specifically: incorporation, taxation, and asset protection.

  • Have you picked a company name yet?
  • Will you be using an LLC or a corporation — or the new Benefit corporation?
  • Will you be filing for copyright, patent, or trademark protection?
  • If you are incorporating, appoint your Board of Directors (from your Team package)
  • Forming a partnership? Create a Partnership Agreement
  • Are you aware of all tax regulations in your region and industry? And your business entity?
  • Apply for all required licenses and permits
  • Do you have an asset protection plan?
Recommended Reading:  

Assemble

Ready to start connecting the dots and bringing your new business to life?

Reminder:  Keep up with your business journal entries.
click to tweet

Step 12: Create your marketing plan

Now it’s time to get, keep and grow customers — to build your marketing strategy.

And the importance of your marketing plan cannot be overstated — the quality of your marketing is one of the most important factors that can determine short and long-term success.

Pull together what you learned about your customers and create a marketing plan that connects with them on a meaningful level and turns them into raving fans.

  • Develop a content marketing program
  • Capture leads and execute email marketing campaigns
  • Create a sales funnel that easily walks them to the buy button

No matter which strategy you use…

Takeaway:  The primary goal of any marketing strategy is to communicate the right message to the right audience at the right time.
click to tweet

And there is no shortage of proven marketing methodologies that can help you do that — find one you’re comfortable with and run with it.

Recommended Reading:  

Step 13: Create your personnel plan

Now it’s time to set up your plan-of-attack for staffing — clarifying how the company hires, compensates, and utilizes employees.

  • Create your organizational chart
  • For what positions will you use temporary staff or permanent hires?
  • What are the job descriptions?
  • Where will you find candidates?
  • How will you attract candidates?
  • How will you qualify candidates?
  • What questions will you ask during interviews?
  • Do you have specific personality needs?
  • Any required certification or degrees?
Recommended Reading:  

Also, keep Holacracy in mind here as well — it’s plug ’n play and provides a robust organizational structure suited to high-growth businesses. We use it here at 10x Nation and recommend it to all of our clients.

Recommended Reading:  

Step 14: Create your contribution plan

Will your new business be a contributor to specific charities or causes? Are there specific philanthropic initiatives you want it to be a part of?

If so, let’s define a strategy to make your company a contributing corporate citizen by making a difference in the communities the company works in and cares about.

  • Are you forming a Benefit corporation?
  • Will you make financial donations?
  • Will you contribute community service?
  • Contributing on a per-sale basis? (e.g. toms.com)
  • Will contributes be at corporate level and or staff-wide?
  • Who will you donate to?
Recommended Reading:  

Step 15: Create your workspace plan

And now it’s time to plan out your workspace, whether it’s for operations, research, or service delivery.

  • Do you need manufacturing or warehouse facilities?
  • Will you buy or lease?
  • What geographic location(s) are needed?
  • Do you want a specific look & feel in the office? (culture-related)
  • Will you support telecommuting?
  • Will you require specific in office hours for staff?
  • Will you buy or lease the office? furniture?
  • How will you stock office supplies?

Don’t forget about your phone system, an email system or provider, and a collaboration system for internal documents, spreadsheets and presentations.

Recommended Reading:  

Scale

Congratulations, you have a graduate! Your startup has all the tools, infrastructure, and processes it needs to successfully move into prime time.

So it’s time to drop the hammer and start scaling things up.

Step 16: Switch to operations mode

All your hard work has led up to this point — a fully operational company.

You can now roll up everything you’ve discovered, learned, and built into a formal business plan and start taking things to the next level.

  • Formalize operating procedures
  • Develop joint ventures
  • Establish a kaizen program
Recommended Reading:  

Now — don’t break it.

One thing to keep in mind…you’ve built a highly effective business system — so let the system do it’s thing — and enjoy the ride.

Takeaway:  For the business to be a long-term success, you want somebody that thinks operationally running the show.
click to tweet

I’ve seen too many promising businesses go down the drain because, even though the business switched to operations mode, the founder did not.

When this happens the founder often becomes their own worst enemy and breaks the business. I call this startup creep.

Startup and operations can be two very different ways of thinking.

And if they stay in startup mode during operations, many entrepreneurs get stuck in a cycle of trying to control and reinvent everything, instead of letting the system just do it’s magic. And that type of cycle doesn’t scale.

Conversely, day-to-day operations are more focused on steady-state growth by fine-tuning operational processes.

Recommended Reading:  

You have a few different options to avoid startup creep:

  • Sell
  • Hire a CEO
  • Take some time out to reset your thinking

And if you’ve built your new business based on this framework, you’re ideally positioned to easily transition to any one of those options — the business can continue functioning smoothly and thriving while you reap the benefits:

  • Hand over the Launch Folder — including your Business Journal (to CEO or new owner),
  • You have fully documented roadmaps and operating procedures (for staff), and
  • The company’s roles & responsibilities are clearly defined
Tip:  If you have third party investors…the savvy ones are well-aware of this startup creep issue and often times will proactively ask you to step aside if they sense a scaling problem.

Congratulations!

Now that you have a successful startup under your belt, what will you do next?

  • Are you a serial entrepreneur and moving on to the next one?
  • Are you going to stay on as owner/operator of this business?
  • Are you selling this business and travelling the world?
Takeaway:  The options are endless — and the choice is all yours.
click to tweet

As always, start simple and never stop improving.

To your exponential success!

References:
Christopher Mohritz

Christopher Mohritz

Chris is the Founder and Managing Director of 10x Nation.