Yesterday I wrote a nice little blog post detailing a complete, step-by-step process for how to NOT launch a business.

I’d recommend reading it, because launching a bad business is a trap that most founders find their way into despite lots of well-intentioned advice, resources, courses, and accelerators out there meant to steer us in the right direction.

Speaking of the right direction, I figure we should discuss what that looks like, too. Here’s the 10 steps to follow to optimize for success:

10 Steps to Launching A Successful Business:

1. Start With One Single Customer

The first mistake most founders make is over-building a product that people won’t actually pay for. To avoid this, BEFORE you build ANYTHING you should start by outlining an extremely narrow, well-defined ideal customer profile worth building something for. The ideal customer is typically:

• someone you can understand extremely well (ie. yourself or someone you have close access to), and

• someone who has an explicit budget (ie. businesses vs. consumers).

2. Identify Their Biggest Problem(s)

The next step is to interview as many of your ideal customers as you can — this is why it’s very useful to define narrowly and to have close access to them, because you need to be able to find them and talk to them!

Ideally you can interview at least 5-6 to get a robust sample. To truly understand their biggest problems without bias, you need to ask the right questions, then consolidate all the answers to triage the biggest common problems. Typically a good interview question sequence is broad, then narrows down to a pain-point, like this:

• How do you spend your time each week?

• What’s your primary goals as a [Job Title]? What metrics are important?

• What are the top 2 or 3 barriers that get in your way of achieving those?

• What do you wish someone would build for you to solve these barriers?

3. Outline Potential Solutions

After you’ve interviewed, you should be able to identify and rank-order a handful of the most common, painful problems across your ideal customer sample. Next step is to imagine the simplest possible product to solve them (ex: a tool to help me be more productive with X, decrease cost of Y, or reduce risk of Z).

• Simplest typically means a product with ONE core feature — this saves you from overbuilding and forces you to crystalize the most important piece.

• Take the best 1-2 solutions, maybe create some mockups with a service like v0.dev, and pitch them back to your ideal customer sample to find out how much they’d be willing to pay if you built it. If at least one says they’d pay something, then you can proceed:

4. Pick Best and Set-up Paid Pilots (Before Building)

Once you’ve validated a painful problem your ideal customer is willing to explicitly pay to solve, you need to formalize this. Sign a paid pilot with your customer that says you will go ahead and build this product to their standards within a bounded period, if (and only if) they will agree to pay for it. You can offer a refund if the product ends up being unsatisfactory by the end of the period.

Point is, doing this upfront de-risks the effort of building, and incentivizes you to build the right product. It also incentivizes the customer to buy-in and give sufficient feedback to make sure it’s a worthy solution to their problem that they’d ultimately keep paying for.

5. Build The Minimum Viable Version

Now, we build. But you must avoid building anything that isn’t absolutely essential (it’s often easier than you think to do this). It can usually be accomplished without writing any code: a simple spreadsheet, a manual email report, a basic calculator, etc. Your only goal is to prove that you can actually build something viable enough to solve the problem you’ve mutually agreed upon with your customer, and this will often mean holding it all together with duct-tape and superglue.

Share it with your pilot customers early and often to get FEEDBACK on any bugs or inadequacies, which you will be able to promptly address and improve given the narrow scope and emphasis on minimum viable. Be careful of how you set expectations and deadlines; avoid breaking promises to users!

6. Create a Waitlist to Seed a Beta Version

After you’ve built a minimum viable product that solves your first customers’ problem, now you have permission to seek out a few more potential customers. At this point you still should NOT be building a full product yet or doing marketing. All you should be doing is creating a beta page that explains the proof-of-concept product and captures emails.

You can simply spin something up on Waitlist Me and share it on a few online forums where your ideal customers frequent. I can’t stress this enough — KEEP THIS SIMPLE — by doing so you actually create a forcing-function where only people who REALLY WANT what you’re building will sign up (and thus you avoid any ‘false positives’).

Ultimately, the goal of this step is to prove that more than your pilot customer(s) will want what you’re building, before you actually build any more.

7. Build the Beta Version

Now if things go well and some people sign up for your beta after all this, you have established enough proof to justify building out a more complete version. This where you can actually allow yourself to write some code and create user accounts, things like that.

Importantly, by this point you still should NOT have spent ANY money on things like marketing, you should not have raised any money, you should NOT be making any major hires. The goal is simply 1) make sure people will pay for it, and 2) build it in a way that you can deliver it to them. Remember: if people DONT sign up for your waitlist without coaxing, then you SHOULDN’T KEEP BUILDING

8. Launch Beta to Waitlist

Now if you’ve established a waitlist and BUILT a self-serve Beta version that they can use, your next step is to individually onboard each and every one of them to make sure they understand how to use it and establish a two-way relationship.

The most important thing at this stage is to ensure expectations, trust, and transparency. These people must also be paying you up-front to use the beta; you can offer a 30d refund policy if you feel like you need to, but ultimately you need to know that this is worth paying for at scale before continuing. Use this group to debug and enhance incrementally even further before sharing with more people.

9. Begin Simple Lead-Generation

Now that you have established your beta group and the product has been refined, you can finally start broader sales/marketing efforts. To start, I would focus on direct marketing channels like LinkedIn, Email, and social media DM’s. This is the best way to reach business clients at scale, and ensure’s more one on one relationships. They are also FREE channels (which I’ve talked about in previous blogs)

At this point you are allowed to scale to hundreds of prospects, with the goal of understanding your conversion rate. That is, how many prospects must you interact with to convert one to a new client. Typically the rate will be something like 5-10%, so this will require some patience, but it’s important to understand this before spending any money on outbound, general marketing.

10. Outbound Marketing

Finally, once you’ve 1) found an ideal customer, 2) established their biggest problem, 3) outlined a solution, 4) set up a pilot agreement, 5) built the MVP, 6) created a waitlist, 7) built the beta, 8) launched the beta, and 9) done simple lead generation, you can FINALLY start spending money on marketing.

The key is understanding your conversion rate and estimated Life-time value. This will ultimately inform how much you should be willing to spend to acquire a new user (it should be less than their life-time value).

Surprisingly, many founders overcomplicate this part. They assume they’re allowed to pay more than they earn from customers because there are exceptions to the rule. And this may be true if you’re trying to raise VC. But truth is you shouldn’t be raising VC without a proven product-market fit these days anyways.

Anyways, hopefully this helps explain a bit. To launch a successful business you must validate that it is a worthy pursuit at each step of the way, and cut out anything that could convince you of false positives.

If you can’t straightforwardly validate after a certain point, then you should probably consider STOPPING the business all together. This, my friend, is the hardest part: Knowing when to quit.

But that is the beauty of it all.

Peace,

Ramsey