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How to Start a Business
Business
What Should a Freelancer Start With If They Want to Launch a Startup? [Founder’s Question]
Asia Tomorrow Original
August 1, 2024
The [Founder’'s Question] section introduces practical concerns of entrepreneurs and answers to those questions based on actual entrepreneurial coaching data.
How Can a Freelancer Grow into an Early-Stage Startup?
Freelancer B's Dilemma:
"I have an idea but can't decide on a direction. The problem I want to solve isn't clear, and in 1:1 coaching sessions, I mainly ask for specific knowledge about solutions. Additionally, I have many tasks at hand, so resource adjustment is necessary. What should I do?"
Advice from an Underdogs Startup Coach:
Clarify Passion and Interest: Entrepreneurs should clearly define their passions and interests and use this foundation to refine their ideas. This process helps maintain continuous motivation and lays the groundwork for long-term success.
Assess the Core Value and Fit of the Solution: It's crucial to evaluate how well the core values of the current solution align with the entrepreneur's personal values. Utilize educational programs (like those offered by underdogs) to develop detailed plans and assess the solution's suitability during this process.
Conduct a Rough Market Size Analysis: Understanding the approximate size of the overall market is essential for setting realistic goals and developing an effective market entry strategy during business planning.
Clearly Define the Problem to be Solved: A clear problem definition is vital for business success. A well-defined problem keeps the entrepreneur engaged and helps maintain a clear direction. It also facilitates smooth communication and collaboration with team members.
Explore Various Possible Solutions: While the problem to be solved may be singular, the solutions can be diverse. After completing the problem definition and persona template, seek feedback and consider various solutions. This approach encourages creative and innovative methods to find the optimal solution
Source : ChatGPT
If You Want to Become a Company, Start With 'Why' First
Here are the reasons why starting with 'why' is crucial for a freelancer transitioning into an early-stage startup:
Clear Direction: Starting with why you want to become a company clearly outlines the direction a company should take. Unlike working on various projects as a freelancer, growing into a company requires long-term goals and direction. In this context, all team members can work towards the same goal, reducing confusion and enabling consistent strategy development.
Motivation and Organizational Culture Formation: 'Starting with why' motivates team members and clarifies the purpose of their work. While freelancing focuses on individual goals and motivations, growing into a company necessitates that the entire team shares the same vision. 'Starting with why' plays a significant role in shaping organizational culture and instills pride in team members.
Strategic Decision-Making: Your own 'Why' serves as a benchmark for making strategic decisions. As a freelancer, short-term project success might be critical, but growing into a company requires a consistent strategy for long-term success. Your own reason ensures that all important decisions align with the company's long-term goals.
Brand Image and Marketing: 'Starting with why' is crucial in building a company's brand image. While freelancing relies on personal skills and reputation, growing into a company emphasizes conveying the company's values and philosophy. The reason of becoming a company allows the company to clearly communicate its purpose and goals to customers and investors, significantly aiding in marketing and brand building.
Growth and Expansion Potential: Vivid narrative of you becoming an entrepreneur provides the blueprint for a company's growth and expansion. Freelancers face limitations in personal capacity and time, but as a company grows, it can achieve larger goals by leveraging teams and resources. 'Starting with why' offers guidelines for this growth and expansion, helping the company move in the right direction.
Attracting Investment and Partnerships: Investors and partners place significant importance on a company's vision and long-term growth potential. Unlike showcasing short-term achievements as a freelancer, a company must present its future growth potential through its own reason to start-up. A clear context of your journey greatly assists in attracting investors and partners and enhances the company's credibility.
Importance of Defining Specific Customers and Setting Goals
One of the biggest challenges early-stage entrepreneurs face when transitioning from freelancing to building a company is establishing systems and structures. Two critical strategies can aid this process: a customer-centric approach and a strategy of accumulating small successes. These strategies are essential for creating a structured framework and achieving sustainable growth as a company.
Customer-Centric Approach
One of the most important factors in building a successful company is accurately identifying and addressing customer needs. Eric Ries, the author of The Lean Startup, advises: "Invest time in customer interviews and market research to flesh out your customer personas and deeply understand their problems."
A customer-centric approach is especially crucial when transitioning from freelancing to building a company. As a freelancer, you often work according to the specific demands of individual clients, but to succeed as a company, you need to systematically and structurally address customer needs. Follow these steps:
Customer Interviews: Conduct interviews with potential customers to understand their actual needs and pain points. This helps verify the value of the solution you offer.
