We were flying down the highway on a three-hour trip, hurtling through space and time, ensconced in the drone of the engine, the whistle of the wind outside the windows, and the hum of tires on the road. We had time on our hands. He knew I have business training and experience.
He asked me where to begin to build a business he had in mind.
“I guess I need a business license. Should I form a Corporation or LLC? Is logo and trademark registration expensive? I suppose I should publish a web site. Where should I advertise?”*
What I told him varied greatly from what he thought a startup would do.
Entrepreneurship Is Big Business, And Nobody Is Guaranteeing Startup Success
I’ve fallen for every misguided approach to starting a business.
- Attorneys have happily sold me business incorporation services.
- I’ve bought dozens of books, courses, and programs about how to start a business.
- Coaches and trainers have delivered dozens of hours and thousands of dollars of leadership and performance training and coaching.
Still, I have no sustainable business to show for it.
We Make It Too Complicated
I channeled for him the best advice I know about how to start a business:
- Lean Startup has revealed the cash flow management secret for early startups: don’t spend a penny on anything except creating a minimum viable product you know a paying customer wants.
- Shark Tank has revealed the simple secret to starting a business: you don’t have a business until you have a paying customer.
I gladly shared those secrets with him:
Don’t spend a penny on incorporation or licensing or advertising until you have a clear picture of your product and the customers who’ll buy it. Shop competitors and talk to probable customers about what is now offered in the market and what customers want. In conversations with them, define the features of your first product or service. First, understand the benefits desired by the customer, which the customer will be willing to pay for.
Until my friend has product/market fit and some volume, he’s just paying for business services he doesn’t really need, to formalize a business that doesn’t really exist. He’d be a customer of somebody else’s business, who isn’t doing him any favors by selling him services to formalize a business he doesn’t really have.
Finally, he knew what to do. He was no longer distracted by red herrings like whether to form a LLC or C Corp, where to go for a business license, or how to go about protecting his trademarks.
Suddenly, he liked his corporate job a lot more.
*(While I’ve placed conversations in quotes, they’re not exact quotes of the conversations. They’re representative of the spirit and content of the conversations, as I recall them.)