Close Menu
Steps

How To Start A Digital Business In Four Steps In 2024

adminBy No Comments11 Mins Read8 Views


To start a digital business with low or no cash, look for a business opportunity within a microniche. Before going all-in, you want to validate your idea cheaply. After validation, you can push on growth and as you grow, you create options to scale your digital business.

 

 

1. Find Your Business Opportunity By Starting With A Microniche

In the era of large digital platforms, it’s important to start adding value from a small audience, which can become the backbone for your next digital business. Indeed, that isn’t a single way to start.

However, if you have limited capital or no capital at all, it’s important to start from a narrow space, where you can add a lot of value.

As a small player, you’ll be able to break the trade-off between cost and value, which is at the base of a blue ocean strategy.

blue-ocean-strategyblue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

In the microniche space, you’ll be able to find the community that will help you build your next digital venture!

micronichemicroniche
A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.

2. Validate Your Idea Before Going All-In

idea-generationidea-generation

The digital world creates two illusions:

  • As you can talk to the whole world you end up wanting to talk to everyone
  • As you can start with little or no money, you’re willing to test anything

These two are indeed facts, but only for those established businesses that have powerful distribution networks, marketing, and R&D budget.

If you’re starting from scratch trying to talk to everyone, or trying to test all the possible options you have might not work.

Thus, you want to look at the key components of the business model you might want to build:

business-modelbusiness-model
A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.
Business-Model-ExperimentationBusiness-Model-Experimentation
Where scientists use labs to test their hypotheses through experimentation. Entrepreneurs build business model experiments to test their business ideas in the real world.

At this stage, it’s important to validate your idea, to see if there is a niche market opportunity before going all-in!

If you already have an audience, you can test your idea by, for instance, proposing a product or service.

Let’s say you already have a blog that generates some traffic, and a newsletter, you can organize a workshop and see if people in your newsletter are willing to pay for it.

If so, that opens up the space for producing a digital product out of the workshop, which can help you get started.

Once you got the audience you can start testing potential revenue streams:

revenue-modelingrevenue-modeling
Revenue modeling is a process of incorporating a sustainable financial model for revenue generation within a business model design. Revenue modeling can help to understand what options make more sense in creating a digital business from scratch; alternatively, it can help in analyzing existing digital businesses and reverse engineering them.

3. Growth and traction

growth-hackinggrowth-hacking
Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing, product, data analysis, and engineering work together to achieve rapid growth. The growth hacking process goes through four key stages analyzing, ideating, prioritizing, and testing.

You can use the growth hacking framework to accelerate growth once your idea has been validated.

Related: Growth Hacking Complete Guide

4. Create Options To Scale

Once you start from a microniche, you can look at it as the foundation of your business, which will give you options to scale as you dominate that microniche.

Therefore, as you grow you can create options for your digital business! This is at the core of bootstrapping.

As you grow, you tune your business with its key customers, and as you do, your key customers will become the most important stakeholders:

bootstrapping-businessbootstrapping-business
The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model.

Some Ideas To Start Building Your First Digital Business

Not all entrepreneurs can initially afford to build the business of their dream (at least not in the short term). Therefore, it might make sense to look at existing opportunities out there that can help you bootstrap:

business-ideas-with-low-investment-and-high-profitbusiness-ideas-with-low-investment-and-high-profit

Top 12 Business Ideas with Low Investment and High Profit

Key Highlights

  • Starting with a Microniche: In the digital age, starting with a microniche is crucial to adding value to a small audience that can form the foundation of your digital business. By focusing on a narrow space, you can break the cost-value trade-off and implement a blue ocean strategy, creating new uncontested markets with higher value at lower costs.
  • Validating Your Idea: While the digital world offers the ability to reach a wide audience, it’s important to validate your idea before committing fully. Established businesses with powerful distribution networks can talk to everyone, but for startups, it’s better to validate your idea within a specific business model by conducting experiments. Testing potential revenue streams, especially with an existing audience, can help validate the niche market opportunity.
  • Growth and Traction: Utilizing the growth hacking framework can accelerate growth once your idea has been validated. Growth hacking involves rapid experimentation and collaboration between marketing, product, data analysis, and engineering to achieve rapid growth in four key stages: analyzing, ideating, prioritizing, and testing.
  • Creating Options to Scale: Starting with a microniche serves as the foundation for your digital business, providing options for scaling as you dominate that niche. As your business grows, you can tune it with the needs of your key customers, ensuring their satisfaction and becoming the most important stakeholders.
  • Bootstrapping: Not all entrepreneurs can afford to build their dream business immediately. Bootstrapping, which involves financing growth from available cash flows produced by a viable business model, can be a practical approach to getting started. Exploring existing opportunities that align with your skills and resources is a way to begin building your first digital business.
  • Key Takeaways: Starting with a microniche and validating your idea are crucial steps in the digital business world. Utilizing growth hacking and creating options for scaling will help your business grow, and bootstrapping can be a practical approach for entrepreneurs with limited initial resources.

Step-by-Step Framework

Step Description When to Recognize Advantages Drawbacks
Find Your Business Opportunity By Starting With A Microniche Starting with a microniche allows you to add value to a small audience, breaking the cost-value trade-off seen in a blue ocean strategy. During the initial planning stages of the business. Offers a competitive advantage and room for growth. Limited market size initially; may require expansion over time.
Validate Your Idea Before Going All-In Testing your business idea and validating it with a niche market opportunity is crucial before full commitment. During the ideation and planning stages of the business. Reduces the risk of failure and identifies market demand. May require resources for testing and validation before scaling.
Growth and Traction Growth hacking involves rapid experimentation and analyzing the entire funnel to achieve rapid growth. After validating the idea and initial market entry. Accelerates growth and identifies scalable strategies. Requires a deep understanding of marketing, data analysis, and engineering.
Create Options To Scale Starting from a microniche provides a foundation for scaling and creating options for the digital business. As the business grows and dominates the microniche. Provides flexibility for future expansion and growth. Initial focus on a microniche may limit diversification until later stages.

Strategy Frameworks To Start Your Business

Porter’s Five Forces And Generic Strategies

VTDF Framework For Analyzing Tech Business Models

Business Modeling

BCG Matrix

Ansoff Matrix

Business Development

Blue Ocean Strategy

AIDA Model

Blitzscaling

Leaner MVP

Coca-Cola Entry Strategy

FourWeekMBA Business Toolbox

Business Engineering

business-engineering-manifestobusiness-engineering-manifesto

Tech Business Model Template

business-model-templatebusiness-model-template
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Web3 Business Model Template

vbde-frameworkvbde-framework
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Asymmetric Business Models

asymmetric-business-modelsasymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Business Competition

business-competitionbusiness-competition
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

technological-modelingtechnological-modeling
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Transitional Business Models

transitional-business-modelstransitional-business-models
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

Minimum Viable Audience

minimum-viable-audienceminimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Business Scaling

business-scalingbusiness-scaling
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Market Expansion Theory

market-expansionmarket-expansion
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.

Speed-Reversibility

decision-making-matrixdecision-making-matrix

Asymmetric Betting

asymmetric-betsasymmetric-bets

Growth Matrix

growth-strategiesgrowth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Revenue Streams Matrix

revenue-streams-model-matrixrevenue-streams-model-matrix
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Revenue Modeling

revenue-model-patternsrevenue-model-patterns
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Pricing Strategies

pricing-strategiespricing-strategies
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

Other business resources:



Source link

Share.

Related Posts

Add A Comment
Leave A Reply