Before you make a major purchase or investment, surely you’d do your research? Before buying a house, a car, or buying a holiday, you would look around, compare offerings and check out reviews? So why is this common-sense approach often abandoned by many new business owners?
We now live in an age when we can find the answers to almost any question in a matter of seconds. We can conduct research, find out attitudes and locate contact details – yet all of this seems to be ignored by some new business owners!
Is it lack of confidence? Arrogance? Or ignorance? Perhaps a mixture of all three, plus a healthy dose of jumping-in-with-both-feet, that apparently is all too common in the world of startups.
Most business owners don’t “LOVE” risk!
“I’ve remortgaged the house and I’m going for this!”. The rhetoric on successful business owners is that they “love risk” – this is a myth.
Sorry to disappoint you but most business owners don’t “love risk”. Sure, they have had to take risk and be comfortable with it, but they have usually done targeted research, making it a calculated decision. Before plunging in, ask yourself: what’s the maximum I can afford to lose? And what happens if it all goes wrong? Always protect the down-side.
What the media and others don’t tell you is this: cutting through the bravado, B.S and maverick stories that are all too prevalent, the vast majority of business success is the result of really knowing your market, sheer hard work and persistence. The non-sexy, boring stuff. The effort. The grind.
Do you have an ugly baby?
We see what we call the “Inventor’s Syndrome” all too often in the world of new businesses. One only has to watch an episode of BBC’s Dragons’ Den, to witness an inventor who has fallen in love with their invention and put their entire lifetime savings into it, without really establishing whether or not there is actually a market for it!
These inventive geniuses no doubt push the boundaries and move us forward, and their pursuits should definitely be encouraged. However, sometimes you need to be cruel to be kind and tell them that their invention is not the basis for a sustainable business. This should be done tactfully, and with real research, as to encourage them to try again. This is also called “having an ugly baby” and sometimes, you’ve just got to tell someone that they have one!
Ultimately, businesses exist to solve problems in a profitable manner. If you aren’t solving a problem (experienced by people other than yourself, your friends and family members!), you don’t have a business.
So, what problem are you solving? We covered this this in a guest blog we wrote for Startup Britain, which you can read here.
The Lean Startup
Not knowing what problem you are solving and who your customers are is bad, however, in the early stages of a new business, it is a phase you must pass through. Throw lots of different stuff at the wall and see what sticks, then focus and go after that. One problem, one market, one focus.
A book that we love that really helps new business owners with this turbulent stage is, The Lean Startup, by Eric Ries.
In the book, Ries talks about startups conducting lots of fast, little experiments, learning from them and iterating. “The Lean Startup is about learning what your customers really want. It’s about testing your vision continuously, adapting and adjusting before it’s too late”.
In essence, it is about launching something before it is ready, using feedback from the marketplace to improve it and then launching another version QUICKLY and CHEAPLY.
Analysis paralysis
Not doing research is one thing but getting bogged down in it is another. For every story we hear about new business owners failing to conduct solid research, we hear another about the opposite: too much research!
What is the point in spending 10 months researching an idea, using outdated reports, that weren’t actually created for you?
If you take too long studying a new idea, chances are someone else in the world will beat you to it! Right now, there are probably other people working on the same idea as you and in some cases, it’s all about being the first business to market – timing is everything and you don’t want to be too late to your own party!
Now this isn’t entirely new business owner’s fault, as certain organisations believe that an 80-page business plan is a reliable and accurate way to predict the future!…
However, startups, by their vary nature, operate in a world of uncertainty – yet, certain business support agencies and banks insist on all new business owners having a “business plan”!
To clarify, we think business plans and forecasting are important. It’s vital to know things such as: who your customers are, cash flow and how you plan or getting your idea to market. However, a business plan should be treated for what it is: a plan.
Business plans only serve two real purposes: a compass for you, the business owner, in terms of where you’re going and how you’ll get there. And secondly, to show potential investors how you intend to launch, grow and make them money. That’s it.
And you can do it in less than 80 pages and in fewer than 10 months – we’re big fans of the One-Page Business Plan, you can check it out here. In many ways, it’s more difficult to use fewer words and it focuses you on being succinct.
“No plan survives contact with the enemy!” – Tommy Franks (former US Army General)
It can be very tempting to launch your new product or service because that’s the fun part! That’s the bit that everyone talks about and if your friends and family think it’s a good idea, then it must be – we covered why you shouldn’t take business advice from them in a previous blog you can read here.
The success of your business will depend on hard work, resilience and solving a real problem that you have researched just enough to know for sure but not too much that you miss the boat!
Of course, there will always be a certain element of “winging it” and your plans will change over time: when we launched Acorn Enterprise over 3 years ago, we initially delivered a 20 week Business Accelerator Programme for new businesses, we didn’t think we’d be working with Colleges and Universities, let alone becoming 3D Printing experts.
Do your homework, make plans, get started and continually tweak your plans to suit your environment. and hopefully you won’t become another startup failure statistic!!!