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After reading my previous series “”How to Start a Successful Business” I hope to have  introduced you to some key concepts and ideas required in a start-up.
In this series we will take it a step further – look at the traditional method start-ups used where most failed, and then a more successful approach to turning ideas into successful businesses. This more successful tweak to the existing model allows you to spend as little cash as possible and minimises your risk
51MLvC+JryL._SY344_BO1,204,203,200_

The key ideas and frameworks we will talk about in this series are from Steven Gary Blank’s award winning book The Four Steps to the Epiphany.


The Traditional Model:
old model
1) Concept and seed: This is the first thing business usually do and includes everything from the company vision, what the product is , how it will be built, what research is required, who the customers are, how it will reach its customers, pricing, costs, budgets and schedules. This information is generally all collated together in a spreadsheet which becomes known as “The Business Plan”. This is then combined with some creative writing to lure some investors into the business.
2) Product Development: The next stage is where:
Engineering focuses on building the product which includes designing it, estimating delivery dates and development costs and hiring staff to build it.
The marketing department refines the market size, begins to target its first customers, builds a sales demo and hires a PR agency. Traditionally, companies sometimes hire a VP of sales at this stage.
3) Alpha/Beta Test: Now, engineering works with a test group to find bugs. The Marketing guys develop a complete communications plan, the PR agency polishes the companies positioning and investors are happy to start to thinking about injecting more money into the business. The CEO then refines his pitch and starts to look for some more capital/investment.
4) Product Launch and First Customer Ship: At this point, the company has a large press event, manages to sell some units and as a consequence goes into “big spend” mode, where it scales up its marketing and sales team.
This is the traditional model, but there is something wrong. Something is missing.  I mean at first glance, it pretty much seems all good right? Plenty of start-ups used this prior to the dot com bubble and they managed to make a lot of money.  Actually they didn’t make as much as they could have – hence the word “bubble”. Expectations were greater than the targets these companies met and as a consequence the bubble burst.

See if you can think of any reasons why most start-ups failed using this model.
We will discuss the answer to this and introduce The Four Steps to the Epiphany in my next post. Watch out for it and follow me on social media:
Instagram: @umarahmed122
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1) How to Start an Unsuccessful Business

2) How to come up with a multi-million dollar idea

3) How to convert my great ideas into cash

4) How to Establish a Long Term Multi Million Dollar Business

Right, so you have read part 3 of this series “how to convert my great ideas into cash”, and have started getting some cash into your business and raised somewhere between £10K-£1m from your first big Venture capitalist investment. What’s next?

A few things:

  • Verify your product is exactly what your customers want and iterate if it isn’t. Ask your customers one question – would you implement this product in your organisation today/use this if it was free? If they reply “we will use it but right now we don’t have the staff to roll it out” or something along those lines, it means the product isn’t good enough and you’re not going to sell a single thing. It doesn’t matter whether you have £200k available for marketing or even £1m. No one will buy it.  (This is a very important point and will be discussed more in my next post)
  • Make sure you do this before you scale your company! If you don’t you will essentially have no clue whether people think the problem is big enough to spend money on solving it, and you would have pointlessly hired and wasted your investment money on a VP of Sales. The VP of Sales will definitely not meet his target when the product is shipped and get fired. The third time targets are missed the VP of marketing will get fired. When you miss the targets for the 4th time in a row the board will realise something went wrong in the company, and eventually you, the CEO, will get fired
  • Finally, make sure you have a VRI and focus on it – more on this below.

 

VRI – Valuable, Rare and Inimitable resource.

  • Valuable – it brings in loads of money/customers for your business
  • Rare- it is hard for a business to get
  • Inimitable – it cannot be copied or replicated by anyone else

 

For example, if you are a popular person at university and you know and have access to 100’s of university students, this in itself is a VRI. Think of how you might utilise this.  A friend of mine utilised his popularity at university to start GradLancer – a company that gives employers access to students. Building on this network of graduates and employers is key to GradLancer’s success.

