In this week’s In-Ear Insights, Katie and Chris explore the three necessities for starting a new business. What three things, if you had to start over from scratch, would you need to make your business successful? You’ll learn what those necessities are, why they matter, and how to apply them to your business, whether it’s new or not.
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What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for listening to the episode.
Christopher Penn 0:00
In this week’s In-Ear Insights, suppose that you’re starting over or you’re trapped on a desert island, or any number of things where you don’t have all the resources that you’re used to for building and growing a business, what three things? would you say are absolutely essential to starting a business and or completely rebooting one, Katie, as our CEO? Where do we start? What’s its Day Zero of the next iteration of whatever? Where do we start? What are your three things?
Katie Robbert 0:32
I would start with users stories, I’m always I think I would always start there.
Because my first question is, what the heck am I doing? Why am I doing it? Who am I doing it for? You know, so I would say, number one, start with a user and a user story.
And I’ve written about this before, a user story can be a stand in business plan.
You know, if you don’t have a fully baked, you know, you know, deck and plan and all that good stuff that people expect you to have, you can have a user story.
So you can say, as a, you know, small business, I want to serve, you know, marketers who struggle with their analytics so that they can have better insights and focus on customer relationships.
That’s essentially what we do.
And that could be our whole business plan.
That’s our business model.
That’s our mission statement, that sort of becomes the driving force behind everything we do.
And so we have stated who we are, we’re a small business, we didn’t say we’re an enterprise sized business.
And so that sort of dictates sort of the next steps of how do we set ourselves up as a small business? I want to serve marketers.
So that’s our audience.
And so do I have that audience already? Do I need to go find that audience who are struggling with their analytics? So that’s a more specific type of audience.
So there’s marketers and then there’s marketers who are measuring and struggling.
So that and then here’s the services that we provide, so that they can focus on taking in taking action and customer relationship.
So that then says, Well, that means we’re going to handle the data.
So I would start there, start with my user story, because it’s going to tell me a lot about what I need to do next.
Christopher Penn 2:26
Okay, so that’s one thing, what are your other two?
Katie Robbert 2:32
Probably somebody who can do the work, doesn’t have to be a big team.
But if it’s not me, if I’m not the person who can analyze the data, based on the user story that I need to find at least one person who could do the work credibly.
So I would say, I need a user story.
I need someone who can do the work.
And then I need the third thing that I need is an audience, I need customers.
And so I need to know that that audience exists, and that this is a need for them and where to reach them.
I mean, that that’s sort of like a big high level, because obviously you dig into each of those things.
But those are the three things that I would say you need to start a business,
Christopher Penn 3:17
I would agree with you.
When you look at some of the pitching kits that big VCs like Sequoia all publish, they all talk about those basic ingredients, right? Do you have to have a product anybody actually wants?
Katie Robbert 3:30
are you solving a problem that people actually have? Or are you trying to, you know, fit something into their lives? That is just one more thing to consider? And I think again, that sort of goes into the user story of what’s the problem you’re trying to solve? And is it a problem that even needs to be solved? Like, you know, we could invent like this really cool.
You know, we’d like to use cooking as the analogy like this really cool.
Like, you know, self mixing, you know, do dad thing that also keeps as it goes, it’s like, okay, but is anybody actually having that problem? Does anybody want that problem to be solved? Or is it just another gadget that they’ll people will use for a couple of days, and then it will just find its way back into your cabinet? That’s, you know, really inaccessible.
We all have that cabinet?
Christopher Penn 4:21
We do? Yes, it’s an entire closet.
You definitely see that a lot in people’s pitches.
When they’re pitching their business.
You’ll hear things like saying, Oh, we’re the we’re the Uber of frying pans.
And you’re like, Did anyone ask?
Katie Robbert 4:38
Yeah, I didn’t realize I was having that problem.
Christopher Penn 4:43
I think it in terms of the three things that I would be looking for to start, it actually aligns very similarly to what yours, right, where, obviously, we have the purpose, which is what the user story covers, but the three things I’d be looking for would be the people and this is something that we I got from our accountant who said this three roles you need an A in any business to work, a finder, a minder and a grinder.
Right? It’s the Finder is your sales, sales and marketing? How do we how do we find people who are willing to pay us money? Your minder is someone whose job is is to run the business, taxes, law, accounting, incorporation, all that fun stuff.
And that may or may not be a full time role, but certainly is all work that has to get done for your business to legally operate.
