Business

10 Essential Things to Do When Starting Your First Business

Your first business–heck, even your second and third–comes with challenges. Lots of challenges, all of which seem like they need to be addressed today, this minute, now, and planned for, of course, yesterday.

What’s your company’s mission? Who’s your first hire? How can you beat Big Widget to market? And trying to figure out everything yourself can make it nearly impossible to emerge with your sanity intact, your vision still relevant, and your bottom line strong.

So we’re here to help. Well, not just us, but other entrepreneurs–ones who’ve dealt with it all before. To bolster your bid to launch, we sought these founders’ hard-earned insights on the 10 categories we think are most important to VCs and always in the pitch deck requirements of venture firms like Sequoia Capital: Company Purpose, Problem, Solution, Why Now?, Market Potential, Competition, Business Model, Team, Financials, and Vision.

We solicited their picks for the most valuable tools for first-time startups and culled the best of their “if only I had known then what I know now” pieces of wisdom. Then we broke it all down into bite-size bits–so, you know, the reading wouldn’t take too long. Because if there’s one thing we know about first-time founders, it’s that you have work to do.

1. Define Your Purpose

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Donie Yamamoto Founder
VITAL PET LIFE
“Begin by writing out a paragraph that is your brand story, authentic to only you. The who, what, where, and why of your purpose. This process is a great community-­building exercise–editing and wordsmithing your company’s ­essence. Take that paragraph and con­tinue to whittle it down until you’ve created a tag line synonymous with your mission.”
In 2021, just four years after its founding, Yamamoto’s pet care startup landed at No. 348 on the Inc. 5000 list.

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Erin Carpenter Founder
NUDE BARRE
“Make a list of five to 10 sentences and test them on various people you’ve never met or pitched the brand to. See if they clearly understand what you do and the purpose behind it. That is the foundation needed to see what works or makes sense to your audience.”
After bootstrapping her bodywear brand for 10 years, Carpenter has raised more than $1.6 million in funding.

THE THING YOU NEVER THINK ABOUT
“Oftentimes, people try to massage and manipulate a business. Then it becomes the average of every other business. Instead of being reactive to the idea that it has to be a certain way, just build around what you think is the right thing to do.”
Michael Lastoria, co-founder and CEO of &Pizza

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Ethan Rasiel Co-founder and CEO
LIGHTSPEED PR
“Read it out loud and see if it sounds like something you could really say to your friends and family. Strip out all the jargon. If you can’t say it out loud on a single breath of air, it’s too long.”
A former executive at Samsung and Edelman PR, Rasiel founded his Hoboken, New Jersey-based firm in 2013. It now has more than $2 million in annual revenue.

TOOLBOX
“After seeing the white space in the instant ramen industry, we spent close to two years in R&D, working with chefs and nutritionists to reinvent the ramen noodle so that a food that everyone has loved eating could be healthy. Notion, an all-in-one notetaking, project management, and knowledge management system, helped our team stay in sync.”
–Kevin Lee, co-founder of Immi

2. Identify the Problem

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Sachin Jhangiani Co-founder and CMO
ELEVATE.MONEY
“Ask questions. That sounds like common sense, but it gets overlooked too often. We may think we know what the problem is, but the best way to find out for sure is to ask your target audience. When we discussed the concept behind Elevate.Money, we hired a survey company to find out whether our target audience was interested in investing in real estate and what currently prevents them from doing so. That was the first thing we did, before building our deck, designing the platform, or raising capital. The survey not only confirmed our premise, it also helped us raise capital to launch the business and present our audience with a solution they had been looking for.”
Founded in 2020, Jhangiani’s Newport Beach, California-­based real estate investment platform raised $1.7 million in seed capital in 2021.

THE THING YOU NEVER THINK ABOUT
“Entrepreneurs need to invest in solutions to keep track of the roadblocks their customers are facing. When first starting, I would go ticket to ticket to understand customer sentiment and feature deficiencies. After aggregating and analyzing my findings, I incorporated them into our product roadmap accordingly.”
–Amit Sharma, founder and CEO of Narvar

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Pete Maldonado Co-founder and CEO
CHOMPS
“Ask yourself, is this a problem I experience myself? If the answer is yes, cast your net wider. Ask friends and family if they also experience the problem. Now wider– the beauty of social media today is that you can crowdsource information at an incredible rate, so use those engines to your advantage. Who else experiences this problem, and what do they wish could be solved to mitigate that problem, or make it go away altogether? Using your network and other resources allows you to really dig into your consumers’ motivations and mindset, ultimately allowing you to answer the right questions or find the right solutions for them.”
Headquartered in Naples, Florida, Maldonado’s healthy snack brand has made the Inc. 5000 in each of the past four years.

