Tag Archives: start-up

Customer Development

I am in the early stages of a new start-up idea so I am poking my head up to look around for the latest best practices before getting underway.   I was referred by some friends to Steve Blank’s  idea he calls Customer Development. It’s not brand new, but it is certainly far from mainstream yet.

Not only do I feel that Steve’s framework is right for my start-up, but I was also compelled to write a blog post.  During my research I found a post so well written that I knew it was better to link out rather than write a new one myself.  Therefore, I highly recommend Jussi Laakkonen‘s post called “Customer Development or why 9/10 startups fail

Please note: just talking to your customers (focus groups) about their needs is NOT customer development.  You need to actually try selling to them and see what happens.  Steve suggests that selling should be brought as far forward as possible in the process.

I have begun forming my customer hypotheses.

  1. I will test my hypotheses by talking to a variety of customers (not too many)
  2. Building simple iterations and seeing if early adopters will use/buy
  3. updating my hypotheses and iterations based on what is learned from early adoption
  4. Developing a larger marketing push once adoption/return is clearly good enough.
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Business Plan 2.0

Business Plans are an essential part of any new venture.  But, what happens once you get into the execution stage….  At that point, almost all go by the wayside.  Some are dusted off and reviewed annually, but most are not.

The initial development of a business plan  is usually dominated by a very small number of people (sometimes just one).  The process often feels more like dotting the i’s and crossing the t’s in order to satisfy some expected template than it feels like truly building a roadmap for success.

In my most recent ventures I decided to leave all that behind.  Not the concept of a plan, but the approach to building it.  In this age of web2.0/collaboration, it makes a lot more sense to have a living business plan.

There are tools to help with collaborative business plans (eg. PlanHQ).  Call me old fashioned, but I prefer free-form.  Because every business is different, using an application seems like working the idea to fit into the software rather than describing ways to help the idea take flight.  My latest business plans are being managed on a wiki (Google Sites).  Everyone on each team has access and is expected to manage the plan.  We can link in spreadsheets, and documents, and presentations.

Those of you who are familiar with deploying wikis know that just because anyone CAN edit something does not mean that they DO edit it.   Not much difference when it comes to doing a business plan on a wiki.  In order to ensure that everyone regularly uses the wiki, you should publish elements of your business activity on the wiki and ONLY on the wiki rather than through email and emailed documents.  Examples of content that can go on the wiki includes:

  • status reports
  • feedback on any team document sent to you
  • creative designs
  • etc…

It is always a natural tendency to get mired in todays’s challenges.  Using a wiki does not change that tendency.  But, if the plan is a click away and you are constantly drawing people back to it, hopefully you and your team will occassionally to re-check and update the plan.

The 3 income family

Human evolution included a time when the men were hunters and the women managed the family unit.  As late as the 50’s it was the cultural norm for most households to have a single wage earner.  Over the last 50 years we all know that has changed dramatically.

Two main trends have led us in the direction of dual income families:

  1. Women’s liberation – we cannot deny this is the major factor.  Women wanted to pursue their goals beyond the home and they were culturaly empowered to do so.
  2. Cost of (desired) standard of living is exceeding the single income 

It is the 2nd of those trends that I am going to examine.  Many families have two incomes because they need to, not because they want to.  They have upgraded their standard of living to the point where they cannot achieve it without a second income.  Keeping up with the Joneses has sent everyone to work at 9-5 jobs.   There is a nice side benefit of having two incomes: reduction in risk.  If one is laid off, the family income is only partially reduced rather than completely eliminated.

Now with the economic downturn many families are realizing that they need to reduce their risk exposure even more.  A standard of living that is consuming both of those incomes and accomplishing very little savings still carries an extreme amount of risk.  Many families are focused on paring their spend, but in the longer term what can we expect?  If the first time around, we let spending increase and sought ways to increase revenue (adding a 2nd income), why should we believe this time will be any different.   Where can we go?….third income.

Because of the massively networked economy where one can start a business with a good idea and a lot of outsourcing, it is easier and easier to start your own business.  I believe that many American families are going to be keeping their job each and trying to generate an additional independent business income “on the side”.  

Has anyone seen any studies on this?  I would love to see if my hypothesis is backed up by the data.  While good for our economy as a whole, how might this impact corporate profits as salaried employees leave work earlier in order to focus on their third income?