And then the grinder is the person doing the work, getting clients or customers happy moving product, putting up signs, baking bread, whatever the business is, you need all three roles.
Now that to your point, they may not be three discrete, distinct people, right? But you definitely need those three things.
And if you don’t have those three things, there’s a good chance your business will not survive even the first year.
Katie Robbert 5:54
So it’s interesting.
You know, you and I are, as you mentioned, we’re saying similar things.
And so as I’m saying the user story, like that’s, that’s the minder, the minder is coming up with the user story to say, here’s what the heck we’re doing.
The grinder? Is the person with the skill set doing the work and the Finder is the one who is working with your audience.
Is the audience that what do they need? What is the problem? So you’re absolutely right, those are the three basic things that you need.
I mean, you can start to get into the weeds of well, what systems are we going to use? And how are we going to serve them and all this different platforms, but I feel like a lot of companies skip to that first.
They’re like, Okay, let me go ahead and stand up Salesforce enterprise, before I even know who’s going to go into my rolodex.
Christopher Penn 6:46
And if you think about it, the people part of your people process platform, the people part is really the timeless part of business, right? A fig distribution company in ancient Egypt still needed a finder, a minder, and a grinder, someone who could do inventory, someone who could schlep the figs from Italy all the way to Egypt, on whatever ships available, and someone to stand the middle of the bazaar and yell, hey, are things better than their figs?
Katie Robbert 7:16
I mean, if you look, any, any single company in the entire world needs those three legs of the stool.
And to your point, Chris, it doesn’t have to be three individuals, it could be one person doing three jobs.
But those three roles need to exist for any company be successful.
Christopher Penn 7:36
And, and they are timeless, they are technology independent, or no technology at all, there are plenty of businesses where someone’s got a notepad, right, and they are just doing inventory the the old fashioned way, there are plenty of businesses where in the world, you know, someone’s on their horse, or their bowl, or their cow with a camel or whatever, moving stuff around from point A to point B, that’s how we got yogurt.
No, it was some someone put milk in a camel skin while they’re shopping across the desert, and they end up with fermented red milk.
Okay, Chris, food, food history on and under Trust Insights podcast, but no, those those three roles are timeless.
And they’re, they’re absolutely necessary.
And you can, if you think about the architecture of a company, all the different, you know, the CIO, the CTO, the CMO, the Chief Human Resources Officer, all those roles eventually roll up to one of those three categories.
I can’t really think of any role in a company where that does not roll up, either into sales and marketing, operations or product.
Katie Robbert 8:48
Yeah, it was just thinking that through and you know, so, you know, let’s say you expand upon that.
And so we were just talking with a tech startup who’s trying to build some piece of artificial intelligence.
And, you know, we were highlighting that that company needs to find a technical project manager, in addition to the development team, in addition to the data science team, in addition to the regulatory team, in addition to but all of those people fall under the grinder category.
You know, and so you’re absolutely right.
And then you have, you know, we were being brought in to consult to make sure that things weren’t going sideways, that makes us the minders to make sure that you know, they’re following the right laws and regulations and ethics and all that good stuff.
You know, so every single role in a company rolls up into something even you know, the interns, the janitors, the people who you might consider non essential your vendors who provide services.
You know, WB Mason who delivers pencils to you, that falls into one of those roles.
Christopher Penn 10:01
This is this is Netflix’s org chart, this is a company called the AUROC.
And they they publish, you know, big publicly traded companies.
Even just very quickly looking at something like this, you can break down those, those three categories, you have the CFO that is definitely on the mind or side of the business, like we got to run the business, right? Your chief talent officer that’s operations that’s, that is the minder to find good writers, and the finance, right, Chief Legal Officer, creative production, VP of games, that’s all product, and things.
And so those three things that we need to run a business, the three essentials, all sort of bucket into that.
Now, in terms of the rest of the five piece, I think you’ll people, processes and platform really are also kind of the same thing in terms of the three things you need, you need people you need processes, you need a platform, a way of doing your business too
Katie Robbert 11:03
well, and so that goes back to the user story.
Because if you start to dissect the user story, then you cover all of the five P’s within a single user story.
So as a persona, that’s your people, I want to that’s your process and your platform, so that that’s your purpose and your performance.
And so if you construct really good solid user stories that are detailed, that are focused, then you’re covering all five P’s, that’s the way that it’s supposed to work.
So each of these pieces, you need to make sure you’re not just using it as like a throwaway placeholder, they’re actually thinking about the information that goes into this statement.
