Basic Business Lessons to Start Any Business
Recently I came across a very wonderful book ‘The E Myth Revisited’ by Michael Gerber. And the way Michael has explained the business development process step-by-step, it’s just awesome. This process can be applied to any business. I haven’t read any book ever where the process and steps are explained in so simple manner & with real stories. I’m going to share my learnings from this book.
There’s just 3 stage of ‘Business Development Process’ Innovation, Quantification & Orchestration.
- Innovation — Creating a new way of solving the problem.
- Quantification — Keep a record of every single process and activity, so as to improve it constantly.
- Orchestration — Creating a standard & repetitive mechanism, so as to give the same experience each time to the customer.
What do you love?
Many of you’ll see a coder will start as a technology startup as he/she knows the coding, a violinist will start a music class, a chief will start a restaurant. This is because they think that they very well know the technical thing or the business. You’ll think a coder is passionate or loves coding, hence he can build a very good company. But it’s not the reality. On the contrary, the failure of the business is more if you’re good at the technical part.
To run a business you’ve to wear three hats initially, first as Entrepreneur, second as a Manager, and last as a Technician. Each of them has their way of thinking. An entrepreneur has a big vision that is very different from reality and he always tries to make his vision into reality. A manager knows to execute the orders and manage his team. A technician loves to do this daily work without any worries about the business.
How much do you need?
Now if you’ve found any problem which you think you’ll love to solve it for the next 10 years. Then you should look to start a business. Every business is not meant to be a billion-dollar business, million dollars is also good.
Let’s take an example Sarah loves cooking cookies and she makes very unique and delicious cookies in the town. And now she is looking to build a cookie shop. First of all, you make sure how much do you want to earn from this business. You’ve your desire and financial goals. When would you like to sell the business, at what price, and in how much time?
The reason behind starting this business
So now first of all you need to know what do you love? If you love coding, then don’t start a company. Because loving coding doesn’t mean you can run a software company. Don’t start a company because you don’t want to listen to anyone’s order, or you have a lot of money. The entrepreneur’s journey is very long without any early signs of success and with constant challenges.
Do market research first
Once you found the answer to your business reason, then you should do market research. In Sarah’s case, she researched her town’s number of people interested in eating cookies, the number of competitors in the town. And must important how much earning she must do to fulfill her financial goals. And she found out that she needs to build 20 shops in 8 cities, and which will reach to certain revenue, and would like to sell the business 10 years from now at $10 million.
Do every activity yourself
Now start will small. Sarah knew about cookies very well, she took a shop for rent. Then she started to do every single activity on her own, cooking cookies, decorating them, serving on the table and getting feedback about it. Initially, she invited her relatives and friends to her shop.
Slowly real customers started to come into her shop, these are early adopters. They like the taste of cookies very much. Now here most important lesson, focus more on the way the product is being served than the product itself. It means you should maintain a standard operating procedure, to give the same experience every time to your customers. Now product quality is not enough, you should look to the entire customer cycle. In Sarah’s case, she purchases every single ingredient from her farm. Where she could ensure that she gets the best quality of raw material.
Create standard system
Now after a certain initial customer, you’ll see the business will grow. And now here starts the mess part of the business. As you were doing all the tasks, now it becomes hard for you to manage everything. Even if working for 18 hours a day you’re unable to complete the work. So you think to hire new staff for various roles. But stop here. Don’t make a mistake to hire quickly as you see many customers coming to you.
First of all, set a ‘Standard Operating Procedure’ for every activity like purchase, cooking, serving, cleaning, and cash collection (in Sarah’s case). Your new hire should do as well as you do, hence be specific in creating the manual of every activity. Keep in mind that your activity must be simple and easy that it takes a minimal skill set to do it so that you don’t need to be dependent on the expert to operate your business. Take the example of the Mcdonald’s business. Your goal should be to give the same experience each time you customers.
Create Organizational Chart
Make responsible and accountable for every role and activity. Freedom and accountability are two different aspects. Create an organizational chart and hang it on the wall, so that all staff will know their roles & responsibilities.
I would recommend reading the book.