If there was a magic formula to building a successful business, we would all be taking the plunge:). It just doesn't existing unfortunately. Because there is an alchemy that occurs. A mixture of timing, planning, resilience, a willingness to listen to customers, financial management and luck, are at play.
History is littered with new ideas that were very similar but only one prevailed. Beta-max versus VHS is the example often used. In more recent years there were superior MP3 players to the Apple iPod. However, iPod's won out. Why?
Business writer Simon Sinek will stress this is down to marketing. Apple gave you a 'Why' to buy. Apple clearly focused on why you should own their product, they created a coolness and 'must have' quality to their design. Competitors instead, focused on technical factors in their marketing and almost had a snobbery to their technology, that most consumers couldn't warm to.
Setting the scene
I could go on with examples, but to keep this as helpful as possible, I want to focus on building on a previous post did: http://www.darrylbannon.com/blog/checklist-for-a-new-business. That piece focused on the early stages of getting an idea off the ground. Below, I expand on this, to highlight 4 stages of your early years in order to developing a sustainable model.
1. Learning from others
The statistics are still clear, close to 1 in 10 of new businesses fail. So when thinking about turning an idea into a business, what lesson learned are there to reduce your risks?
- May seam common sense but you have to research. Is you idea completely new or an improvement on another?
- Is there a consumer need for your product?
- Are others doing it already - how can you actually differentiate - is there a niche you can target?
- Also, has someone else already failed, launching a similar business? Why did they not succeed? It could be that the technology required to support their idea just did not exist. There wasn't enough demand, the pricing could have been wrong for the target audience etc.
- Was the infrastructure ready? You could have a great idea for a driver-less car, but the laws, roadways etc are not ready yet. You may have to wait until the environment is ready.
Key thing is do your research first!
You have done your research and you think you have a commercially viable idea. Great, so what next?
You have to test the market or do what is termed a 'proof of concept'. Asking friends and family is not always the best place to start. Lets face it, no one will want to hurt your feelings.
You will need to think about who your target audience is and getting their honest opinion. So it could be that you order some samples of what you plan to sell and pitch up at a market and do sampling/testing. Or you could set up an online shop to see which products sell and don't get returned. Even consider, gathering feedback on social media (just be careful of the bots!).
Ultimately the true test is if people buy and return again.
3. Processing Feedback
You may find that what you thought customers cared about, is very different to what they say after experiencing your product or service.
For consumers there are always trade off. They will put up with minor things if the price is low. Charge to much and they will expect a platinum service. They may like a certain colour, but if your product serves an important purpose, they won't care that it is only available in yellow.
Something else to consider when taking on feedback - how you behave. Customers, are very understanding with small business. You can get away with some misunderstandings, however, never blame the customer. It might have been user error, but think about how you could have made the experience easy for them? Consumers do not what to walk away feeling embarrassed because you didn't provide clear instructions.
4. Continuous improvement
When you get traction, a common factor that contributes towards failure is not keeping up momentum. As more customers come on board are you listening to them? Do you have new segments you could service? Are there competitors coming into the picture. while you have to run your own race, don't ignore the impact of competitors. There can be some great benefits.
Such as, they may service a niche you are struggling to keep happy. Or in a country that is prohibitive for you to trade due to tariffs or logistical costs.
Therefore, more brands help to boast your profile. As consumers will learn about your brand due to web searches and seeing a dedicated section in the product isle for you goods.
On the flip side competitors can help to highlight key issues people are having that you never noticed. Therefore, scanning the environment is key through your early growth stage.
Tools to help continuous improvements
There are a number of tools available to help structure your approach to continuously improvement.
1. One of the earliest things you can do is have a business plan. This should not be a 50 page tomb of work. It can be as simple as a few pages with key goals and how you plan to achieve these. I have a separate article on that below:
Also note, as your business grows you may need to go for funding and therefore a business plan is essential. Therefore, having something drafted will make the task a little less painful, as you will have at least a template to build upon.
2. Timetable every 4/6 months time to do a SWOT. I have a separate link below to a template you can use. What is key to note, it is a great opportunity to self reflect on your business and be honest with your self and your team about what positives and blockages are ahead.
3. Do a PESTLE analysis:
There really is no magic formula. There will be high points and there will be set backs. You will have to be prepared to change and pivot. You will have this flexibility in the early years. So be prepares to assess your ideas and your business as you grow.
Other related articles:
Business funding -