Framework to Identify and Start a Business

January 8, 2025 Nikhil Kumar Entrepreneurship

Over the last few days, I have been thinking deeply about the requirements to start a modern business. I will try to jot that down here.

What Kind of Business to Pick?

  1. Demand for the service/product should be high.
  2. Supply of the service/product is low/fragmented/has a gap.
  3. The inherent margin is high.
  4. Initial investment required is low.

Important Factors That Will Help You Go Really Big

  1. Where operating leverage is high – meaning it can be scaled disproportionately to the effort put in.
  2. The ability to build a MOAT.
  3. Offering a differentiated experience.
  4. Building something that can't be copied easily.
  5. Headroom for expansion.

The Three Areas of Business Activity

Broadly, any business can be divided into three different areas of activity:

  1. Bringing traffic/users/customers to the website/WA catalog/Google Maps link/store.
  2. Building the store/website in such a way that we can convert as much of the incoming traffic as possible into orders/leads.
  3. Servicing the leads/orders.

The above frameworks may sound very simple. But the reality is that most educated people can't really grasp this because most of them have not experienced this complete cycle or the activities involved from end to end. Someone in customer service may not understand the nuances of selling, someone in sales may not understand the nuances of building the product, and someone in technology may not understand the nuances of bringing traffic to your product. All of these individuals may not understand the unit economics involved, and so on.

So here I am trying to come up with a list of skills that everyone should learn. Let's call this Business 101.

Business 101 – Essential Skills

  1. Digital Marketing – SEO, SEM (Google, Facebook, Google Maps, Instagram, YouTube, etc.), WhatsApp for Business, keyword analysis, cost-benefit analysis, competitor analysis.
  2. Copywriting – This is required at all stages, and hence mentioned separately.
  3. Understanding User-Centric Design – UX, UI.
  4. Understanding the Basics of Tech (Not Coding) – To be able to build basic websites using no-code AI tools.
  5. Understanding the Basic User Funnel and Analytics – e.g., Google Analytics, A/B experimentation.
  6. Operations 101 – Ability to handle servicing, shipping, customer service, etc. This could be done by oneself, hired employees, or via business partnerships.

A lot of the activities required in building an online business can now be done with the help of AI. By understanding the above, an individual with no capital can open new vistas and start a business.

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