Another great example of a VRI is described by London Business School Strategy Professor, Aharon Cohen Mohliver. He says, there were hundreds of apps that did exactly what Uber did when it entered the market. But now Uber is the market leader? Why? It’s a phone app like all the others isn’t it? What is it about Uber that the others cannot do?

The answer is Uber’s pricing algorithm. Uber has access to data and can process that data with an algorithm that no one else can match. None of the other apps have such a good pricing algorithm and it is difficult for them to make one without a huge investment both in physical and human capital.

Improve-Business-Success-Rate-620x465

 

This concludes the “How to Start a Successful Business” series (parts 1-4) which provides an overview of the steps you need to take to go from having a bunch of ideas to a successful business. Note, the series does not go into detail in how each of the steps should be performed – it just lists the steps and the decisions that need to be made and provides you with some food for thought.

However, my next series titled “The Epiphany” will touch on things in detail, describing the exact processes that must be taken from having an idea for a product, to getting it into a position where you can get some funding (£10K-£1m) from a VC and acquire enough capital to start a proper company with your own office. I will be talking about concepts from Steven Gary Blank’s award winning book “The four Steps to The Epiphany”.

I finish this series with a sentence Professor Michael Davies, (Technology Venture specialist at MIT and London Business School), started every single one of our lectures off with:

“Anyone who is interested in starting a new technology venture should read Four Steps to the Epiphany”.

I cannot stress how much this book will help you with starting a business. Watch out for my next post on it and follow me on social media:

Twitter: @umarahmed12

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It’s been a while since my last post (How to come up with a multi-million dollar idea) so I will skip the introduction and get straight into the most important thing. The first thing you need to do to convert your idea to serious bucks is to figure out who your customers are and whether or not they want your product.

Customer discovery is the most important thing when embarking on a new business venture. Say you have a new app that is targeted at university students, go and speak to university students, get them to trial the app. If they end up deleting the app after a few days it means your target customers don’t want it. So go back to the drawing board and try again. The same applies to any other product. If it is a type of food or new recipe you have and no one is buying it, go back to the drawing board. This process should take a few weeks and should include surveys and REAL CUSTOMER DATA, not just market size estimates and market growth forecasts.

When you know customers actually want your product and you have market size and growth estimates, its time to think of a business model. Sounds complicated, but its actually just a model/plan which describes who your customers are, what your product is and why it is different to the competition, and how you plan on making money.

 

money-making-ideas-300x225

 

Once the business plan is done you can combine this with the customer data + feedback you recieved earlier and start making some initial financial forecasts to see if this is a business actually worth pursuing.
In other words check if revenue is greater than total costs in the long term. You obviously don’t want to be operating a business at a loss. If at this point it seems you will be breaking even or losing out, STOP. Don’t think of it as a waste of time, think of it as an investment you made to stop yourself on losing out on money and time.

Once you have your business model and you have produced some low cost prototypes and have real customer data purchases, it is time to make a decision. Do you iron out the bugs of your current product before you release or whilst you release it? This is a difficult question to answer and depends on what the product is so read up on past companies and case studies before you decide (e.g. Dropbox).

The reason this is very important is because these decisions will heavily influence whether or not you will pass the barrier which occurs at the early adopter’s stage and kills the majority of start-ups (See the figure below)

 

adoption

Most business dont get past the “early adopters stage” shown in the diagram as often their products require a radical behavioural change. If there is one thing entrepreneurs learn the hard way, it is that no one wants to change for your product or app or whatever you have. So find a way to make it convenient around people’s current lifestyles.

So once this is decided and you find yourself approaching or at the early adopter’s stage, you will be considering your second stage of funding and will be looking for investors, most likely a venture capitalist.

