Defining the why, what, and how.
I’m going to make
SOOO… much money!
Is that your ‘why’?
Today we are going to outline the importance of delving into your motivations for starting a business. Regardless if that business turns out to be a solopreneur side hustle or a full-on capital raising entrepreneurial startup.
Not only will we cover why, but we are also going to explore what kind of business and how you see it working. These answers will guide you through the early business establishment stages. Then they will keep you prioritized later on when you’re faced with tough decisions and tempted to pivot into a new direction.
The easy glib answer to ‘why’ is that you want to make more money. And actually, that’s fine – it’s a reason that has established new businesses throughout all of history.
But there are other ways to make more money – many of them much easier.
So it’s still a good idea to figure out and write down your core motivations.
Let’s get to it.
First – we are staying at a high level in this post – this is not a ‘how-to find your niche’ article – that will come later in The Entrepreneur Experiment process. In Chapter 1 we covered the early stages of a side hustle idea being born, today is the next step.
If you have read my post on strategic planning, you will be able to understand my focus on the ‘why’ first. Once you have ‘why’ buttoned up, it’s relatively easy to define the what and the how.
Most people will start this process by having a notion in mind of what they want to do. With our constant internal self-dialogue, it’s hard not to have ideas and daydreams, often too many. The trick is to flesh them out to uncover if they are real or just a fantasy. The very act of going through this process will help crystallize your idea and set it up for being translated into action.
You can go through a few rounds of asking the why and the what before you get real clarity of your idea. Each round helps drill down a little more into your motivation and purpose.
I took this same approach towards translating my life strategy (detailed in the last chapter) into a business idea.
Before getting too far down the path of entrepreneurship, you really want to work out and write down your motivations.
This is a good idea for a bunch of reasons, not least because there will be times when you are frustrated, overwhelmed, dispirited, sometimes all those things at once.
In short, there will be times when you are tempted to quit.
At those times, you will want a firm grasp of why you’re doing this in the first place.
Hint… For the money is one but should not be the only answer.
I’ll use my idea as a working example to show you how this goes. But you are going to have to do your own thinking hard to come up with the answers.
Why create a business?
To help me achieve my life long objectives of learning and self-improvement.
How does starting a business help?
The business provides an environment and a stimulus for constant learning of new skills. My vision of self-improvement also rests upon the premise of providing value back to society through helping. Helping people and generally helping on environmental issues.
The best way I can see myself able to accomplish that is through the mechanism of business. There are other ways to achieve this. Such as volunteering or even entering politics, but those mechanisms are less interesting to me.
One of the specific early goals falling under the heading of helping people is to involve my daughter as a shareholder of the new business.
Another of the significant benefits of using a business to pursue my objectives is that it will be an enterprise run to generate profit and eventually have an equity value. It will become an asset – one that can be leveraged and used as an enabler for any future life goals that I evolve.
So that’s why a Business, but what kind of business?
Well, that was easy for me – a consumer brand business. Why? Because that’s what interests me most, I believe it will lead to the most significant learning opportunities and the best potential for helping. Besides – you have to be interested in your business area – we are talking about a multi-year project, potentially decades-long.
It’s the classic case of find work that earns money doing something you’re actually interested in.
Only ever start what you can sustain!
Create a satisfying work-life that you never want to retire from.
I would just love to be part of a young, dynamic brand – if you want an example of what I mean, I’ll give you Allbirds as a good one.
Finding your ‘What’
I’ve seen a lot of advice over the years about the correct way to start a business is by first finding a problem and then building a company to provide the solution. Well, that’s all good as long as you manage to find a problem and that problem is something you’re interested in solving.
Frankly, I suspect it’s rare for a business to start that way these days. Not least because a bunch of other companies will already be trying to solve that problem. Much more common is for people to be motivated to start a business in a specific niche or product category. Then hunt for a way to provide a better solution or product.
Even classic conviction businesses like Patagonia didn’t necessarily start from conviction. They started from an area of interest (climbing) and the opportunity to provide a solution (better gear). They evolved into a conviction business through the values and culture of the people involved.
So back to the process.
Examine your interests and your areas of knowledge, or just trends and growing niches in the modern economy. Don’t focus so much on the product or service you might want to sell eventually – first focus on what kind of business model interests you — for example, eCommerce, SaaS, rental provider, b2b services.
You probably already have a preference – one of the biggest challenges of this stage is indecisiveness. Worrying if you are choosing the right kind of business model can lead to decision paralysis. Ultimately nothing is yet fixed in stone; if your idea does not pan out in the research stage, you can re-evaluate. Frankly, that’s why we research the first place…
Now you have the first round of ‘why’ (to help), and you have the ‘what’ (a brand). Now you need the basic ‘how’ – how will you make revenue.
