What’s it like to start a business?
Starting a business is hard … very hard. It takes commitment, skills, experience and a good team to survive the journey from startup to sustainability. But with the right advice and considered approach the difficult journey can be successfully negotiated is spite of the occasional setbacks. In this talk I speak about why it is a difficult journey and the strategies you can take to prepare yourself for it.
My answers on Quora:
Develop a business concept for your idea.
OK, the next step after the commitment is to document your business concept. That’s right. Put it on paper, on a whiteboard or on the back of a beer coaster … but make your idea materialize. To do this step you need to be in the right ‘adventure mindset’, you need to have educated yourself for this journey and you need to prepare for and plan the subsequent steps.
So look at the questions and headings listed below and start formulating your business concept. Unless you can clearly articulate your business concept you will not be able to progress to the business modeling and strategic planning phases of turning your idea into a commercial reality.
Key components of a business concept
MANTRA – (In 2-3 words summarize why you are doing this.)
What’s is your consuming passion that is driving you to enter this life of adventure, of risk or long hours of commitment. You will need this to keep you going through the set-backs, disappointments and what seems like an eternity of unrewarding hours of ‘blood, sweat and tears.’
PRODUCT – (Describe the Goods/Service that you are offering)
Answering some of these questions may help – What is the product called? What does it look like? How is it packaged? In what quantity is it offered? What are its main features or attributes? What does it do? How has it changed it from other products on the market? How will it be produced or how will the service be performed? Is there any specific equipment, skills, specialised personnel, information or machinery needed to make it?
TARGET CUSTOMER – (Describe the customer niche/segment your product is target at)
Answering some of these questions may help – Describe the customer that you believe is going to pay you for this product? Are they the also the user of this product or are they buying it for another’s benefit? Are they individuals, other businesses or government departments? How would you describe the socio-economic status of this group? What are their common demographics (profile), geographic (where live & where buy) and physiological (motivations) characteristics? Why will they in particular, highly value your product? What life/work situations would cause them to pay you extra subjective margins? (i.e. Urgency, pain/fear relief, sentimental or high emotional value, critical part of whole, scarcity, indulgence, self esteem)
VALUE PROPOSITION – (Explain why the customer should buy this product from you and not from a competitor. What’s in it for the customer?)
Answering some of these questions may help – How do plan to help your customers? (i.e. give them more knowledge, help them save money, help them make money, help them express their unique abilities, talents or expertise, help them be free, help them belong, be accepted or be loved, help them feel safe & secure, help them get better organised) What benefits are in it for the customer to buy your product (cheaper, better quality, more utility, more convenient, saves them time, more enjoyable, better service)? What degree of innovation have you incorporated into this product? (Imitative, incremental, revolutionary) Does this make your idea unique? In what way? What is the customer’s or market’s burning problem, or big pain? What emotion does the pain evoke? How does your idea solve this problem and become a targeted solution? How do emotions make your story compelling? Is there an experience to be had with this product? To what degree will the customer value this solution?
DISTRIBUTION CHANNEL – (Explain how you intend to get your product to the target customer.)
Answering some of these questions may help – Where is your target market located? (Local, region, state, country, global). Where do they usually go to purchase this product? How will you get this product to the customer – i.e. they pick up, transportation option (information download, information pack (CD, document), post, parcel delivery, road, rail, airfreight, ship) Will you sell it directly to the consumers or will you sell it to intermediaries who will then on sell it to them? Will it be sold via a market stand or home outlet, in a retail shop, in a hospitality business, inside institutions, by wholesalers, directly from the manufacturer, over the internet, by party plan, by network marketing? Will you hire sales reps., join a cooperative or use other means of selling? How do you stay connected with your customers once they have purchased the product from you the once?
POSITIONING – (Identify the position that your business will take relative to other competitors in this market?)
Answering some of these questions may help – Look at the following list and identify 3 that you intend to excel at and 3 that you will only provide to an adequate standard. How will you position your offer in relation to each of these aspects. (i.e. highest or lowest percentile of total offers) (Brand/Image, Range & variety, Customisation, Outlet appearance, Quality, Packaging Appearance, Product Convenience, Price, Location, Discounts & Special sales, Innovation, Sales Method, Financing, Expertise, Gender appeal, Flexible payment terms, After sales service, Company Reputation, Age appeal, Technical support, Stability & Reliability, Advertising & promotions, Time of Day target, Guarantees/Warranties, Credit Policies, Distribution, Location – convenience)
The Business Concept
The Do’s and Don’ts of a business concept
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DO
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DON’T
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Do start a business that is easy to on-sell.
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Don’t start with a high-tech or heavy compliance type business.
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Do start with a low capital investment business first.
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Don’t start in industries that are mature unless you have extensive experience or networks.
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Do look for opportunities in emerging or currently changing industries.
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Don’t avoid doing a Porters 5 Forces test on your targeted industry.
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Do look for industries where the current offer leaves customers dissatisfied.
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Don’t think you are the only person that has thought of this idea.