NOTE: Before even approaching a venture capitalist you need some customers, you need to show there is a demand for the product, it works, and your business model and projections are reasonable and can forecast some profits which are worth investing in. This isn’t forecasting profits of £1000 after a year. This is after you have really thought about your business model, what your sustainable competitive advantage is (what you have that is difficult to imitate) and when you have good answers to the following questions:

 

  1. What are the other technologies available that can achieve the same thing
  2. How much does it cost you to do this relative to competition
  3. What do you have that someone else cannot really imitate
  4. What are your projections for the next three years

 

So to summarise, we have covered a few things in this post. First and foremost is the importance of researching weather or not customers want and will buy your product- this takes weeks and sometimes even months. Second is the importance of having a well thought out business model, knowing the market growth forecast, knowing your customers, and using this information to make a reasonable financial forecast. Third is thinking about how you can get past the early adopters stage to get mass adoption of your product by minimising behavioural changes and tweaking your product to better suit customer needs. And finally once the above points are sorted, preparing yourself for standing in front of a venture capitalist.

Stay tuned for part 4 where we talk about what companies do when they have passed the early adopters stage and how they establish themselves as key players in the market. In other words, going from £millions to £billions.
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Part 2: How to come up with a multi-million dollar idea

 

1) How to start an unsuccessful business

2) How to come up with a multi-million dollar idea

3) How to convert my ideas into cash

4) Going from $millions to $billions

 

How do I come up with a great ideas? How do I start that business like Amazon or Dropbox? Initially I had no idea, but it is amazing what the brain can achieve if you just give it that little push in the right direction. This is the subject of this post and although its a short one, it will hopefully give your brain that little push it needs to help you come up with your next multi-million dollar idea.

2

A great business idea consists of one of two things:

 

1) Think of a solution to a problem people have and solve it

OR

2) Look at a current solution to a problem and make it better

 

That’s it. Literally. Read these two points again and again – I cannot stress their important. You don’t even need to carry on reading the rest of this post.

If you do wish to continue,  lets just look at an example for each.

Dropbox was a solution to the problem “I can’t take my files with me wherever I go without having to transfer them to USB and carry this around with me”. Houston came up with a solution to this problem by allowing users to store data on the cloud and access it from any device, anywhere in the world- a solution now known as Dropbox.

An example for the second point is Apple’s iPod. There were plenty of MP3 players around at the time, yet iPod came in as a new contender and dominated the market. Why?

Because it was just a much better solution. It made listening to music, downloading music and updating your music easier and simple.

In conclusion, when thinking about new ideas, look at processes you go through regularly and think how can I make this less cumbersome? OR alternatively look at problems you face in your day to day activities which do not have a current solution and think, what would be a good way to solve this.

Once you have a bunch of ideas that’s great – write them down and ask yourself the two questions above.

These ideas however are no good if you cannot or do not know how to convert them into money. So make sure you stay tuned for part 3 where we talk about how to evaluate the profitability of your idea, figure out who your customers actually are and then use this information to determine if this is a venture worth pursuing.

Twitter: @umarahmed12

Instagram: @umarahmed122

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Official Website: www.umarahmed.com

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In order to talk about how to start a successful business, let’s look at how to start an unsuccessful business. The top 20 reasons why people fail is shown in the figure below- take a minute to look at it before we discuss.

 

startup-failure-post-mortem-top-reasons

 

Surprise surprise. The number 1 reason why start-ups fail is because they do not listen to their customers.

Rule number 1: Before you even start developing and putting loads of money into your product, get a cheap prototype/idea and ASK PEOPLE WHAT THEY THINK.

Imagine you’re developing a first person shooting game. Go and ask people who play games like Call of Duty and Halo what they think of your idea. Don’t get feedback from Facebook friends whose favourite games are Pokemon and Mario Kart and think, well these people like it so I must be doing alright.. they are not your target customer!

First, figure out WHO YOUR customer is, and second, LISTEN to them. If they think the game is rubbish, then its rubbish. It doesn’t matter how cool the graphics are or the whether or not you can drive spaceships or what have you. If the people you want to sell the game to are telling you it is rubbish, go back to the drawing board and pivot.

