#52/111: The Entrepreneur’s Guide to Customer Development

What is it about?

Build a product and they will come? Sorry, probably not. Today, you have to work with your prospective customers from day one. Brant Cooper and Patrick Vlaskovits talk about the Customer Discovery, i.e. finding problems to be solved and building your MVP (Minimal Viable Product).

What can I learn?

Solve needs: You probably don’t have a billion dollars to create demand for your product. So the best thing to do is solve a real need. Why? You don’t have to educate your prospects about the problem you’re solving and they will more likely give you money for your solution.

Get out the building: But what are these real problems? The best way is to talk to your prospects. You can meet them face-to-face, phone them or even write an email. You have the role of an interviewer. Let your prospects/customers do the talking. Often they appreciate that they can talk with you about their business problems.

Test your market: Now that you have identified some problems, you should start building your MVP, i.e. something that will you bring to your next step. Your first MVP is probably a landing page to check if there is enough demand for your solution. Later you could print some mock-ups or build a product that will solve the most important problem you have encountered. This will allow to tweak your product without spending too much time and money.

Conclusion

The Entrepreneur’s Guide to Customer Development is OK. The title is a bit misleading because it’s only about Customer Discovery and I found it a bit too short. However, I think the next book I will review is much more appropriate if you haven’t read The Four Steps to Epiphany before.

#46/111: Startup

What is it about?

If you want to start a business, you need an idea and a business model and money. Elizabeth Edwards focuses about the latter. She shows you how to cut your personal expenses, how to calculate your financial numbers and why venture capital isn’t always the best option.

What can I learn?

Is your business profitable? Before starting your business, you should check if your business model can generate enough profit. How high is your initial investment and how much does it cost you monthly to operate your business? The next step is to calculate your profit on this basis. How long does it take you to break even, i.e. you aren’t losing money anymore? You should reject your idea if it will take longer than two years.

Capital can be expensive: Before you are going to look for venture capitalists, you should think about your need of outside capital. If you can do it alone, go for it. If you can’t do it without outside money, she recommends you to thoughtfully calculate your costs. Don’t forget to include your opportunity costs for searching investors.

Know your metrics: A business runs on numbers. You should monitor your industry key metrics (e.g. page impressions for social sites) and of cause your ordinary indicators like sales, costs and profit. Even if you aren’t a numbers person, learn how to read your key numbers.

Conclusion

This book is an accumulation of tips but lacks the explanation of why you should do they. This is a bit of a downer. The good parts of Startup were clearly the financial and legal knowledge. If you start your business in the US this information is possible pretty valuable. Lastly, besides of the financial and legal advice most advice is out of other books like Made to Stick or Business Model Generation. I would recommend reading those, if you want to deepen your knowledge.

#36/111: The Knack

What is it about?

What should you know before starting a business? Norm Brodsky and Bo Burlingham try to answer this question. They focus on some topics from money management to hiring. The Knack is especially targeted at former sales persons.

Key points?

Know your metrics: Most sales people focus on the sales volume only. This doesn’t work for your business is your profit margin is too low. Brodsky recommends to calculate your profit margins by hand to get a feeling for the numbers.

Search a niche in an old market: You should focus on an old market because you don’t have to generate demand and often the leading companies are pretty rigid. If you can find a niche which undermines these companies, you can earn a fortune.

Keep your old customers: You already know that it’s easier to sell to your existing customers than to new ones. So try to generate more profit from them.

Build a culture: You will reach a point where it is impossible to do everything by yourself. If you hire people try to hire for cultural fit. This way you will trust them more and they will know what’s important for your business.

Conclusion

The first quarter was extremely good. He told a story from two friends of him who wanted to start a business and he explained lots of steps and how they developed their company. Sadly, stories of other people decreased and it become more and more egocentric. The name of the book is a bit misleading, maybe it would be better if it was named “My Business Life by Norm Brodsky”.

#35/111: Start Small, Stay Small

What is it about?

You want an independent lifestyle? If you are creative, you should consider being a micropreneur. Rob Walling defines a micropreneur as a one person company which sells products (software, ebooks, designs) online with a minimum of effort.

Key points?

Go niche: Why? You don’t have so much competition, i.e. your advertising budget is smaller (ads are cheaper, your customers are on the same place) and you can increase your profit margin. Furthermore, your product don’t have to be extraordinary.

Marketing first, product last: Founders often make the mistake to build a product for 9 months to three years and then try to market it. Go the other way around. If you found some possible niches, build a small squeeze page where people can subscribe to a mailing list for further information and market the page with Adwords. After some weeks you can see how many people are interested in your product. If there aren’t enough, go to your next idea.

Outsource: Your time is expensive. Instead of trying to do everything, do just the things that matter, i.e. marketing and building your product. For other things consider using a virtual personal assistant which costs around $6 to $15 per hour.

Automate: If you tested enough marketing tools and done enough SEO, you won’t have to do so much. Try to automate most of the other stuff, i.e. use auto responder for new prospects or build a list with answers for most problems, so you can trim down your support time. After some time, you will have a steady income stream with a little effort.

Conclusion

Terrific book, even for bootstrappers who want to grow. It shows you how to test your ideas and how to do most of the online marketing. It’s extremely actionable and hands-on. No platitudes and fillings. Recommendation for writers, software developers and designers who want to start their own business!