1 perfect your offer
THE GOAL: Find ways to reach your customers.
Take your best guess on your potential customers. Set up low cost tests to get proof you’re on the right track.
2 create a flexible plan
THE GOAL: Start your business with a solid but flexible plan.
Balance planning and doing. Put a working business plan together that you can change on the fly.
3 execute with small sales
THE GOAL: Make small sales first, then set up your entity.
Start with the basics by making a small amount of sales first. Once you have the process down, create your legal entity and get licensed.
Sole Proprietorship – just you in your business, getting customers and making sales.
LLC – Limited Liability Company. This is a Sole Proprietorship but in the company form so that you’re legal separate from your company.
S-Corp – A ‘passthrough’ entity. This is a separate-from-you company where income taxes are paid for by the company’s shareholders instead of the company.
C-Corp – Still a separate-from-you entity, but the corporation is taxed on revenues instead of its shareholders.
Non-Profit – an entity that contributes to social improvement. Not taxed.
You’re not alone in wondering about this. It turns out that once your idea is public, it’s difficult for others to get Intellectual Property protection for it. There are three different types of IP protection:
Fortunately, there are many ways to get funded. That doesn’t mean it’s easy, though! First, getting as many sales as you can in the beginning is a great way to fund – it allows you to keep ALL of your company and revenue. Second, there are different types of leans out there – from micro-loans, to crowdfunding, to traditional loans from banks. Third, there are investor dollars (Angels & VC). Investor dollars can help you scale quickly – and also come with a price, usually equity and pressure to perform.
There’s an infographic inside the guide:
It’s been a tough-but-worth-it journey the whole way until now (and it continues). Looking back on it, I can say that a mix of spirituality, learning, and practice have gotten me to where I’m at now. The actual moment I left my 9–5, I had just ‘found’ a chunk of money – enough to break out – and some follow-on opportunity. But none of that would have materialized had I not been looking.
A couple years before I left the cubicle, I decided to…
Oh, yes. There have been lots of those! But failing doesn’t have to mean lots of time and money lost – we can use our fails as learning points that help us get better and better. Here’s an excerpt from one of our most ‘famous’ fail stories:
“Six years ago, I flew back to the US after 4 years overseas with some money in my pocket and a successful startup under my belt. This was when mobile was just starting to gain traction and apps were still hot. I had recent experience and was really motivated to get going, especially after having read Business Model Generation, Peak, and The Lean Startup.
“I got a sketch together and even used a prototyping tool to create a functioning mockup. I assembled the business model and figured out a price point, or at least one that I thought was feasible for my customers. I found a national hypnotherapist association and figured that with a $5 monthly subscription rate and a market, I was ready.
And then, s*** got real…”
This depends on you alone. Investors will tell you that they look for teams instead of individuals, but that’s for when you’re looking to scale. In the beginning, it may be too early for a teammate, or it may be the only way you want to go. In any case, there are a few things to consider up front:
- Understand what you and they mean exactly by ‘co-founder.’
- Look for real leverage – it’s not about spreading the tasks around so much as it is about doing things that your co-founder can’t.
- A co-founder is like a marriage partner. Go slow before signing.
I’m Dan, the founder at The Lean Innovator. After 11 years in the workforce, I left my job and started my own business with an Iraqi partner in Baghdad (an ISP). That first business was successful and I returned to the US in 2012. My wife and I bought a cupcake shop and created two more after that – and they’re still operating and profitable. After some side gigs and a couple startup fails, I discovered my love for learning and teaching. My goal is to learn useful knowledge and techniques, then pass them on to you. I hope you enjoy the guide at The Lean Innovator.