Hardy Mariner

On Starting a Business

June 13, 2021

Much has been written about starting a company or a “startup” by media and online gurus trying to sell a course.

This is my two cents to help someone who wishes to make a lot of money by starting a business but doesn’t know how or where to start.

In this article, I won’t focus on the tactics but on the core fundamentals of what makes a good business and the different business models that exist. I will also focus on how to start from scratch without much capital.

Disclaimer: At the time of writing this article - 12th June 2021 , I have not built a successful company yet. Although I have tried to start a couple of times. These are some of my findings from my failures and noticing how others do it.

Startup vs a Business

Startups are companies that are highly innovative and grow very fast, The sole aim of a startup is to grow as fast as possible in terms of users. These companies are often 100 times better than their existing competitors or counter parts.

These are very attractive to venture capitalists since they bring with them huge return on money invested.

A Business on the other hand grows slowly is often not very innovative but only slightly better than the existing alternatives.

These are very loose definitions but this is how I see both of them.

Business Models

Some business models to generate revenue

  1. Affiliate Marketing:

    This is where you sell someone else’s product for a commission, It could be selling real estate, Ebooks, Physical Products, software, debt, advertising or even services. Essentially you make a deal with the company that owns the product that you will get a percentage of revenue for every sale you make. This can vary from 10-50% depending on the type of product, usually its lower for Physical products.

    This is by far the easiest business model to follow since you often don’t require a very high upfront capital investment.

    However total margins remain lower than your own product or service

  2. Consulting / Service Provider / Agency:

    Here you offer your expertise in a domain could be marketing, product development , law , medicine etc. You can either sell a one of consultation or a done for you project.

    This is harder than affiliate marketing when just starting because you often don’t have relevant skills or experience.

  3. Product:

    In this model you sell a physical product or software as a service. This is where fortunes are made and is the hardest for someone just getting started. Not only do you need to find a gap in the market, but you also need have the relevant skills / time /money or a team to execute the product. If you are going solo and your concern is to generate revenue as fast as possible, don’t make a product.

  4. Media Companies:

    Although this comes in product category its worth mentioning separately. This is often a winner takes all type of market like musicians, actors etc. So unless you are sure you are gifted in some way (Good looks, acting, film making) stay away from trying to be an entertainer. Although a viable strategy. Probably not the best idea if you want to make money fast.

    All social media entertainers come in this category.

    Please note coaches and “guru” you tubers don’t come in this since their primary source of income is from their courses / books although they do get ad revenue too.

The Start

When you first start a business the very first step you should take is to research your competitors. And answer some fundamental questions which will make the process a whole lot easier.

What service or product do I sell ?

Who are my competitors ?

How do they acquire their customers ?

What marketing channels do they use ?

What are the services or products they offer ?

What are their strengths ?

What are their weaknesses ?

Who are their customers ?

How do they talk about themselves on their website ?

Once you have this information you must find out where the gaps are .

What markets are they not catering to ?

What do they suck at ?

What do the negative reviews say about them ?

What geographic locations are they focussed on ?

Finding your positioning / differentiation

Now you must differentiate yourself from your competitors.

Some ways to differentiate:

  • Sell the same service / product in a geographic location they are not catering to.
  • Sell to a customer type (Doctor,Lawyer,Dentist etc.) that has been missed.
  • Offer a service that is not being served.
  • Offer a product with new features.
  • Use a marketing channel that is not being used.
  • Pitch to the customers that gave them a negative review.
  • If everything else fails sell value added services (Do more work for same price)

When you actively talk about how you are different. The customers that feel the pain you solve start seeing you differently so you occupy a distinct position in their mind.

Examples of Positioning from real life:

  1. Cars: Volvo focuses on making its cars the safest , maruti provides the cheapest and best after sales service.
  2. FMCG: Colgate is toothpaste for family, Patanjali focuses on ayurvedic ingredients.

Opportunity and Luck

There are many variables in a Business that are completely out of your control but will determine how successful your company eventually becomes.

Some of those are: The size of the market you are in, The rate of growth of the market (ie how many new people are buying that particular kind of product or service), If the individuals have enough money.

To maximise your chance of success. Choose a market that is growing or where people are innovating. This can easily be done by looking at startup news. It will give you a good idea of the problems people are trying to solve and the “gaps” they are working on.

The Edge

If you are going to start a business, It is very important to determine what your edge or unfair advantage is that will increase your chance of success.

Edge comes in many forms and you often need more than one.

It could be: Your network, your skills or your experience in the market.

Without an edge you will most likely fail. However in most cases the edge can be developed.

Go to market

This is the part that requires patience and skill. The final step is take your product or service to your potential customers. It can be done by running ads, posting on forums , cold emailing, cold calling, influencer marketing etc.

If you have positioned your product well, Sales will come. Then it becomes about growing a team and acquiring new customers.

Tips for Beginners:

  • Choose a B2B product or service when starting out. Since businesses have money and are ready to spend if it adds value.
  • Start by affiliate marketing or consulting as your first business, as it requires very little capital and you see revenue immediately.
  • Luck and timing will play a huge role in how successfull you will be. So your job is to optimize to get lucky. By constantly pitching your product or service and iterating as new information comes to light.
  • Start by selling consulting or services and use the cashflow it generates to build a product if you want really want to.

Written by Sahil Kamra

© 2021