TOOLBOX
“We use so many different sales and customer service technologies, and we need to combine the data from them to get the most impact. Fivetran is a data pipeline that connects sources like Square, Shopify, or Kustomer to our database in nearly real time, and then reformats it so it’s ready for analytics.”
–Louisa Serene Schneider, founder and CEO of Rowan

3. Find the Solution

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Alexandra Cristin Founder and CEO
GLAM SEAMLESS
“You cannot just assume your thoughts on the problem are the only solution. Conducting research and paid focus groups is key to making sure you hit all pain points for the customers or market you are trying to reach.”
Cristin started her New York City DTC hair extension business with only $1,500, building it into a $25 million company within five years. It was acquired by Beauty Industry Group in 2019.

THE THING YOU NEVER THINK ABOUT
“Don’t ignore bad data. One trap I think entrepreneurs can easily fall into is that their will to make something work clouds an objective view of a situation.”
–Alex Kost, co-founder and COO of the Naked Market

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Eli Crow Founder and CEO
EDUCATION ADVANCED
“Find the smallest piece of the problem you can solve that provides the largest benefit to the buyer, and make sure you get it right. It takes time, so don’t rush to solve every issue. Get the first one right, and then take on the next.”
Crow’s Tyler, Texas, edtech SaaS company is a two-time Inc. 5000 honoree, in 2020 and 2021.

4. Time Your Launch

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Vishal Joshi Co-founder and CEO
JOY
“The right time for your company or product to launch is now. Staying in stealth mode is rarely helpful unless you are in a space like hardware or hard sciences. For most typical SaaS, B2B, or B2C companies, you will benefit from and save time by getting validation early.”
Last year, Joshi’s wedding- planning app, founded in San Francisco in 2016, announced a $20 million Series A round.

THE THING YOU NEVER THINK ABOUT
“One mantra that I find myself repeating to early founders is ‘Don’t worry about good problems to have.’ Spending time making your website more scalable before you’ve even launched is an example of this. Focus all your time on getting your first user and making them happy.”
–Eddie Kim, co-founder and CTO of Gusto

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Tom Aulet Co-founder and CEO
ERGATTA
“I feel like this is probably the hardest thing to get right and where the most luck is involved. Make sure what­ever industry you’re attacking is in the first inning of whatever disruption you think is going to happen; there should be some evidence that the disruption is going to happen, but most people you speak to in the industry haven’t realized it yet.”
In 2021, Aulet’s New York City-based fitness equipment maker raised a $30 million funding round at a valuation of $200 million.

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Larry Cochran Founder
SEMO
“Like most things in life, there’s never a perfect time to launch your company or product. And even if there were, you’d never be able to pinpoint it ahead of time. You just need to make sure that your initial market testing supports a strong enough signal that your timing will be successful. If there are too many conflicting signals, it’s best to hold a beat to ensure you’ve accounted for as many variables as possible to have a successful launch.”
Semo, a San Antonio-­based insurance score platform, is the second insurance business Cochran has founded and the third where he’s served as CEO.

5. Find Your Market

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Ajeet Singh Co-founder and executive chairman
THOUGHTSPOT
“Market first, problem second, idea last. I don’t fall in love with an idea too quickly. Instead, I spend time up front understanding the market structure, confirming that there’s a widespread, high-value problem to solve. If you’ve picked the right market, you can refine the problem you are working on. If you pick the right market and the right problem, you can refine your idea. The hardest thing to do is to pivot to a completely different market. Not impossible, but it’s a painful transition.”
Before starting ThoughtSpot, a San Jose, California, analytics business valued at more than $4 billion, Singh co-founded the now-public enterprise cloud company Nutanix.