Market Research: Perform market research to understand the overall market size and competitive landscape. This information is essential for developing a business strategy.
Persona Development: Define ideal customer personas based on collected customer data. This is crucial for creating marketing strategies and guiding product development.
Understanding Problems: Deeply understand customers' problems and develop solutions to address them. This significantly increases the likelihood of your product or service succeeding.
Strategy of Accumulating Small Successes
Successful founders emphasize the importance of growing gradually by accumulating small successes rather than trying to achieve a big goal from the outset.
In the process of transitioning from freelancing to building a company, a strategy of accumulating small successes is very useful for establishing systems and structures. This approach means gradually improving necessary parts as you grow, rather than trying to build a complex system all at once. Here are some specific methods:
Setting Short-Term Goals: Set realistic and achievable short-term goals. This helps maintain the motivation and focus of the team.
Celebrating Small Wins: Celebrate each short-term goal achievement and share the sense of accomplishment. This boosts team morale and fuels continuous growth.
Incorporating Feedback: Use the feedback gained from small successes to improve products or services. This allows for continuous product improvement and innovation.
Gradual Growth: Set and achieve progressively larger goals based on small successes. This approach minimizes risk and leads to stable growth.
Source : HubSpot
Challenge ‘Becoming a Company’ by Referencing Similar Cases
Freelancer B's Dilemma: "I have worked on various projects so far, but now I want to do 'business' rather than one-time projects."
HubSpot: Growing from a Community to a Global Marketing SaaS Company
Brian Halligan and Dharmesh Shah met at the MIT Sloan School of Management and founded HubSpot in 2006. Before starting the company, Dharmesh Shah ran the blog 'OnStartups' since 2005, sharing startup-related information. Brian Halligan, a marketing expert, had accumulated experience in various companies, realizing the need for inbound marketing.
Inbound marketing is a strategy that makes customers seek out a company's products and services on their own by providing valuable content through blogs, social media, SEO, and more. HubSpot started as a community founded by these two entrepreneurs who emphasized inbound marketing.
Since 2008, HubSpot has provided comprehensive tools through inbound marketing software to help companies attract, engage, and satisfy customers:
SEO Tools: Drive more organic traffic through search engine optimization.
Social Media Management: Efficiently manage and analyze social media campaigns.
Marketing Automation: Maximize efficiency through email marketing, lead management, and workflow automation.
Free Education: Operate HubSpot Academy to offer online digital marketing education.
In 2014, HubSpot was listed on the New York Stock Exchange, and today, more than 215,000 customers in over 135 countries use HubSpot's software.
By following HubSpot’s example, Freelancer B can transition from project-based work to running a full-fledged business. Here are some steps to consider:
Leverage Existing Expertise and Networks: Just as Dharmesh Shah utilized his blog to build a community, leverage your existing projects and network to build a foundation for your business.
Identify a Core Strategy: HubSpot focused on inbound marketing. Identify a core strategy or niche that you are passionate about and can excel in.
Develop Comprehensive Solutions: Offer comprehensive solutions that address your target customers' needs, similar to how HubSpot provides a suite of marketing tools.
Educate and Empower Your Customers: Provide educational resources, like HubSpot Academy, to help your customers make the most of your offerings.
Scale Gradually: Focus on gradual growth and improving your offerings over time, eventually aiming for larger milestones like HubSpot's IPO.
Ghost: From Freelance Web Designer to Blog Platform Company
John O'Nolan's journey began as a freelance web designer, eventually leading to the creation of Ghost, a popular open-source blogging platform. Initially, he stood out as a freelancer by attracting large clients like Ubisoft and Virgin Atlantic, particularly excelling in WordPress blog design and development. His success in this area led to his contribution to the WordPress core design team.
O'Nolan realized the increasing complexity of WordPress and saw the need for a simple blogging tool. In 2012, he wrote a blog post about his vision for an ideal blogging platform, which resonated widely. The concept product was brought to life through a Kickstarter campaign, raising £200,000 (about $300,000) in just 11 hours, far surpassing the initial goal of £25,000.
Today, Ghost operates with a distributed team of 10 full-time employees and numerous open-source contributors worldwide, generating approximately $720,000 in annual revenue. This success is attributed to John O'Nolan's efforts to solve a problem based on his freelancing experiences and the support from the community.
Ghost has become more than just a blogging platform; it is an inspiring model for many, demonstrating transparency and community-focused operation.
