Table of contents
In this section, we'll cover operations and financials.
⚙️ Operations
Operations is how your offering is made, sold, and delivered. Who does what, and how long will things take? Operations are an extension of how you build you MVP or Prototype, and is highly individual to your business.
Remember that your start-up will have a combination of:
- Builder: The technical co-founder who builds things.
- Brander: Connects product to customers by marketing, branding, visuals.
- Business developer: Handles finances, and sales.
"The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing."
- Peter Thiel
🤑 Financials
- Revenue models: Focus on your paying customers, which could be different from your users. You could sell a product or subscription service directly to your customers (like Netflix). Or build a user base then sell advertising space or data to businesses (like Meta and Google).
- Pricing: Charge a premium price, but with its equivalent value (not overpriced). Your quantified value from Step 4 of Testing Your Offering should help. The tricky part is that your actual value may be different from the customer's perceived value (which depend on your marketing, and competition) which makes customers unwilling to pay. But since it's easier to lower prices than to raise them, you should start high then discount later.
- Sales projection: Start with a bottom-up approach (extrapolate current numbers by making small assumptions) because you need a high degree of certainty of your forecasts. After a few years once business is stable, take a top-down approach (estimate your potential market size from the total market) to check if you're growing enough. You can do both every year to check for gaps in logic.
- Investment need: The total amount of initial investment needed before a company can sustain itself from its own profits. Physical products require higher investment, and digital ones require less.
Conclusion
Improve your operations by focusing on the important stuff, then delegate or automate the rest. Make sure to always stay on top of your financials.
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