TOOLBOX
“Google Trends is invaluable to validate any idea or product you are exploring. It allows you to compare search volumes and interest for your category, product features, and competitors, all the while seeing the seasonality for your product.”
–Jordan ­Nathan, founder and CEO of Caraway

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Joe Procopio Founder and CEO
TEACHINGSTARTUP.COM
“When you aren’t confident that your product directly serves a large enough market, you’ll tend to open up your aim to a broader market, and you’ll end up targeting no market at all. An overly broad message doesn’t speak to anyone. A wide positioning just confuses potential buyers across a lot of various categories. A long feature list may lead you to believe your product will find a wider audience, but you risk never being the right solution for any single use case. ­Instead, have faith that if you pitch and serve one ­customer amazingly well, other customers will conform to your ­product, not the other way around.”
Procopio is a serial entrepreneur, as well as the chief­ product officer at Durham, North Carolina, ­on-demand car care startup Get Spiffy.

THE THING YOU NEVER THINK ABOUT
“Inventory forecasting. It is really exciting when you figure out a marketing strategy that works, but if you don’t have inventory to back it up, it can quickly become a nightmare.”
–Tara Williams, founder of Dreamland Baby

6. Size Up the Competition

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Joanna Griffiths Founder and CEO
KNIX
“Follow your competition on social media, read about your industry and competitors as well as the market more broadly in business news publications, and listen to podcasts where a competitor is the guest. It’s amazing what you can discover.”
Griffiths raised a $43.5 million round in 2021, bringing her Toronto-based DTC intimate apparel brand’s total funding to nearly $50 million.

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Hillel Fuld Tech marketer and startup adviser
“Even if your product is different from another company’s, if you’re both targeting the same audience and both pitching an increase in revenue or web traffic, you are directly competing. Once you have built a competitive landscape of every company in your space, add columns to the spreadsheet for wins and losses. Gain from the lessons others have learned. For example, you can learn a lot from a competitor’s go-to-market strategy. Look at its language, and take notes.”
Fuld is a marketing expert and adviser to entrepreneurs and investors, as well as tech giants such as Google, Oracle, and Microsoft.

7. Design Your Business Model

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Nicky Jackson Founder and CEO
RANGEME
“You learn, iterate, and pivot along the way. A lot of what you thought or planned for in the early days is different from what evolves. The biggest items to consider are your objectives; modeling for growth is very different from modeling for a sustainable and profitable business.”
Jackson’s San Francisco-based product-discovery platform is used by retailers including Walmart, CVS, and Best Buy.

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Alexa von Tobel Co-founder and managing partner
INSPIRED CAPITAL
“Find the five smartest people in your life, and go run your business plan by them. Ask them to kick your butt. Ask them to poke holes in your strategy and vision. Let them tell you what they think is so stupid and ridiculous. You don’t have to agree with them, but they’re going to point out things that future investors will care about, that future business partners will care about, that people you’re hiring will ask you. And you need to know the answers.”
In addition to running her New York City-based venture fund, von ­Tobel hosts Inc.’s Founders Project podcast.

THE THING YOU NEVER THINK ABOUT
“You should approach a startup like an indie band. A 50/50 split of focus between creating the album and the fanbase. It might take 50% longer to build a product, but you’ll be instantly profitable at launch vs. going bust. You’re also creating a fanbase that you can sell your next ‘album’ to.”
–Kevin Michael Gray, founder of ApproveMe

8. Build Your Team

THE THING YOU NEVER THINK ABOUT
“We forget that most people in the organization are lacking the context they need to truly execute well in their jobs. Practice communication intentionality by putting yourself in the seat of someone three to four levels of reporting below you and figuring out what ­information they need.”
–Nick Greenfield, co-founder of Candid

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Ryan Black Founder and CEO
SAMBAZON
“Founders should hire their opposites. If you’re good at sales, hire operations. If you’re good in ­finance, hire marketing. It’s key to get to a balanced team quickly. Think of it like basketball. If you and your co-founder are seven feet tall, don’t go hire a big man. Rather, you look for guards and forwards.”
Black co-founded the San Clemente, California, maker of açai-based foods with his brother in 2000, building it to more than $100 million in annual revenue.

TOOLBOX
“Professional ­employment organizations (PEOs)–often called employee leasing companies–save a ton of time and headaches on the HR front as you start to grow your team.”
–Jennifer Beall Saxton, founder and CEO of Tot Squad

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Rob Braiman Founder and CEO
COGENT ANALYTICS
“The most important consideration to keep in mind when assembling your team is very simple: How do I extract myself from each part of the process in a way that I can still trust it to be handled to the standard I set for my team? Figure that out and you will enjoy a far healthier work-life balance and a more successful business.”
Braiman’s Greensboro, North Carolina-based business consulting firm is a four-time Inc. 5000 honoree.