It’s not just a, alright, let me just do a user story just to sort of gut check, it can be incredibly informative, to understanding each of these five P’s.
Christopher Penn 11:57
And the other flip side of that is if you do a user story from the perspective of the customer, then you’ve put anyone’s got your sales and marketing, at least down in terms of messaging, like, Hey, this is what people want.
If you do a user story, and say, as a personal chef, I want to never have to wash a frying pan again so that I can spend more time cooking.
I mean, granted, yes, you can have Uber for frying pans.
As he misses out, anyone wants that.
But certainly doing a user story from the perspective of your customer will make the sales and marketing part the final part easier.
Katie Robbert 12:35
and if you you know, continue on with that example, you know, it’s a bit of a silly example, but it’s a really good one, you know, to demonstrate with user stories, you can start to experiment with scenarios.
And so the scenario is being well, what if they don’t want this? And what if they want this so you know, as a personal chef, I don’t want to wash a frying pan ever again.
I also don’t want to destroy the environment by having multiple frying pans delivered to me on a regular basis, because, you know, there’s going to fill up a landfill, so that I can be a considered a Green Chef, I’m putting that in quotations if you’re listening.
Just it’s like the goofy example that we’re going going down.
And so then you can start to think about, does my business model even hold water? You know, am I creating a bigger problem.
So as an environmentalist, I want to shut down this Uber for frying pans so that they don’t destroy the environment? Is that a scenario that I as a new business owner, needs to worry about? Who’s going to be critical of the things that I’m trying to do.
And you can use those user stories from all different angles.
So as internal teams, as external customers, as critics as competition, you know, as a competitor to Uber for frying pans, I want to, you know, replicate the Uber for frying pans model at a cheaper rate, so that I can, you know, overtake the market and make more money.
Okay, if that’s a realistic scenario, then what do you as the business owner, need to think about in terms of protecting your company, and, you know, growing and scaling?
Christopher Penn 14:22
Now, if we dig into process a little bit in terms of starting up a new company, I recently watched someone start an LLC, and they did the incorporation.
They did the paperwork, they got the full certificate stuff, but they did not do the one thing that I thought they probably should do most, which is building an operating agreement for the different people who were involved in this.
And I remember when we started at Trust Insights, we spent a lot of time on the operating agreement on on how the company would fundamentally function and what happens if bad things happen here and there a lot of a lot of what if scenario planning.
And so if we’re talking about three things, even just one of these categories, the on the process, I, the three things I think you absolutely need, you absolutely need some kind of operating agreement and that that’s gonna depend on your company.
So if you’re like, in the USA, if you’re a C Corp, it’s actually going to be your company’s bylaws.
Among other things, if you’re an S corp or LLC or LLP, I think you use operating agreements, might be just be LLC is an LLP is to do that.
But either way, you need some kind of process documentation that explains how the company works.
Katie Robbert 15:37
And so it’s really you know, whether you want to formalize it into an operations agreement or, you know, bylaws, starting with expectation setting.
And so, you know, and Chris, that’s where we started, we didn’t on day one, we didn’t have all of those documentation in place, we had the bare minimum, and we learned as we went, but we realized that we did have to have those expectations, setting agreements.
You know, because it’s, and I think that this is where people get hung up on these agreements.
It’s not that you don’t trust your team, or you don’t trust the person that you’re starting a business with.
But I mean, let’s be honest, shit happens, and you don’t know what’s going to happen.
Like, I could walk outside and get hit by the FedEx truck that speeds up and down my dead end street every single day, because I don’t see them coming.
You know, that, that could happen? I’m going to hope to heck, it’s not going to happen.
But if it did, then 50% of the company is now unaccounted for.
And Chris would need to figure out, what does that mean, operationally, what does that mean financially? What does that mean, legally? And those are not small decisions, because my family is involved as an extension of me.
And so what does that mean, for my, you know, whoever’s inheriting all my stuff, which is, as of today, it’s my dog.
So good luck, she’s very stubborn.
But those are the basics that, you know, you don’t have to have the formal agreements in place on day one.
But you need you do need to have some sort of an outline of expectations.
Christopher Penn 17:12
And, and a, you know, a should happens plan.
So what happens if this happens, if you know, I get arrested for building an army of killer drones, which is not entirely inconceivable.
Katie Robbert 17:26
But that’s, that’s the kind of thing where, you know, it might feel silly to play out those extreme scenarios.
