If you’re going to fail, which as a first-time (or for that matter, any amount of times) entrepreneur, you will in many ways and many times, then fail fast. You only get so long as a start-up until the money runs out or your personal circumstances change, and realistically have time for 2 failed “traditional” businesses in your lifetime. If you can test your assumptions quicker by getting an MVP out there or testing demand in some way, you can reduce the time it takes to know whether you’re on to something and increase the number of chances you will get to more like 4-6.
In order to be able to fail a test, you need to know what you’re testing for. To that end, you should always know what the 1 or 2 key hypotheses you’re testing are and have some way of tracking them. Generally the first 5 will be something like: Target users have X problem; Target users want problem X solved; My solution helps solve X for these users; I can distribute to/find users through Y channel; Users will pay ¬£Z for it. Once you’ve established what these are, you can quickly devise ways to test to see if they are true, and if they’re not, work out if fails can be turned into passes, or if one represents an insurmountable obstacle to your businesses success.
The tests above are all just the baby steps that you need to make on the path to getting traction e.g., if there’s no one who has the problem, or there is but they don’t want it solved, no-one’s going to want your solution, and you don’t have a business. By splitting them out into discrete steps you can test for them in turn much more quickly than by bringing something all the way to market and finding that no-one wants it.
In the early stages, except in rare circumstances, getting traction is all you should really be worrying about. You shouldn’t be thinking about writing a business plan or raising funding, and should just be relentlessly focusing on getting traction, as everything follows from that. Trying to get a co-founder to join/raise money/get a customer with some sort of product and some level of traction, for instance, is a whole different ball game to walking in there cold with a business plan and a pocket full of dreams.
Don’t bother making a business plan until someone who matters asks you for one (NB. Most people that do, won’t). When you first have the idea, it’s worth writing a short 1 or 2 page executive summary, just to help you flesh out the concept but beyond that you’re wasting your time. A short exec summ will be much more effective for sharing your idea with people (which again, except in very limited circumstances, you should do at every opportunity) than a business plan, and will also take a lot less time to make, allowing you to focus on what really matters; building something and finding out if people want it.
In summary, your business is going to fail or succeed based on whether you can build a product (or develop a service) and find people who want it. And the crucial thing for me is that, if you can find out that you’re idea sucked in just 3 months as opposed to 2 years, you’ve got another 21 months to work out how to make it not suck, or come up with a better idea. So build something, and get it in front of users asap. I guess the central tenet underpinning all of this is that, ultimately, whoever you are, first-time entrepreneur or serial founder of successful start-ups, you’re going to fail at a whole host of things on the way to success with any new business, so at every stage you should do whatever you can to fail fast and learn quick.
P.S. Seeing as much of this is focused on what to do when you’re starting out, I wanted to give you a random tip that I wish someone had given me (or that I’d listened): whatever you do, don’t mess around with names. You still will. Whatever, at least listen to me on this: pick a domain name for which you can get the .com as messing around negotiating with domain squatters 6 months down the line or face changing your name and brand sucks. Also, if you can, try to use a real word(s) or something as short as possible; endlessly having to spell your name for people and losing traffic because people still can’t spell it also suck. Believe me on this one, no matter how clearly you enunciate, no-one’s going to know whether you’re the founder of Groupay, Group-A, or GroupPay.