The 3 Levels Of Building A Business

There are three stages involved in building a business. Each of these stages are very crucial for the success of the business. Understanding these stages by the entrepreneur is key.

The Three Levels Of Building A Business


At Level One, you are designing and planning your new startup. You’re gathering your initial team, raising any required startup capital, and executing your launch plan. Your focus at Level One is to plan your new business. And get immediate market feedback to learn if your business concept and model is economically viable. This is a fancy way to say you’ll be testing your product or service to see if you can sell it at a price that allows your business to be profitable.

A Simple Formula To Know Which Business You Should Start.

After observing thousands of entrepreneurs start businesses and seeing which ones thrived and which ones struggled, which succeeded and which failed, I’ve developed the following simple formula to help you know the business you should start.

You will find your highest likelihood of success when your business falls within the overlap of these three areas:


  • Your passions
  • Your talents
  • Your advantages


Your passions: what are you passionate about? What do you love to do? What thing do you find absorbing? Engaging? Engrossing? To build a successful business requires focusing on your business long after the blush of the initial excitement has faded. Your passion keeps you in your business and enjoying it even when you’re faced with the inevitable challenges.

Your talents: what are you great at doing? What skills come easily and naturally for you? What do other people say looks easy when you do it? In what area are you consistently improving?

Your advantages: what are the resources, both financial and non-financial, that you can bring to your new business venture? What life experiences have you earned and want to apply? What relationships have you built that you can tap into? What skills and proficiencies have you invested the time and money to cultivate? What financial resources can you access? What symbolic capital have you earned?

The most successful startups live in the overlap of these three areas: your passions, your talents, and your advantages.

Before you decide on which business to start, clearly list your passions, talents, and advantages. From there, look for a business opportunity that addresses the overlapping area of all three. More on this in a subsequent chapter

The 4 Action Steps You Must Take In Level One

Action step 1: Clarify your basic business idea

Let’s say you’ve been dreaming of your new business for months or even years and playing the “what if” game in your head. It’s time to get serious and turn your dreams into tangible, concrete ideas on paper. To clarify your core business concept, start by answering these seven questions:


  1. In two or three sentences, describe your business idea.
  2. Who is your ideal customer? Describe that person’s characteristics in as much details as possible.
  3. What exactly will that ideal customer buy from you? Describe your product or service including the key features and benefits that will prompt your customers to buy it.
  4. How much will your ideal customer pay? How and when will you collect that money?
  5. Who will be your main competitors? List the most important ones.
  6. What will separate you from your competitors? How will you find space in your market or niche to generate sales?
  7. What is your dream for how you will expand and grow your business? What do you imagine it will look like in three to five years?


Action step 2: Conduct your market research

Before launching your business, invest time and energy to do an intense period of market research. Study your prospective customers, your key competitors, your likely key vendors, and you business advisors. Use this chance to sharpen your thinking, gather raw data, and record the information you’ll need for your planning process. Get online and start Googling away. Phantom shop your competitors. Interview your prospective vendors. Talk with your advisors and mentors. See if you still want to move forward with your business idea. If you do, determine how you can refine it to increase your odds of success.

See chapter 5 for more details.

Action step 3: write your business plan “draft”

A business plan is the written outline for how you’ll launch your new business. Too many business owners never take time to write one because they find it intimidating. However, you don’t need to create a perfect business plan; you just need to use it as a template. It will help you refine your thinking, organize your thoughts, identify the questions you need to ask. You don’t need to have all the answers, but you need to identify the questions you must pay attention to- immediately and over time. Your business plan will help you create a clear action plan with defined next steps, timelines, and deliverables. In addition, if you need to raise outside capital, your business plan will be essential to helping you fund your new company.

Note that I suggest writing a “draft” of your business plan. This is to reinforce the concept that your business plan will always business be a work in progress and you don’t have to get it perfect. It’s the process of doing the plan and updating it regularly that is useful.

Remember, writing a ‘draft’ gets you to start organizing your thinking and capturing the questions you’ll need to answer as you launch and grow your business.

You will learn more about writing business plans in a subsequent chapter.

Action step 4: test your product or service to make sure it will sell

If your new business involves selling a product or service that customers are already buying from someone else, then you just need to know how you can attract new or existing customers to buy from you so that your business will succeed. But what if your product or service is new? Then you have to find a quick, fast, and cost-effective way to see if people actually will buy it before you go to the expense of investing time and money in large amounts. This might mean creating and selling a prototype. Or you can canvass members of your target and gauge their feedback on whether they will buy if it were available. In any case, use your best efforts to get objective feedback and test the waters on the viability of your business idea.

Proving your idea is viable means determining if the market will buy your product or service from you at a price that can be profitable. What is the best guarantee of getting accurate information? Actually close a sale! You can sell a prototype and deliver later; you can sell someone else’s product or service that you buy wholesale; you can even sell the product or service and just go back the next day and refund the money, explaining you have a delay in your ability to deliver. Yes, you might lose a sale, but at least you’ll know you can actually make that sale! This confirmation is worth the world to you in Level One when you are wondering if you can sell your product or service at a profitable price for your business.

So what happens if your test marketing shows you can’t get any sales? Does this mean your business won’t work? Not necessarily. It just means your business won’t fly in its current form. But before you redo your entire product or service, experiment with your sales and marketing efforts. Tweak those first. Not only are they the cheapest elements to change, but they’re the most likely reason no one is buying. Check out the chapter on sales and marketing for more strategies.

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