But the longer you’ve been in a professional role, the more you see, the more you realize these things aren’t so unrealistic.
Christopher Penn 17:45
Yeah, I mean, the definition of expertise that I like to use a lot is is someone who knows what will go wrong.
So someone who’s been in business for a while, someone who’s seen a lot of different things go sideways, after a while you like, okay, so this is probably going to happen at some point, right? If you if you have a corporation of more than five people, at some point, you’re gonna have some drama, that’s going to have people parting ways, possibly on on friendly terms.
And so there’s a series of processes that go with that, like, Okay, well, how do you handle employee termination? How do you handle hiring? How do you handle disputes about pay? All these things are things that as you’re, as you’re building your startup, you should have at least something written down? Even if it’s not, you know, a 500 page binder is the at least some way of saying, Okay, well, we thought about this.
And here’s probably how we’ll deal with it.
Katie Robbert 18:47
Right? Well, and that goes back to those three roles of the mind or the Finder and the grinder.
If you aren’t equipped, or don’t have time to build out those processes, then you need to find someone who can, and someone who can mind those processes to find your grinders.
And your finders.
Christopher Penn 19:10
And then on platform side, what are the three platforms that you would have?
Katie Robbert 19:18
I was actually just writing about this.
There’s three different kinds of platforms, let me actually pull up because I have this written down.
Where is it? And so you should have three kinds of platforms, one to collect your data, when to analyze your data and one to report your data.
And that may sound like we’re only talking about, you know, web analytics, but really, that could be anything.
So that could be your financial information.
That could be your customer information.
That could be your product information.
You know, so I think, you know, there’s this I think it’s the martec 11,000 Then 38 or something, I might be like off by a couple.
But there’s basically the point being is there’s 11,000 tools just in the MAR tech stack that doesn’t include all the financial tools.
If you’re in higher ed, if you’re in, you know, private sectors regulatory, there’s no shortage of tools.
And so having that user story at the beginning, is really going to help you narrow down and focus in on what are the essentials that I need.
And so even if you can’t sort of get all of that from your user story, you probably need some way to keep track of your customers, you probably need some way to keep track of your financials.
And you probably need some way to keep track of communication.
And so that could be you know, a very simple like QuickBooks or something, or a spreadsheet, that could be a very small CRM, and that could be an email system.
And that could be all you need to start.
I’m pretty sure when we started, that was all we had.
Christopher Penn 21:04
Yeah, that was exactly where I was going with that the the Finder, the mind and the grantor each have sort of a core system or set of systems that they need.
So system like Hubspot for your your finder, yeah, this Hubspot sales, and maybe you combine it with the modoch marketing operations system, so that you have the basics of it.
We can put up a website with this.
We can collect emails, you can send a newsletter, we can manage leads, or customers or what have you.
On the operation side, yeah, good system.
QuickBooks is a good system.
There’s zero and a few other systems that are out there that can do that.
And then on the doing the work side, that some kind of project management system and yeah, and inbox, in the beginning is an appropriate project management system is definitely not for the long term.
Katie Robbert 21:51
No, but it is good enough to start with.
You know, and that sort of the other side of it is, there’s what are the things I need to start with? But then, am I thinking long term when, you know, what is the point where I’m going to say we have outgrown the following things? And so there’s the short term and the long term planning that comes with all of this.
Christopher Penn 22:17
And then on the performance side, what are the three things that that you are I think are essential measurements for a new business?
Katie Robbert 22:28
I mean, that’s tough, because it’s really going to depend by business, you could make an assumption, that revenue is probably a key performance indicator, customer satisfaction.
And I would say probably the thing that I would look at is time, you know, in terms of, am I spending more time and making less money? Am I spending less time and making more money? So it’s, I would have to think specifically about what that metric is.
But I would look at revenue, customer satisfaction and time.
Christopher Penn 23:05
Nice, I would be looking at cashflow.
Just from the philosophy of finance that I grew up with.
If you have negative cash flow, sooner or later, you’re going out of business, it might be 100 years.
But if you’re if you’re burning more cash than you’re bringing in, you’re in trouble if you’re earning more cash than you’re spending.
Yeah, it might take a while for your business to get up and running.
But you’re not going out of business because you’ve got more money coming in, then you’ve got going out.
So cash flow to me is is sort of the minders big number.
The find is big number is that sales pipeline, you know, how are we doing in terms of getting stuff in the door that we can that we can sell and if that number is low or zero, then it’s will sooner or later it will show up in the minders number on cash flow.
