From recently failing my biggest project so far, I learned 4 things that I happened to do right. These 4 tips got me much closer to my objective of raising funds and eventually coming to market with my product.
The following list might look unusual compared to other top tips lists on a similar topic floating around the web. That’s because I don’t like giving advice that hasn’t proven to work with me or things I haven’t tried out myself. That’s why I’m limiting this list to things I happened to do right.
#1: Plan, Estimate, Analyze and Compare – Write Everything Out!
If you have an idea for a business, it literally doesn’t take any skill or prior knowledge to write it out. Just open Google Docs and start writing! After a short while you realize, this was the most important step.
The document you create will describe the idea, what makes it special, how it will make money, and more. It will fully have to describe your product or service, and the market around it.
While writing, you will realize you need to research some parts that aren’t clear for you. As a result, you will fully formalize the idea and be able to present it to anyone later in just a couple of sentences. And on top of that, you will automatically notice flaws in your plan and have a chance to think of solutions to solve them.
While writing you need to keep in mind who might eventually be reading it and how much patience they may have. There is a chance that the person reading it doesn’t have the same prior knowledge on the subject as you. So you have to make it easy to understand to anyone. And if the person reading wishes to grasp the idea in a short time, the document should allow that as well.
Don’t be discouraged to come back to this document every few days and rethink, rewrite and reorganize your material. It can, and it should be a ‘living document‘. This is very common in the game development industry and it’s called a Game Design Document.
Through working on this document, you prepare yourself for future pitches, small talks, and long-lasting conversations on this topic. You may also soon realize that it’s better to split the document up into different files (text documents, presentations, etc) depending on the target audience and the situation that it’s needed in. That is good practice!
Product Design Document
This version of the document will be aimed towards your colleagues who know the area better and are familiar with the relevant terms. These can be your designers, engineers, developers, marketers, etc. It’s good to dive deeper and get specific for them. They will need to know exactly what is in your head.
Describe all the details, find similar projects as reference examples, sketch together some drawings. Unfortunately, mind reading hasn’t been invented yet, so you have to work extra. Do anything to get what is in your head out into this document.
Financial Plan Document
There are people who might want to financially help out your project because they believe in it and see that it can make them more money. So you need a way to lay out your plans to them and explain how you’re gonna make it happen. This is why you’ll need a separate specialized document just for this. You will probably be presenting this to interested investors or using it to put together pitches for them.
Figure out which monetization model you want to go with. Are you going to simply sell your product, rent it out, or give it for free and earn money through ads? Do you have an alternative monetization model instead? Read about other similar products or services in the field and compare yours to them. Decide what would be best.
When you have picked a monetization model move over to Excel, Google Sheets or something similar. Here is where we start playing around with numbers and start figuring out if and how the business will be profitable.
You don’t need to be an accountant or a mathematician at this step. You will only need to have basic knowledge of how to use the software you picked – so watch a few tutorials if you haven’t already. Expect this step to take some time. You will need to parallelly do A LOT of market research (Googling) and then input your findings into the table calculations program. Some of this info might be hard to find and might take some logic based guessing, but keep at it. Also, don’t always believe the first numbers you find, go in-depth.
Find out the following numbers and add them to your calculations:
- The average price you could ask (or average revenue you could generate) from your client;
- The number of clients you might get;
- How much taxes you need to pay;
- The average cut that the intermediary businesses will take;
- How much you will have to pay your employees (and/or the cost of production);
- How big the unexpected costs might be (you will have them, you can’t plan for everything);
- The total cost of all the licenses you will need;
- How much the legal fees will be for the whole process
It is normal to be a bit optimistic with your profit estimations, but definitely, don’t be unrealistic! It is highly unlikely you will start competing with the biggest fish in the market any time soon – unless you have a very-very strong upper hand and you can prove it.
Hint: You most likely don’t.
#2: Create a Prototype and Let People Test It
Having a prototype puts you significantly closer to making your plan a reality! Not only do you prove to everyone that you can make the end product happen. You also get to observe how your end users are using it already.
You have to have a prototype!
Every person in the world has ideas, very few act on them, and even less make it a reality. When you have a prototype that can primitively display the features of the end product, you have set yourself apart from most of your competition. Couple that with the research and preparations you did in tip #1 and you will have some serious investment negotiations with investors.
Another great benefit to having a prototype is the chance to study the way that your end users are interacting with it. That is always extremely fascinating for me. Just give them the product and say what it is.
For example, I say “Here. This is a video game I made.” Pointing at a laptop sitting on a desk. When they sit down and start trying it out, they shouldn’t need any more instructions from you to get started. Keep in mind, you can’t be in every client’s home, holding their hand through the learning process. So every instruction you need to give them is feedback to you to improve the design.
Of course, some design flaws are inevitable in the beginning. Especially if the product is at a very early prototype stage and you haven’t put much effort into design yet. But you can still observe how the core features are used. You probably have a vision of how and what for your product is being used. There is a high chance that the user is not using it necessarily how it was intended to be used. Take note of that and analyze it later – you might want to rethink the user experience or even the whole purpose of your product.
#3: Tell Anyone Who Is Willing to Listen and Take Feedback
I am willing to bet you are not the smartest person in the world. You are also not the most connected person in the world. So don’t act like one. Tell people what your plan is and ask for their opinion.
Of course, it is great and extremely necessary to have a clear plan and vision, but don’t be too stuck to something you came up with at the very beginning. You learn on your journey, and you should use your new knowledge to perfect your plans. Discussing with people your ambitions doesn’t only allow you to look at it from a different perspective, it also opens an opportunity for that person to connect you to someone that might help you out.
Remember how in middle school when you found out about a great song that no one in your class knew about. And after you told them about it eventually everyone was listening to it and jamming along.
At least that’s how it happened in my class. 😛
For the person introducing the new song, it created this great feeling of pride, even though he didn’t compose the melody, nor wrote a single word of the song himself. He just created value by introducing it to people, and that’s why he was special.
The concept hasn’t changed now that we are older. We still want to feel special and thus most people still tell their friends about things that might be valuable for them. So let people know about what you are doing so that they can start talking about you and make it possible for the right people to find you.
#4: Be Organized and Make Every Hour Count
If you are like most entrepreneurs you don’t have unlimited hours to spend on making your dream come true. You have to be organized and make every hour count. That’s why you should try this extremely simple time management exercise!
Start every morning with a list of things you want to get done during the day. Plan your day out with time-boxes. Give yourself a schedule of how much time every task you plan to complete that day should take. Factor in everyday activities like lunch breaks, food store visits, etc.
Throughout your day, keep an eye on your schedule!
You will miss your deadlines a lot in the beginning and might not get as much done as you first thought you would. But don’t be scared to be wrong. Learn from it and the next morning make a more realistic list for the new day.
This exercise works like magic. It doesn’t take a lot of time from you and it doesn’t make you overwork. It just gives you an overview of your workday and keeps you focused on things you need to do.
Try it, you’ll be surprised!
My hope is that these 4 tips will help you along with your next startup creation. I’ve learned that these 4 are absolutely crucial, and without following them I would have never gotten as far as I did.
If you haven’t already, be sure to also read the article 6 Mistakes That Will Make Your Startup Fail where I go over the major mistakes I made with my last project. You’ll find more tips there on creating a successful startup and hopefully, it helps you avoid the same blunders I made.