Starting a business was once described as “running a marathon on an empty stomach.” In other words, it’s nearly impossible. Yet, despite the long odds of success, every day there are new entrepreneurs around the globe who decide to take the plunge. If you find yourself among this rare group of determined souls, we salute you. We love entrepreneurs because we are entrepreneurs. In fact, we’re building software to help you run your business. The road ahead of you is long, and your days will be challenging. Storms will come, and misfortune will abound. To make it, you’ll not only need to commit significant time and effort, but when things get hard, you’ll need to have a reason to keep going. So before you start, or as you start, it’s important to consider your “why.” We believe that if you can define your why before starting a business, you can significantly increase your chance of success.
Simon Sinek is the godfather of defining your why. In fact, his book, “Start with Why” has sold hundreds of thousands of copies. In his TED talk, Sinek makes a bold statement that should resonate with aspiring entrepreneurs everywhere: “People do not buy what you do, they buy why you do it.” You can sell new products, new technologies, or new ideas, but if you haven’t defined your why, you will have a hard time convincing anyone to buy from you. So with that in mind, let’s look at four ways to define your why.
1. Understand your reason to exist.
Your why starts with understanding your company’s reason for existence (or if you want to say it in the fancy French way, your raison d’être). It’s very likely that what you’re trying to sell, or the services you’re offering are already being sold or offered by competitors. The chances of being the lone vendor in any market are slim, and even if you do find yourself in that position momentarily, you’ll very soon be met with competition if you’re even remotely successful.
So before you start, take a moment and write down the reasons why your company should exist. What will you do that your competitors won’t? Why will customers choose you over competitors who offer similar products? Why will anyone pay attention to your product when substitutes are available? If your product or service didn’t exist before, why should it exist now?
Entrepreneurs who will take the time to answer these questions honestly will have an immediate advantage over those who do not. Understanding your reason to exist will be one of the key drivers that pushes you to keep going when times get tough. If you’re not clear on your reason to exist, then your customers certainly won’t be. If you cannot convince yourself that the world needs the service you’re offering, then you will not convince anyone else. When starting with why, you must deeply understand your reason to exist.
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2. Create a company mission statement.
A company mission statement is designed to declare an organization’s purpose. That could easily be rephrased to mean that it’s a statement that defines the company’s why. Once you’ve figured out your reason to exist, the next step is to create a short, succinct statement that summarizes and explains that reason to the world.
A great example of a mission statement encapsulating a company’s why can be found in Tesla. When you visit Tesla’s “About” page on their website, in clear, bold font at the top of the page, the company explains its reason for existence: “Tesla’s mission is to accelerate the world’s transition to sustainable energy.”
Tesla, of course, is a car manufacturer. So does it surprise you that their mission statement doesn’t mention the word car? It shouldn’t. Tesla makes stylish, high performance electric vehicles as a way to accomplish the mission of accelerating the world’s progress toward sustainable energy. Car manufacturing is what they do, but it’s not the why driving their reason to exist.
Other great examples can be found by looking at the difference between the what and the why of the following companies:
What they do: Make affordable, easy-to-transport furniture
Why they do it (Mission statement): “To create a better everyday life for many people.”
What they do: Organize conferences, create videos, and produce written and visual content
Why they do it (Mission statement): “Spread ideas.”
Life is Good
What they do: Create and sell clothing for men, women, and children
Why they do it (Mission statement): “Spread the power of optimism.”
What they do: Sell goods and groceries in physical stores and online
Why they do it (Mission statement): “We save people money so they can live better lives.”
Now of course, sometimes the what and the why are so inseparable that there will be little need to differentiate between the two. Here are some examples where the what and the why are very similar:
What they do: Allow entrepreneurs and creators to share projects and get funding
Why they do it (Mission statement): “To help bring creative projects to life.”
What they do: Offer software that makes it easy to send and receive money over the internet
Why they do it (Mission statement): “To build the web’s most convenient, secure, cost-effective payment solution.”
What they do: Manufacture sports cars
Why they do it (Mission statement): “To make unique sports cars that represent the finest Italian design and craftsmanship, both on the track and on the road.”
Now that you have some ideas of what a mission statement might look like, we invite you to take the time to write down some thoughts on the mission statement of your company. Of course, this can change over time. Your business might pivot, you might find new opportunities, or you might discover a new why along the way. But it will certainly help guide your early days if you have a clear mission for your company. And remember, the mission does not have to focus on what you’re selling—focus instead on why you’re selling.