Lessons from Ghost's Success:
Identify a Niche Need: Just as O'Nolan identified the need for a simpler blogging tool, freelancers transitioning to a business should identify a specific niche or gap in the market that they are passionate about and well-equipped to address.
Leverage Community Support: Ghost's successful Kickstarter campaign shows the power of community support. Engaging with and building a community around your idea can provide the necessary backing and momentum for your project.
Start with a Strong Foundation: O'Nolan's background in WordPress and web design provided a strong foundation for creating Ghost. Use your existing skills and experiences to build a solid base for your business.
Transparency and Open Source: Ghost's commitment to transparency and its open-source nature have been key to its success. Consider how transparency and community involvement can play a role in your business model.
Gradual Scaling: Ghost’s evolution from a concept to a fully-fledged platform demonstrates the importance of gradual scaling. Start with a manageable project and expand as you gain traction and support.
Rise: From Professional Consultant to Founder of a Women's Freelancing Platform
Vivian Chen began as a freelance marketing consultant before founding her own startup.
After working at L'Oreal, Chen started freelancing to raise initial capital, working with clients across various industries. She earned $300,000 annually and, as many female friends sought her advice on freelancing, she was inspired to create Rise, a freelancing platform for women. Rise aims to build a community of highly skilled female freelancers and provide benefits such as health insurance.
During the preparation phase for Rise, Chen taught herself coding to build the platform and personally handled sales, marketing, and content creation to minimize initial costs. Her journey illustrates the importance of gradually preparing for a startup, launching a product even in its imperfect state, and continuously improving it based on feedback.
Key Takeaways from Vivian Chen's Story:
Leverage Freelancing to Raise Capital: Chen used her freelancing career to generate the necessary funds for her startup. This approach can be an effective way for aspiring entrepreneurs to gather resources without external investment.
Identify a Niche Market: Chen identified a need among her female friends for a dedicated freelancing platform. Recognizing and addressing specific market needs can lead to successful business ideas.
Learn New Skills: By teaching herself to code, Chen was able to build her platform and reduce costs. Acquiring new skills can empower entrepreneurs to take control of various aspects of their business.
Minimize Initial Costs: Handling multiple roles herself allowed Chen to keep initial expenses low. This strategy is crucial for startups to maintain financial sustainability in the early stages.
Launch and Iterate: Chen’s experience highlights the importance of launching a product, even if it’s not perfect, and then using feedback for continuous improvement. This agile approach helps in refining the product to better meet customer needs.
Vivian Chen's journey with Rise provides valuable insights for freelancers looking to transition into entrepreneurship:
Capitalize on Freelancing Experience: Use the flexibility and income from freelancing to support your entrepreneurial ambitions.
Focus on Community Building: Creating a supportive community, as Chen did with Rise, can enhance the value proposition of your platform.
Be Resourceful and Adaptive: Learn new skills and take on multiple roles to keep costs low and maintain control over your startup’s development.
8 Coaching Questions for Entrepreneurs Expanding from Freelancing to Early-Stage Companies
What is your 'Why', and what are your long-term and short-term goals to realize this narrative?
Clearly defining your reason to start a business and goals is essential for establishing the direction of your business. List your own reason and the specific short-term goals needed to achieve it.
How do you understand the major trends and competitive landscape of the current market?
Understanding market trends and the competitive landscape through research and analysis is crucial. Consider what opportunities you can seize based on this knowledge.
What were the most common issues or demands from your clients during your freelancing days?
Use client feedback to identify which problems need solving and which demands need fulfilling. This will help you confirm the actual market demand.
Who are the key team members needed for your business expansion, and what will their roles be?
It’s important to assemble key team members and clearly define their roles and responsibilities. Consider the specific skills and experience required.
How will you define the Minimum Viable Product (MVP) of your product or service, and how will you test it in the market?
It’s essential to test the market’s reaction with an MVP and improve based on early customer feedback. Plan how you will develop and test your MVP.
What is your first strategy to approach the market, and how do you plan to reach your target audience?
Develop an initial strategy to approach the market and think about how to effectively reach your target audience.
What are the major challenges you expect to face during business expansion, and how do you plan to overcome them?
Identify potential major challenges in the expansion process and develop strategies to overcome them. Consider aspects like infrastructure building, personnel management, and financial management.
What is your plan for raising initial capital?
Develop a funding plan and consider various methods such as angel investors, venture capital, and government support programs.
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