And then on the grinder side? Yeah, I think customer satisfaction is one or even just simple things like are you meeting your deadlines? Right? Are you delivering what you’ve promised you that you would deliver? And if the answer is no, then that will eventually show up and things like customer satisfaction, etc.
So, and cash exactly, because people like I haven’t really pissed off, so I’m not going to give you any more money.
Those three things.
And the deliverables can fall into both the grinder setting and the minder side of thing if you got a good mind, or they can say, hey, it looks like we’re falling behind, you know, we only shipped 40 loaves of bread today we’re supposed to ship 50 So what’s going on? That those those three numbers can do do interplay, they’re interconnected that you can’t take one in isolation.
Katie Robbert 24:41
Well, and I think that that’s a really good point as well in terms of how you’re setting up your business is so let’s say you have these three distinct roles with three distinct processes each with three distinct platforms each with three distinct you know, sets of KPIs each.
If you are setting up your business big okay mind are you go over there you do here thing and we’ll check in later, find our ego over there and do your thing.
And we’ll check in later, Grindr, you go ahead and just like do the thing, and we’ll check in later, then you’ve already not set yourself up for success.
And so Chris, you were just talking about integration, and making sure that these, all of these pieces for all of these people are working in concert together versus independently.
And so, you know, my KPIs, as, you know, the minder should, you know, at some point intersect with your KPIs, as the grinder should intersect with John’s KPIs as defined or like they should all be dependent on each other?
Christopher Penn 25:43
definition of leadership, all three of these your problem.
Katie Robbert 25:50
Doesn’t matter if it’s not your job, it’s your job.
Christopher Penn 25:52
But even even in simple organizations, even startups, even in non businesses, right, volunteer efforts and things, you still need these things, right? I’m thinking of, for example, the volunteer stuff had done with the Warrior Nun campaign, you still need people, processes, platforms, you still need key objectives, you still need policies and how things are going to work, you still need technology.
So I would say there are very few situations where, you know, the sort of these three things and these three core roles would not apply.
Katie Robbert 26:30
Okay, here’s a challenge for you.
How do you apply it to managing your household?
Christopher Penn 26:38
It’s, it’s, it’s seven ways, it’s, it’s very similar, right? And so you, in the case of the find a role, that’s more, you have to have income coming into your household, right to pay for it, you have to have someone to, to run the household, right to to manage the household finances, and then you have stuff to be done around the house, you you’re off your to do list.
Oh, that’s leaking again.
Katie Robbert 27:04
The reason I ask is because it strikes me that those three roles are to your point, not just universal to any business, but really kind of universal to any situation.
You know, even if it’s, you know, something that you yourself are doing, you know, I’m gonna go clean up the yard, you know, you, you yourself, you’re a grinder, you’re actually doing the thing you’re finding, you’re actually figuring out, like, what tools do I need? What’s gonna be my measure of success to clean up the yard or not? And then the miner to be like, Okay, what time do I have to start? What time? Do I have to be done? You know, am I bending at the knees? Or am I just gonna throw my backhoe? Like, it’s, again, sort of silly examples.
But you can apply these rules these roles to any situation.
Christopher Penn 27:50
It’s it’s your money, operations and work.
How do you how do you balance all the things you want to go out for dinner? And you don’t have the money for it? Okay, well, how do you find that money? How do you manage the money that you do have so that you don’t overspend? And how do you balance all of that with your other priorities in life, as much as certain groups, people will make fun of certain generations for getting avocado toast and you know, and artisanal coffee? Well, if those trade offs, if somebody doesn’t have the same goals as you, then they will have different priorities on what they find mine and grind.
And so those are, those are the things that the big conceptual pieces that everybody needs.
And, to your point, it works for a household, it works for a relationship, it works for everything, if you’ve if you can document and, you know, sort of codify those things it makes running your life easier.
Katie Robbert 28:50
I would agree with that.
And I think, you know, there’s also I mean, I could go on and on about process all day long.
Christopher Penn 28:59
Well, I have just the place for you to do that.
Katie, you can go to trust insights.ai/analytics for marketers, where you have over 3000 other marketers can talk about process all day long.
Katie Robbert 29:10
And I will, I will.
Christopher Penn 29:14
If you would like to hear more about process, you could go to trust insights.ai/ti podcast for all the back episodes of the show, and how to tune in on a platform of your choice.
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