How to start a business from scratch

Maybe you have an idea that you just can’t shake. Or a feeling that you’d love to be a CEO and start your own thing. We call this ‘the entrepreneurial itch’. Sounds unpleasant, but in fact, many Escapees have had that same itch, and many have gone on to start successful businesses that they still lead today.

The good news is that nowadays you can pretty much start and run your own business from anywhere in the world with nothing more than a decent wifi connection. But in order for it to last, business planning is essential.

How to start a small business.

Part 1: Identifying the opportunity

If you don’t yet have an idea, it’s essential to identify your motivations in order to pinpoint an opportunity that will leave you feeling fulfilled. 

When you understand your values, you can use them to make better decisions about how you want to live. And the same goes for identifying the right business idea for you. Here is an exercise to help you discover your values. Take your time on this one. 

1. Identify times when you were happiest. These can be from your career and personal life. Why did they may you happy?
2. Identify times when you were most proud. Why did this make you proud?
3. Identify times when you felt most fulfilled and satisfied. What need or desire was being fulfilled? How did the experience give your life meaning?
4. Determine your top values based on your experiences or happiness, pride and fulfilment. Why is each experience important to you? 
5. Use this helpful list of core values to help you choose your top 10. Some may blend into each other - For example, if you value community, generosity and philanthropy, service to others could be a top value for you. 
6. Prioritise your top 10 values. This could take a while! You could do this by putting them into pairs randomly and asking yourself if you could satisfy just one of these, which would you choose? Keep working through the pairs until your list is in priority order.
7. Reaffirm your values. Check your top-priority values and make sure they fit with your vision for yourself.

Hopefully, these steps will help you to clarify your values, or at least approach future decisions with confidence. 

Generating an idea

Some people are full of lightbulb moments. But for the majority of us, inspiration can be rare to come by. 

Fortunately, there are techniques you can use to help spark some ideas:

• Look at problems you face on a day-to-day basis or a need that exists in the world.
• Pick a target demographic and think about the problems they face. 

Write down 25 problems that your chosen person/demographic face. Try to put yourself in their shoes by researching their challenges. The more specific you can be about a challenge, the more chance you’ll have of solving the problem.

Once you have 25 problems, choose the top three most intriguing ones. For each problem, come up with 10 possible solutions so you have 30 possible ideas to play with. 

Try talking these ideas through with someone until you have something that feels interesting and feasible to execute. Take into account the skills and money you need to get the idea off the ground. 

If you have an idea of where you might want to set up your business, have a look at existing businesses in the area. Read reviews of potential competitors and see where the opportunities lie, and where customers have found a gap. 

As you spend time analysing the market for growth opportunities, researching the market and industry trends, the more knowledge you’re absorbing for your next big idea. 

Part 2: Testing your assumptions

The majority of business mistakes are made because of misplaced assumptions. Google thought people would want to walk around wearing camera-wielding glasses. Sky thought everyone would want 3D TV at home. You may not realise that the basic things you’re believing to be true are, in fact, assumptions. They can be a dangerous blind spot. 

It makes sense to get really clear about your assumptions and test them to help you put your best foot forward.

1. Brainstorm your assumptions: What are you assuming to be true in order for your idea to work? Assumptions usually fall into one of five categories:
2. Your users e.g who they are, what they want, what they’ll pay
3. Your product e.g how it solves a problem, what features are most importance
4. Your business model e.g costs, price, how often people repeat purchase, how quickly you can scale
5. Your marketing e.g what customers want to hear, where to find them, how to find them
6. Your operations e.g how the supply chain works, how your team will work, logistical and insurance considerations

Make a list of all your assumptions. Go deep with this one to ensure you’re not missing any assumption blind spots. 

1. Rank your assumptions in order of risk: start working on the riskiest assumption right away. 
2. Test your riskiest assumptions: Research, speak to customers, work out the minimal viable product to solve your customers’ problems. Tests should last no longer than 2 weeks, if they’re taking longer, scale them back. The trick is to learn, fail, and try again fast. 

Testing assumptions might feel strange and uncomfortable, but the more holes you can pick in your idea, the more ways you can overcome the holes and make your idea stronger. You’ll learn to spot risks before they occur, and it can help you stay on track. 

