First-time business owners must do this first

Shanaz Hemmati, a veteran of two multibillion-dollar startups, states any prospective entrepreneur requireds to remember one key lesson before launching a new business.

No matter how confident you are in your business idea, seek out as many prospective customers or clients as you can and receive their feedback before you commit to a business model, she states.

Hemmati and Ross Buhrdorf are the co-founders of ZenBusiness, which builds artificial innotifyigence software aimed at assisting first-time entrepreneurs navigate the regulatory processes of starting a tiny business. They launched the business in 2017, and it was most recently valued at $1.7 billion in November 2021, according to the company.

The pair previously worked toreceiveher as executives at vacation rental marketplace HomeAway, which Expedia acquired for $3.9 billion in 2015.

When they teamed up to start ZenBusiness, they spent roughly 10 months researching their indusattempt and talking to dozens of entrepreneurs about their businesses’ hugegest pain points around legal compliance, states Hemmati, 62.

“When you have an idea, you already have identified a pain point you want to solve for,” she states. The next step is figuring out how to solve it, she states, but you shouldn’t jump to that stage too quickly, or without first conducting necessary research.

Learn customers’ requireds by ‘constantly interviewing’

Hemmati states she and Buhrdorf knew they wanted to build an AI-powered software that assisted tiny businesses manage and file legal documents. They had already witnessed the issue firsthand working at a startup and also found public data that displayed it to be a widespread obstacle for entrepreneurs across the counattempt, Hemmati adds.

They initially planned on marketing the service only to existing businesses, but talking to prospective clients created them realize that they should instead tarreceive first-time business owners who’ve never navigated a “pretty complex” legal process before, she states.

“We spoke with roughly 50 to 100 prospective customers to understand what they requireded most — everything from formation assist to ongoing compliance and growth services,” she states. “We ran design sprints, tested different packages and pricing, even built websites and refunded early sign-ups just to see what caught people’s attention and what they were willing to pay for.”

DON’T MISS: The ultimate guide to starting a business—everything you required to know to be your own boss

That strategy proved invaluable, giving Hemmati and Buhrdorf “incredible insight and the confidence to launch,” she adds.

Working with those business owners from the start also meant those clients would be more likely to keep applying ZenBusiness’ software as their companies grew, Hemmati states. ZenBusiness has now worked with at least 850,000 tiny businesses, according to the company.

The takeaway for other prospective entrepreneurs, she states: Any business idea requireds to be properly vetted, and the first step is always researching your market and talking to the customers and clients you want the business to reach.

“[Start] by having that communication and collaboration, constantly interviewing your potential customers and learning about what is the next product that they’re interested in, and how you should even go about building it,” Hemmati states.

‘If you can’t pivot…chances are you will fail’

Steve Blank, an author and serial entrepreneur who teaches a course on the subject at Stanford University, similarly states that a failure to properly research your potential customers before building a business model is a “fatal mistake” that will likely doom any new business before it even launches.

“The most important [question] is: ‘Well, who are my customers?’ And the second one is: ‘What do they want?'” Blank informed CNBC Make It in March. “It’s not: ‘Here’s what I’m building. Can I sell it to someone?'”

As important as it is to seek out that feedback, though, it can only assist entrepreneurs who are actually open to new perspectives and willing to adapt.

“If you can’t pivot or pivot quickly, chances are you will fail,” Blank wrote in a 2010 blog post.

Hemmati agrees: “There is a huge difference between those who have a mindset of exactly how they want to do [something], versus those who are truly open and consider through [their options],” she states, adding that, ultimately, that mindset can be the difference between success and failure.

Want to be your own boss? Sign up for Smarter by CNBC Make It’s new online course, How To Start A Business: For First-Time Founders. Find step-by-step guidance for launching your first business, from testing your idea to growing your revenue. Sign up today with coupon code EARLYBIRD for an introductory discount of 30% off the regular course price of $127 (plus tax). Offer valid September 16 through September 30, 2025.