Second, I won’t give an example of every mistake, but I will highlight some important points.

  • Get good co-founders: If you plan on developing a technology venture, then it is preferable to have one co-founder who is a tech guy, otherwise every time you need to make a change to the product (which at the beginning will be all the time), you will be relying on someone who doesn’t care about it.
  • Think of a business model and how you plan on making money.
  • Get investors on board so you have enough money to complete the product and don’t run out of money half way.
  • If the product is rubbish change it.
  • If you are only working part time, make sure some or all of the other co-founders are full time.

 

To conclude, the graph shows you how to start an unsuccessful business. Study it carefully, do the exact opposite of these mistakes, and you are well on track to starting a successful business.

Stay tuned for part 2 where we talk about how to actually come up with the best business ideas.

Twitter:@umarahmed12

Instagram:@umarahmed122

Youtube: Coming Soon

Official Website: www.umarahmed.com

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We all want our business HQ’s based in Silicon Valley or Wall Street, so I think it’s about time I talk about how one goes about starting from an idea and transforming that idea into a multi-million dollar business.

 

wall-street-sign-pic

 

As you can imagine, starting a multi-million dollar business is not easy, so I have divided this post into 4 parts:

1) How to start a successful business

2) How to come up with a multi-million dollar idea

3) How to convert my ideas into serious money

4) Going from £millions to £billions

To answer the question “How do I start a successful business”, I will tell you how to start an unsuccessful business. Starting a successful business is simple- do the opposite. Next I will briefly talk about the best way to generate great ideas.

This is where most people do well enough by themselves. We all come up with great ideas, but can we convert these into serious bucks? The most emphasised concept I have learned at business school is that a great idea doesn’t really mean anything. Great ideas have no basis unless you can capitalise on them and transform them into viable businesses. We address this in part 3.

Finally once we have spoken about how to generate your initial £1m, the game begins. This is where people will see you making money and try to take your customers. In part 4, Going from $millions to $billions, we will talk about strategies adopted by players such as Apple and Google, that enable your company to remain competitive and invest in projects that will keep you ahead of the game, increase your market share, and grow your business.

Part 1 will be out soon- follow me on social media and make sure you don’t miss it!

Twitter: @umarahmed12

Instagram: @umarahmed122

YouTube: Coming Soon

Official Website: www.umarahmed.com

 

 

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When I heard this question I used to think, no way is someone going to give me a concise straightforward answer on how this can be done. I mean, it’s too good to be true. Why would someone tell me how to make money rather than just go out and do it himself?

 

how-to-use-the-internet-to-make-money

 

Actually I think there is a paradox- all of us know how to make money, yet very few of us actually go out and do it.

Back to the question, how do I make money? Well it’s pretty simple, you just need a couple of things:

i)                    Give customers something they want

ii)                   Make sure price is higher than costs

Now most people think it stops here. This is what separates those who make enough money to get by, and those who make a decent sum of cash.

Before I tell you what the third and final condition is, let’s consider an example. Imagine there is an empty place near where you’re favourite concert is being held. After the concert everyone is dead thirsty. This gives you an idea. You can set up a drinks stand and start selling water. The people need it, water is pretty cheap and you can sell it to them for more than how much you bought it. Both conditions are satisfied.

But what’s the problem with this? Just take moment to think.

 

thief-stealing-money

The problem is that someone else can see you doing this, and very easily set up a stand and do the exact same thing, taking your profits. Eventually as more people move into the market, your profits tend to 0.

But what if you had a SPECIAL type of drink that could quench thirst better than any of the other drinks available at a much lower cost? This leads me on to the third point

iii)                 Make sure what you give them cannot be provided by anyone else

This is the most important point that a lot of people forget about. Consider Uber. There were hundreds of apps that did exactly what Uber did when it entered the market. But now Uber is the market leader. Why? It’s a phone app like all the others. What is it about Uber that the others cannot do?