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Do study profitable existing firms to identify profitable markets or methods
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Don’t move forward without both primary and secondary research
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Do stay focused on a niche. Develop a business concept that is “an inch wide but a mile deep”
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Don’t wait for the perfect opportunity – reasonable idea with exceptional commercial execution is the key.
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Do focus on the benefits to the customers not on the features of the product
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Don’t start until you understand the target market’s needs, issues and problems.
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Do realize that change is your opportunistic friend. (Social, technological, legal, economic)
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Don’t assume that just because another has been successful with a business concept that you will be.
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Do avoid complexity in new product offers. Easy market acceptance is the key.
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Don’t rely on just better quality to be your competitive advantage. Most successful products are simply adequate.
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Do choose a business concept with easy market acceptance. Innovate incrementally and in easy to understand ways.
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Don’t make your product offer so new that you need to educate customers on its application and benefits
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Do prove the existence of a market that can sustain your business concept.
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Don’t lose sight of exploiting one concept at a time. Opportunities can be a distraction.
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Do find a need and satisfy it.
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Don’t just replicate a service. It is too easy to imitate. Innovate!
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Do look for HIGH margins (buy for 1 sell for 4 if possible).
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Don’t fall in love at first sight. Fall in love with a well thought out, fully researched and critiqued business concept.
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Do couple your business wagon to a high growth industry and hang on.
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Don’t assume that a good idea = a profitable business
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Do fail quickly. Drop the concept quickly if the concepts proves unpromising.
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Don’t go into a business that you don’t like. Don’t pour your life into something that you don’t enjoy.
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Do pick a business concept that suits you – skills, personality and experience.
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Don’t pick something unless you believe it will be an easy sell to customers, investors or employees.
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Do know your stuff and cater to a genuine need or demonstrated want.
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Don’t pick something only because you like it. It must be commercial.
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How to format an entrepreneur’s Elevator Pitch
‘Elevator Pitch’
Entrepreneurs, whilst overflowing with ideas, are constantly short on two things – customers and resources. Crafting a well thought out and targeted elevator pitch, increases your chances of adding at least one or quite possibly both of these to your passionate endeavour. So, entrepreneurs need to maximise their opportunities to engage, and that’s where an elevator pitch comes in.
Crafting an Elevator Pitch
The best approach to take, when crafting an elevator pitch, is to imagine that you are taking the 20 second trip in a high rise elevator with some folk that you have just met. One of them invariably asks the question … “So what do you do for a living?”
Now, we have all been asked this a thousand times before and most entrepreneurs didn’t realise that this is actually an opportunity to either engage with a potential customer or the resources within their control. So, we respond casually, almost feigning disinterest with something like “Oh … I’m a graphic designer ”.
The person look up, nods politely and an opportunity to engage escapes with the opening of those lift doors. You gave yourself a label, they placed you into their preconceived box, an opportunity to engage was lost and most importantly … your passionate story remains untold.
Entrepreneurs need to be able to express what they are on about in less than the 20 seconds it takes to ride that elevator to the top. More importantly, the elevator pitch needs to be delivered in a way that invites engagement from everyone we met. Here are a few steps you could follow to help you craft yours.
How to craft your Elevator Pitch
Step 1
- Our first line, in an elevator pitch, should aim to generate a response, either verbally or with a quizzical look, of “How do you do that?” With this response you have baited the hook that will potentially land the engagement. An entrepreneurial lecturer, like me, might say “I teach people to fly” or “I show people how to run like a Giselle”. Our graphic designer friend might say “I turn words into art” or “I help people believe”. What would you say about your business to engender this response?
Step 2
- The follow up to the quizzical look or the “How do you do that?” question, is to complete the follow-up paragraph of your elevator pitch.
I specialize in …(what is it you do?) for … (what target market?) who … (have what key need?). I offer … (what product? Goods/service) that … (delivers what key benefit?) rather than … (what is that boring thing your competitors do?)
“Every day presents an opportunity to harvest the fruit of the past and plant seeds for tomorrow’s” … Peter Baskerville
Elevator Pitch – Example
I had a pre-packaged sandwich store once (actually a chain of them) and this is how I explained my business in an elevator pitch format;
I specialize in (providing lunch) for (office workers) who (want convenient healthy, fresh food and drinks). I offer (pre-prepared gourmet sandwiches/salads) that (can be purchased in a quarter of the time) that it takes to (purchase from those stressed-out made-to-order lunch stores).
One final twist that can sum it up all so well is to create a metaphor. Find a concept that is established and well known and match it with your story like:
“We are the Rolex of pedometers” … “We are the Mercedes Benz of lawn mowers” … “We are the McDonalds of sandwiches” … you get the picture.
It will pay handsomely to take some time to develop a benefit-rich, passionate elevator speech that you can use to engage the people you met and cause them to want to come back for more. It’s the benefits you provide for your customers that are the most important aspect of an elevator pitch. Go on … turn more chance meetings into happenings with a great elevator pitch.
Start your own business 