9. Track Your Financials

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Barr Moses Co-founder and CEO
MONTE CARLO
“I’d suggest having all functions align on one or two important metrics that signal growth instead of trying to boil the ocean.”
Moses’s San Francisco-based data reliability platform has raised more than $100 million in funding and is on Inc.’s 2021 Best Workplaces list.

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Carolyn Betts ­Fleming Founder and CEO
BETTS RECRUITING
“Be mindful of how money is being spent and certain that the investments you’re making contribute to the longevity of the company. With new companies, it’s easy to burn cash and develop an inconsistent cash flow. Cash is king, so managing cash is the single most important financial advice founders can learn early on.”
Betts Fleming founded her San Francisco recruiting firm in 2009. It made the Inc. 5000 list in 2016 and 2017.

TOOLBOX
“Shopify allowed me to launch a business in 2016 for $199. And, even with zero tech background, I could run my entire business from my iPhone.”
–Michelle Cordeiro Grant, founder and CEO of Lively

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Max Baybak Co-founder and chief ­strategy officer
INFLUX MARKETING
“Many companies spend too much time obsessing over profitability early on when they need to focus instead on tracking the volume of jobs completed or products moved and pushing that up and to the right.”
Baybak started his Pasadena, California-based medical marketing agency, a 2021 Inc. 5000 honoree, in 2014.

THE THING YOU NEVER THINK ABOUT
“There should be zero exceptions when it comes to receiving payment for your services. Don’t be afraid to hold others accountable to contracts and payment terms that have been established.”
–Julianne Fraser, founder of DialogueNYC

10. Realize Your Vision

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Natalie Nixon Founder and president
FIGURE 8 THINKING
“Creating a vision can be fun and energizing. And it will also feel messy and ambiguous. Don’t shy away from the moments when it gets confusing. Factoring in diverse stakeholders or shaking up pre-established roles and legacy is hard work. This is why it may make sense to bring in an external facilitator who can lend more objectivity to the process. This will not be a linear process; there will be shades of gray.”
In addition to founding her Philadelphia-based strategy advisory firm, Nixon has authored books on creativity and strategic design thinking.

THE THING YOU NEVER THINK ABOUT
“Don’t forget to write down your values and founding principles.”
–Shivani Siroya, founder and CEO of Tala

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Vishal Sunak Co-founder and CEO
LINKSQUARES
“You have to find time to work on the business from a strategic level, not just in the business, putting out fires and dealing with today’s issues. It’s painful sometimes to do only this. So set aside one day a quarter when your management team dedicates 100 percent full focus to thinking exclusively about the future, what’s not working, and how you will position the company to succeed.”
Sunak founded his Boston-based contract management software maker in 2015. It is No. 253 on the 2021 Inc. 5000 list and has raised more than $60 million in funding.

TOOLBOX
“While you can use ­feature-packed systems like Monday.com or Trello to juggle competing priorities, using a good, old-fashioned whiteboard is sometimes better. The act of physically writing down what is important and crossing it off is immensely satisfying, and helps you achieve your long-term vision.”
–Kelly Dyer, co-founder and co-CEO of SourceFuse Technologies

Statistics Section

68% 

of U.S. entrepreneurs say they want their business to make a difference in the world. (Source: Global Entrepreneurship Monitor)

29% 

of current and aspiring u.s. business owners said being their own boss was their motivation for starting a business, the most common reason. (Guidant Financial/Small Business Trends Alliance)

10% 

of startup failures were in part the result of a mistimed product release. (Source: CB Insights)

35% 

of failed startups cited a lack of market need as a reason they failed. (Source: CB Insights)

20% 

of failed startups said they got outcompeted by other companies. (Source: CB Insights)

64% 

of entrepreneurs use personal and family savings to fund their companies. (Source: Kauffman Foundation)

14% 

of startups that failed said they did not have the right team in place. (Source: CB Insights)

$405,800: 

The average amount of debt owed by a u.s. small business. 70% of small businesses have business-related debt. (Source: National Small Business Association)

58% 

of U.S. startup founders and executives say their long-term goal is to get acquired. (Source: Silicon Valley Bank)

From the March/April 2022 issue of Inc. Magazine


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