The answer is Uber’s pricing algorithm. Uber has access to data and can process that data with an algorithm that no one else can match. None of the other apps have such a good pricing algorithm and it is difficult for them to make one without a huge investment both in physical and human capital.

So whenever you’re thinking how do I make money and have a new business idea; before you start thinking into the business plan, model, details, etc. Answer the three questions first. Do customers want this, can I charge a price higher than costs and will someone else be able to enter and steal my customers.

Feel free to leave comments below, and follow me on social media:

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Should I do my MBA at Harvard, London Business School, Wharton, or just carry on with my job and forget about this whole MBA business?

The 2015 Financial Times ranking came out today with the top three business Schools in the world being Harvard, London Business School and Wharton.

FT Rankings

 

Before I answer the question “Do I need an MBA”, I have a question for you. Why do companies value MBA graduates from these business schools?

Do you think it is because they have a good education? Do you think it is because they are clever? Do you think it is because they have demonstrated some sort of social skills?

Of course these factors are important, but you can also have all of these things without an MBA.

I mean let’s take a step back and ask, what is the point of an MBA? You can pick up Josh Kauffman’s book ‘The Personal MBA’, do some online courses and get the material off a friend and you are pretty much learning the exact same thing right?

Well there are many arguments for an MBA, one of the main ones being the network you build, but the most interesting one I will focus on will be something I didn’t initially think of before having this conversation with one of the leading Strategy professors at London Business School.

Before I tell you what our discussion was about, I first need to explain the concept of a firm’s signalling policy. If a company like Facebook has a great project that they think they can make money out of, (e.g. the Occulus Rift), they can take on some debt to finance and invest in this project. When a company that size takes on the right amount of debt, the “markets” usually react positively. This is because people in the “market” are considered as “clever” and know that well established companies are only going to take on debt if they are sure they have a good project. In other words, they are putting their money where their mouth is, rather than being all talk and just make an announcement saying “we have a great project coming up that will make us a lot of money”.

In the same way an MBA student is kind of like a company. He/she takes on debt to pay his/her MBA tuition fees, which can take on numbers such as £60k+. Firms see this as a signal and place their trust in an MBA student’s abilities. They are thus willing to pay them six figure salaries as the signalling concept shows how strongly the MBA believes in his/her potential.

A lot of the world is based on beliefs and expectations of the future. This is just some food for thought for those who hear about how much it costs to do an MBA and think “Do I really need an MBA”..  “I mean Wow, that is a lot of dollar”.

Posted 26/01/2015

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How can I start a company that is going to be the next Google? Is it even possible for a normal person like me to do such a thing?

For me personally, no. Well now it might be, but if I asked myself these questions 3 months ago I would have said definitely not. I mean, I wouldn’t even know where to start, where to get the money from or who I should work with. In fact, I just had a bunch of good business ideas and thought “I’m going to start a business” without having a clue what my strategy was, who my customers were or even how I planned on making money.

So what has changed in these last 3 months? The answer is Business School. Three months ago I accepted my offer to start my Masters at London Business School and it really has changed the way I think. I mean, I didn’t even know what the Time Value of Money was. I literally thought if I sold my car and put the £5000 in a bank without touching it, that £5000 is still going to be £5000 in two years’ time when I buy new one. This isn’t actually true. In fact, when I got home after learning this I was like:

 

Surprised

 

For quite a while.

So I guess the question now is, should you go out and spend £28,000 per year (Masters) on business school fees to learn these important concepts? Well yes and no. If you can afford it, yes, I would highly recommend it – London Business School has been one of the best experiences of my life to date. If you can’t don’t worry. Over the next 6 months, I will be posting about every important concept I learn that I believe is essential in recognising how to become as successful as a Fortune 500 Business Leader. As long as you read all my blog posts, you will pretty much be learning everything I am, but saving yourself £28,000 per year . Stay tuned, follow me on social media and keep up to date with my blog.

Twitter: @umarahmed12

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