Again, not too difficult for me – my initial daydreaming already covered this ground. Online retail – ecommerce. A proven business model, low barriers to entry, and the versatility and headroom to evolve in many directions. Plus, it just is something I get excited about – I love the tangible thrill of making a sale on a physical product.
But wait… you dear reader may be asking yourself… if his goal is Ecommerce, why is he starting with a glorified blog?
There are a few reasons –
My existing commitments only allow me part-time to work on a side gig. I judge that fully-fledged ecommerce brand building requires more time and concentration than I currently have.
Time frame, it could be 3+ years until I can dedicate myself to the business full time. I don’t want to wait that long to start the ball rolling.
Skills, there are essential skills I can be acquiring and meaningful learning I can be undertaking. Starting and running a blog on a part-time basis will help give me those skills.
A blog to help a product – the combination of content and commerce is a powerful one. Done right, a blog can help create visitors and sales, leaving you less reliant solely on paid advertising in the early stages.
So that’s my ‘how’ – what about you?
Finding your ‘how.’
First, take what you are doing; it may give you an obvious ‘how.’ Examples, health tracking SaaS business, online subscriptions. Another example is a niche blog using Affiliate marketing. If you’re still struggling, then again, examine your interests and look for the typical business models you see in those spaces.
Okay, that’s the first round of why – what – how complete.
You then should do it again once you have figured out the niche or the product type that your consumer eCommerce brand will target. Second time around, it’s focused on developing the why, what, and how in a more customer-facing form.
Find that process in my Strategic planning article.
As one further example, I’ll tell you about my first ever business back in the early 2000s
I had a young family we had plenty of financial pressure and commitments like a mortgage and car payments. Actually, we were also in credit card debt at that time, despite us both working full-time.
The motivation to make more money was strong and I always knew that one of the best ways was to have a business. But it was before the age of YouTube and blog info, at least as far as my awareness, so info on starting an online business was hard to come by.
One year we could not really afford the price of our typical vacation and, as an alternative, got into family camping. I had a background in the outdoors anyway, it’s always been one of my passions.
Finding a big family tent was a challenge. I had to find one that kept bugs out (one of my wife’s red lines for going camping) and was affordable. It was a real struggle, most family tents at that time were either cheap junk, or hugely expensive.
That was the beginning of my ‘why and what’. I was underpaid and under-engaged at work; that’s why I wanted to start a business. I wanted to improve my financial options and do something interesting to me.
So I would start a company to make my own affordable large family tents with a sewn-in groundsheet to keep out bugs.
Later that summer, I used vacation days and attended a trade show for outdoor suppliers and came across a few tent manufacturers. I sent them designs that I drew up and had them make prototype tents and provide costings. One supplier was outstanding, and on the back of that, I formed my first ever company.
It was a part-time side hustle as I had to keep working.
I maxed my credit cards, got a loan, and ordered a container of tents from the manufacturer in China.
I can’t tell you how stressful it was waiting for three months for those tents to arrive and clear customs. Would I get a container of junk? Would the tents leak? Would I simply get scammed?
Eventually, they arrived and turned out to be awesome quality, just like the prototypes.
I set about marketing and selling those tents early in the summer of 2006. Long story short, I made 38k dollars in profit off that first container and got out of credit card debt. They sold like hotcakes, and I sold tents for years afterward.
Eventually, competition, exchange rate issues, plus a better full-time work opportunity led me to sell that business. I still kick myself today for doing that – I should have stuck with it – If I knew then what I know now…
Anyway, the point of this example is that knowing your motivations can be critical. I would never have taken the risk on that first container if I did not have a firm grasp on what I was trying to accomplish.
All along the journey to a business, you will be gathering information, insight, knowledge, and research.
You want to have a process to capture that information because it will prove a powerful asset to getting things right and being more effective.
If you don’t record it, you will lose much of the effectiveness of the learning.
Capturing information takes many forms, from jotting thoughts and facts down on a notepad beside your bed — right to taking voice memos and recording the info into a cloud-based Google document.
Essentially though, it’s about getting into the habit of taking notes.
One of the most effective ways I have found to do this is via your phone. It’s virtually always on you and is a fully connected interface to the net (at least in most countries). We are halfway to becoming cyborgs anyway, so we may as well embrace it and use this powerful tool to the maximum.
For example, some of my best ideas come while I’m commuting, voice free AI assistants let me take notes without even touching the phone. So I never lose an idea.
Suggested apps are Google Keep or Evernote. Or use the inbuilt note-taking app on your phone.
I may have privacy concerns like many others, but ultimately functionality wins out when you’re trying to be as productive as possible.
Links to further reading
If you want to explore reasons to focus on the money
Knowing the why, what, and how – help put you on the right path to creating something you never want to retire from. Only start what you can sustain.
In the next chapter of the Entrepreneur Experiment, we will cover how you should set up your life to start your business.