3. Define your company values.
Now that you have a deeper understanding of your why, consider the values and guiding principles you’ll follow to get you to your destination. Will you be a company that puts more emphasis on people or profits? Will company decisions be made after long, deliberate discussion, or would you rather borrow the Facebook approach of, “move fast and break things?”
Defining your company values will allow you, and your team to understand what’s expected (and maybe more importantly, what’s rewarded) within the walls of your organization. They’ll help you make decisions when faced with opposing alternatives. They’ll guide your thinking as you build your product. They’ll shine a light on what’s important.
At Eddy, we have five core company values that guide our work.
- GRATITUDE – We’re kind, grateful, and we express it often. It’s the happiest way to live.
- WORK HARD AND GOOD THINGS HAPPEN – The harder we work, the luckier we get.
- LIFELONG LEARNERS – Once you stop learning, you start dying. Our greatest investment is in our people.
- SCRAPPY – We are lean and mean. We are smart and resourceful. We deliver, whatever it takes.
- MAVERICKS – Innovation is in our blood and winning is on our mind. We have diverse talents but not diverse values.
Each one of these values plays a prominent role in how we work. For example, the fourth value, “Scrappy”, influences the way we look to solve problems. Instead of buying expensive software or hiring outside consultants for certain business problems, we find scrappy, inexpensive, but productive ways to tackle challenges head on. Or the fifth value, “Mavericks”, implies that we encourage and reward innovation. At Eddy, ideas can come from anywhere, regardless of department, seniority, or status in the company. We want all our employees to be empowered to innovate and create.
As you develop your list of company values, you’ll be tempted to include a lot of different attributes. While this is a good desire, it’ll be impossible for you, or your employees to focus on a long list. We recommend narrowing your list of values/principles to 4-7 items. As we have done, you can use terms that have multiple meanings to encompass larger ideas. But if you have too many values on your list, it won’t be clear to your employees what really matters.
4. Define what success looks like.
In the book The Seven Habits of Highly Effective People, author Stephen Covey asks readers to “begin with the end in mind.” This powerful exercise of envisioning the end of the journey at the beginning allows you to determine what a successful outcome will look like.
Success will look different for everyone and a primary indicator for your success will be closely related to your why. Some startup founders are motivated by money and fame. This is the why that drives them. They may think the only way to achieve success is if they end up on a glamorized magazine cover for a top media publication.
Other company founders are motivated by a desire to take care of their families, employ great people who they can pay well, or contribute to an important cause. These founders will be perfectly happy if their business can grow at a healthy rate and turn a profit. For some of us, our why is simply the thrill of creating something new and seeing if anyone will pay for it. We’ll be super excited to just sell a single product.
Defining the appearance of a successful outcome at the beginning of your journey can be critical to your level of happiness throughout the journey. For example, if you started a company today without defining success, and five years from now sold your business for $1,000,000 you might actually have a negative reaction. Why? Without having defined success from the outset, you could very easily be disappointed that you didn’t sell for $2,000,000 or that it took you so long (five years) to sell for $1,000,000. But had you defined success at the beginning of the journey by stating: “This business will be a success if I can grow it and sell it for $1,000,000” then you’ll be elated when you reach that goal.
Of course, over the life of a business things will not always go according to plan and your definition of success might change. However, just because you re-define success, we hope you will not re-define your why without careful consideration. Your why should be a steady guidepost throughout the life of your business and should guide your actions when challenging questions arise. When you have difficult decisions to make, ask yourself, “Does this match with the reason I started this company? Does this choice complement my why?”
A great example of sticking to your why comes from Jason Fried and David Heninemeir Hansson, the founders of the software company Basecamp. Jason and David have written a variety of books and many blog posts on the inner workings of their company and how they make decisions. Something that’s unique about Basecamp is they’ve taken almost zero venture funding (rare for software companies), and the price of their software is considered by some to be comically low.
Many “experts” looking in from the outside might assume that Jason and David are not great founders because they don’t know how to price their software or because they haven’t invested money into growth marketing. Jason and David, however, laugh at these pundits, because the critics don’t understand their why. Jason and David didn’t start Basecamp to raise a bunch of cash, grow it to a billion dollars, and then sell it. Instead, their why is deeply centered on having an innovative, sustainable, profitable business that is calm, human-centric, and pleasant to work at. Their why drives all their business decisions and has helped them achieve their version of success.
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Starting and running a business is a challenging endeavor. Doing it without understanding your why makes it nearly impossible. No matter where you are in the process, it’s not too late to understand your why. By defining your reason to exist, creating a company mission statement, defining your company values, and defining your definition of success, you’ll have a leg up on the competition because you’ll be selling something that is uniquely yours. You’ll sell your why.