Part 3: Determine demand

You’ve got your idea. Now it’s time to see if it has legs. Try to spend more time speaking with customers about it rather than making it come to life at this stage. Your customers will be able to tell you whether there’s demand before you spend your money. 

Avoid just speaking to friends and family. Think about who your product/service is really for. Set a target customer or niche. They should be easy to access, have a pain point you can solve, and give you good feedback on your idea. Get to know your niche really well. 

You can use free tools such as Typeform or UserTesting for a survey. Or you can use face-to-face or virtual feedback. 

Remember, your clients and customers are people, and are likely using social platforms such as LinkedIn, Twitter, Facebook and Instagram. There are also more niche forums where you can find people, like Mumsnet and Reddit. Spend some time searching for local groups on these kinds of channels and chances are you’ll find lots of people you can speak to to validate your ideas and better understand their needs. 

5 golden rules to follow when conducting research:

1. Speak directly to your niche
2. Ask about behaviour rather than opinions (remember, everything is subjective!)
3. Talk about value rather than price
4. Ask about specific past behaviours
5. Ask about problems rather than solutions

Get as many insights from interest groups as possible, so that you can make sure you’re on the right track before you plan your next move. 

Part 4: Choosing your business model 

Think about the different types of revenue streams your business could generate. It could generate more than one. Some types of business model include product, service, event, subscription, licence, franchise, intellectual property, business to business, advertisement, affiliate, freemium or sponsorship. 

With the example of a cafe, you have the product (food and drinks). You could also sell other people’s coffee beans as part of an affiliate model. You could also host events, which would make it a service. Thinking about the full scope of an idea can help you to plan for unexpected circumstances that may arise.  

Once you’ve thought about revenue streams, think about revenue drivers e.g the number of stores, units of production, and price. Keep in mind the direct and indirect costs to run your business so that you have an understanding of whether it’s possible to be profitable.  

Should I go it alone, or have a business partner?

You may want to work alone in a sole proprietorship, but a business partner can help you to shape your business. 

If you decide to have a business partner, be sure they have qualities such as trustworthiness and strengths in areas that you may find more challenging. Check out this great article for more tips for finding a business partner.

Part 6: Deciding on your destination

After deciding on your potential revenue streams you may have an idea of how these may be impacted by the location you choose. Do you need high footfall? Do you need to be near a niche demographic? Or can you run your business from home?

Never underestimate the power of a network or community when starting out. Amplifying what you’re doing is best done with many people. Join your local community, join in with discussions on social media, or head straight to networking events for face-to-face interaction. 

Organisations like Enterprise Nation and The Dots often list local business events that you can tap into. Plus it’s worth searching events sites like Meetup and Eventbrite to make sure you’re not missing useful networking opportunities in your local area. Sites like coworker will help you to find coworking spaces where you might attend events or meet like-minded people. Check out Nextdoor where you might find people in your local area who are interested in similar things.

Preparing for the worst 

The honest truth is that sometimes things don't work out. Maybe you don't like the area, maybe your idea doesn't work in your chosen location. Whatever it might be, it's good practice to think of these potential roadblocks ahead of time so that you can plan ahead and prepare for any bumps in the road. 

One really useful activity for you to do is called fear setting, made popular by serial entrepreneur and author Tim Ferriss. Fear setting is the opposite of goal setting – it’s a way to visualise all of the bad things that could happen to you, so you become less afraid of taking action. 

Create a list of your fears, the likelihood of them coming true, and all the possible results of action or inaction. Then think of ways you can prevent those situations, and what you'd do to repair the circumstances if they did happen. 

Part 7: Getting into business

You should now feel much more equipped to generate ideas, gain valuable insights from potential customers, and figure out the best place to go, setting you up nicely for the greatest opportunities for a happy business and lifestyle. If your first idea doesn’t quite pan out, that’s okay! There’s always a lesson to be learned. 

Starting your own business is a challenging and rewarding experience, one that can allow you to live the life that’s really true to you and gives you the opportunities to do things you wouldn’t otherwise have. 

And don’t forget you don’t have to do it alone: you’re part of a movement of people doing something different, and creating a life that suits you. By choosing an idea that’s aligned with your values, understanding the financials and customers before you get set up, and getting yourself set up with local communities, you’ll have the best chances of success. You can do this.