The Anti-Silicon Valley Business Plan For Years 1–3 (Part 1)
What startups that don’t get funded by VCs and angel investors should not do.
This is Part I of a two-parter. Click here to read Part II.
When I have the opportunity to coach an entrepreneur through building a new business from scratch, our first order of business is to remove all the bullsh*t “should’s” that startup culture tells entrepreneurs to populate onto their to-do list.
Here’s the image a lot of entrepreneurs have in their head of what they should be doing when they have a new business idea: 1) dream up idea 2) write a business plan and pitch deck 3) look for investors 4) build 5) make sales, hopefully, hit traction 6) ask for more money from investors 7) scale.
This version of building a startup is one usually observed amongst angel-invested and Silicon Valley startups, so it’s perceived that this is the tried and true path of building a successful business.
Before the tech startup boom, there was a different path entrepreneurs took to launch and build their businesses. This was the path taken by those who didn’t have access to capital, and only hustle and drive to make their business a reality.
I don’t really know what to call this path, other than this is the path I personally observed mom and pop shops (including my parents’) take when I started my first business back in 2007.
Following this mom and pop model, here’s the path I tell entrepreneurs to take instead when starting something new: 1) dream up idea 2) build 3) make atleast $20K in sales 4) write a business plan, if you need it 5) make more sales, hit traction 6) scale 7) look for investors if it makes sense.
I don’t have anything against the Silicon Valley method of launching a new business. It works for those that have the social capital and network to pursue it. It’s just not the playbook 99.95% of startups who never access VC funding should be following. Even if you pursue angel investments, 99.09% of you will not secure those investments.
I’ve put together a list of what you don’t need to do if you are one of the majority of startups that will have to bootstrap to get their business off the ground. Here’s a breakdown of my anti-Silicon Valley business plan and what you don’t need to do in years 1–3 of your business.
I don’t care if your startup is building a spaceship to create a colony on a moon off of Jupiter. You don’t need funding to start your business.
If you’ve pursued raising money for your business and didn’t get a substantial response, it should not be a block to pause on building your business. It should provoke you to get building with what you’ve got.
Think about this scenario: let’s say someone pitched you a business idea and they are bouncing off the walls excited about what they’re building and are passionately telling you about how this startup is the full embodiment of their life’s purpose.
Fast forward to a year after that conversation — you run into this entrepreneur and they share that they weren’t able to get any funding for their idea, so they gave up on the business. How would that make you feel?
It personally makes me feel like they weren’t crazy enough about the idea, or that they were just selling me a story to get me to invest in their business.
Observing what an entrepreneur does when they don’t have funding is where you see what an entrepreneur was truly pushing — guts and passion, or an idea they wanted to sell but weren’t hungry enough for.
Now let’s go back to my Jupiter moon spaceship startup and how you’d go about starting this business that probably costs billions of dollars to get off the ground. Every startup idea that needs an ungodly amount of funding to bloom into its full potential has a seed version (a 1.0 version) that can be executed with $0 to very little funding.
If you are starting your Jupiter spaceship business because you are passionate about preserving and continuing the human species before Earth becomes inhabitable, it’s not the idea of flying a spaceship to Jupiter’s moon that will buy your customers, it’s the vision you have behind the idea that will hook them.
The 1.0 version of your business should ride off of your unique vision and create a product/service related to it. The idea here is to start gathering your customers for your future spaceship through a product/service they want in a different form.
Selling version 1.0 gives you the opportunity to familiarize your audience with your brand’s ethos, unique perspective, and build a community of likeminded superfans.
Your 1.0 bootstrapped product can look like: a blog, YouTube channel, or podcast that educates its audience on the possibility of inhabiting other planets, or a consultancy that helps businesses in the aerospace industry build stronger products and accelerate space travel technology.
All of these 1.0 ideas require little funding to start up, and just gumption, drive, and hustle to generate revenue. Once you’ve got 1.0 going, you can take the profits from 1.0 to help build the 2.0 version of the business, or to court investors who are interested in a business that has an audience and a proven track record of buy-in into that vision.
There’s nothing more impressive than an entrepreneur who’s willing to deconstruct their ego and take a few steps back in order to reach their goals through an alternate path.
An entrepreneur who is truly in love with their idea and exhibits that love through a tenacious will to keep moving forward, even when everyone tells them no, is an entrepreneur who’s going to inevitably crush it. My money’s all-in on someone like that.
Outsourcing Major Decisions
Don’t jump the gun on outsourcing the creation of your business. Hiring someone to help you define your vision for your business is great, but hiring someone to define that business for you is not great, in my humble opinion.
Hiring a business coach or consultant to help you strategize and mold your vision into its most polished state is fantastic, but outsourcing the creation of your brand’s voice and messaging to a Marketing Manager without your hands-on involvement isn’t.
When you hand off the task of something as important as who your brand is, how it speaks, and the vibe it gives off, you want to be the person who defines that. Not some random Marketing Manager you hired.
Your brand becomes molded to the vision of your Marketing Manager, and it begs the question — who’s the CEO of your company steering the vision, you or the people you’ve hired?
Hiring a team is necessary to retain your sanity as a business owner, but in the beginning? You need to be the source behind the formation of your identity. Don’t give that immense power to someone else.
So in the beginning, do a bit of everything yourself, just for the sake of understanding the direction you want to steer the ship in, and the reason behind why you’re steering the ship in that direction.
Work with someone like a business coach or consultant to get you up to speed on how to define a resonant brand position, voice, etc. and then build that identity.
Once you’ve planted the roots and you’ve established what your garden is ultimately going to look like, only then should you bring in a support team to maintain the land you’ve already laid out.
You don’t need a business plan, trademarks, be incorporated, or even need a website in the first year of your business if you have not made any sales yet.
I usually recommend that entrepreneurs make about $20K in sales in their business before doing all the official stuff of setting up a more permanent structure.
When you’re in the pre-$20K sales phase, you are in the experimentation phase in my book. During this phase, you have chosen a theory to test in the form of a business model, and you are using your sales as an indicator of whether this theory is true or valid.
Don’t Officially Launch Your Startup Until You Make $20K In Sales
The 3 phases to testing and launching your startup.
Your first year of business shouldn’t be considered the year that you open your business’ doors. It should be the year when you proved or disproved that your business idea was viable. It should be your experimentation year.
If you’ve found that your business has a valid revenue model behind it, you can then move forward to building a website, writing a business plan, etc. with confidence that you’re putting formal weight behind something real rather than something that just sounds good in your head.
You may be asking yourself, how do I make $20K in sales though if I don’t formally do all the things to look official?
Create a super simple Squarespace website and pick one sales floor like Instagram, in-person markets, etc. to sell your product/service.
I have seen businesses generate a million in revenue with only a 1-page website and a strong Instagram game plan to sell their product/service. It’s possible, and thousands of entrepreneurs are doing this right now. Why not you?
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