A prospective business owner may want to start a business around an interesting idea. But if they are clueless on what to do next, “Startup Assembly Manual: Building a Business from the Customer Up” is the book to pickup. Timothy Freriks (@TimFreriks), the author, has a lot of experience starting and running multiple businesses, from consulting, real estate, to software development over the last four decades.
Hence, readers might gain from his insights and wisdom. He provides a blueprint/task plan on various aspects that need to be considered before starting a business. The author also describes his ‘ACE methodology’, developed from his own experience, to guide business owners from a business idea to exit.
To illustrate his points, the author gives a few good real life examples based on his own experience and the experience of people he knows. These business stories are presented in an interesting way and the author leaves readers in a cliffhanger each time he breaks off the story and goes back to detailed explanations and suggestions.
First Steps: Analyze and Validate
It maybe better not to invest a large amount of money upfront based on one’s assumptions alone, says the author. He suggests that prospective business owners do a quick and dirty analysis to validate the business idea first. That could be done by reaching out and asking prospective customers if they will buy the product/service.
Then he suggests preparing a detailed business plan according to the ACE methodology which he elaborates throughout the book. He suggests validating the business idea with a few customers through actual sales, and going ahead with the idea on a larger scale once the product proves to be successful.
Ask the Customer, Ask the Customer, Ask the Customer
This is one point the author repeats frequently throughout “Startup Assembly Manual” — Ask the customer. One may have a brilliant idea but the customer may not want it, at least not without modifications.
The author asks prospective business owners to build customer profiles with information on who they are and what they do — for work, leisure, etc. One needs to find what problems customers face, how that problem affects their work & family. Is the problem urgent, how do they solve it currently, can the proposed product help them solve it better? What is their perception of value: how much are customers willing to pay?
The prospective business owner will then have to approach customers in the real world or over the Internet, tell them about the product/service, convey the value proposition, and evaluate if they show interest in it. He says prospective business owners should proceed with their idea only if a few customers are willing to buy the product.
Pricing and Minimum Viable Product
In “Startup Assembly Manual” the author gives a formula for determining the selling price:
Customer Price = Per Unit Total Cost x 4
But this may vary depending on the business. He suggests that prospective business owners need to estimate how many products they will sell in a year and then determine the total cost per unit based on that.
Determining in advance what customers are willing to pay is recommended by the author to evaluate if the pricing strategy will work. In some cases customers maybe willing to pay more than what the business owners plan to charge because the perceived value of the product in their minds maybe higher!
The author also suggests in “Startup Assembly Manual” that business owners ought to focus on releasing the Minimum Viable Product with only those features/functionality that are absolutely necessary to solve the customer problem. Too many features will confuse customers and will increase the cost. Additional features can always be added later on for customers who request it.
Make Sure Your Marketing Message Reaches its Target
“The foundation for smart marketing messages comes from truly understanding the pain and the problem of the target customer” says Timothy Freriks.
Although the author admits that marketing is not his specialty, he gives many useful tips for reaching the message to whom it matters. He suggests prospective business owners take their message to any place where customers hangout (like an online forum) through advertising, giving free samples to early adopters, etc.
If customers like the product, they will talk about it to others thereby popularizing the product. “Startup Assembly Manual” emphasizes why it’s important to have a short benefit statement and a catchy slogan to attract customers. The author also suggests using A/B testing to test the effectiveness of marketing messages.
When to Look for Funding, Exit?
When to approach investors for funding is an important question.
“Startup Assembly Manual” suggests they should be their own first investor and put in all the initial investment needed by themselves. If the initial sales are good, profits from those sales could be invested back into the business.
Once the product starts selling steadily and revenues grow, external investors could be approached for funding to expand the business. A business owner could also look at selling the business at this time.
Is “Startup Assembly Manual” Worth Your Time?
“Startup Assembly Manual” will be useful to prospective business owners and entrepreneurs who have a business idea and want to know what to do next. The examples given from the author’s own experience are a gem.
The blueprint/task plan charts with check points on important aspects to be considered before starting a business are a good addition. The author’s website has a number of resources and links for further research and understanding.
However, “Startup Assembly Manual” is longer than what it should be. The author spends a lot of time explaining ACE Methodology concepts that at times feel obvious and repetitive. But all that reinforcement maybe essential as otherwise readers may miss important points.
This is in contrast to the wonderful and insightful real-world examples he sprinkles throughout the book. However, some of these examples could have been more detailed.
Altogether, “Startup Assembly Manual” is a good book to read for would-be entrepreneurs. I wish the book was shorter with less advice and repetition, but the case studies could have been more detailed.