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Advice for Starting a Business

Launching a business is challenging. Here is some sound advice for starting a business.

Greg Fisher

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Entrepreneurs need professional advice for starting a business because the start-up phase is a critical time in the life of any business. Researchers have put a great deal of effort and energy into understanding what sort of perspective and behaviour enables an entrepreneur to succeed in launching a business.

The behaviours and perspectives described below highlight what successful entrepreneurs tend to think about and do in the very early stages of creating a business.

Advice for starting a business: Leverage what you have

In the early stages of starting a business things are usually  chaotic. You will seldom find an early stage start-up that is ordered and organised. In this stage it is very useful to focus on what you have and to use the means at your disposal to build some momentum in your business.

Because much of the writing about entrepreneurship focuses on the importance of having an explicit goal – of knowing exactly what outcome you want and going after it – many novice entrepreneurs create elaborate goals of where they want to be in three or five years but they don’t think about what they have at their disposal now and how they can use that to get the business off the ground.

Professor Saras Sarasvathy, a researcher at the University of Virginia, did an experiment in which she gave a group of experienced entrepreneurs, people who had started multiple successful businesses, a challenge of working with a new product to create a new business. She asked them to think aloud as they addressed the challenge. She then gave the same challenge to a group of business students who had never started a successful business.

The main difference between the thought patterns of the experienced entrepreneurs and those of the inexperienced students was that the students focused on where the business would be a few years into the future whereas the experienced entrepreneurs focused on what they had at their disposal now and how they could use that to get the business off the ground. The experiment showed that experienced entrepreneurs learn to leverage what they have.

They do that by asking: “Who am I, what have I got, and who do I know?” as they attempt to launch a business. They focus more on their means than their ends. Therefore, if you want to get your business off the ground, focus on your means: who you are, what you have and who you know as you launch your business. Don’t be too obsessed with the future, operate in the present and utilise the knowledge, skills, opportunities and relationships at your disposal.

Orientate towards action when starting a business

Successful entrepreneurs tend to be action orientated. If you want to spend long hours doing extensive analysis and in-depth budgets and plans, you should join a large corporation. Having a basic plan for your start-up is important but it is even more important to actually get going, to make things happen, to take action.

One can become so obsessed with the business plan that you forget to build the business. After interviewing over 100 founders of companies that made it onto the Inc 500 list, the list of the 500 fastest growing private companies in the USA, Amar Bhide, then a Professor at Harvard Business School concluded that one of the things that distinguished successful entrepreneurs during the early stages of business development was their inclination to act.

Compared to their corporate counterparts, successful entrepreneurs tend to focus more on doing and less on analysis and planning. As the business grows, develops and gets more structure, so planning and budgeting may become more important but very early on it is action that makes the difference. You need to take action and make things happen if you want your business to build momentum.

Understand what you are willing to lose

Starting a business is a notoriously uncertain endeavour. There are just so many things that can influence your success or failure and operating in such an uncertain environment can be crippling. To deal with this uncertainty, successful entrepreneurs have been shown to work with the concept of affordable loss.

They decide what they can afford to lose and limit their spending to this amount in building the new venture. This is liberating as it allows them to operate freely within predefined boundaries. If you make a deal with yourself that you are willing to put in R100 000 and six months of hard work to see if you can get your idea off the ground, you know exactly where you stand and you have a clear idea of what you will spend to get the business going.

If you focus on expected return (instead of affordable loss), you may just keep on pouring money into the business, becoming more anxious and concerned about whether this investment is ever going to pay off. You have no idea how deep you may need to dig to make it work and the stress linked with this uncertainty will eat you alive.

Decide what you are willing to lose and therefore what you are willing to put into giving your idea a chance and you will be able to operate with a newfound freedom and confidence.

Partner rather than compete

In the very early stages of a business, paying too much attention to competitors can distract you and cause you to become reactive and unfocused on what is really important. What’s important is building momentum in your business, not worrying about what your competitors may or may not be doing.

As a brand new start-up you are not yet in the competitive fray, you need to be trading to be able to compete. Focus on customers and cash flow rather than worrying about competitors. As the business grows and establishes itself, so an understanding of competitors and competitive advantage becomes important. Experienced entrepreneurs often consider competitors as possible partners.

They spend more time seeking opportunities with competitors than trying to defeat them. Established competitors have access to the market, they may have insufficient capacity, and they may have customers they wish to off-load or capital they wish to invest. If you shift your focus from compete to partner, you may see a myriad of new opportunities open up early on.

Adapt

I recently did a study of 20 of the most successful start-up internet businesses founded after 2000. This was the year when the dot.com bubble burst, so the successful businesses founded post-2000 are genuine, value adding businesses created in a fairly tough environment. One of the most interesting features of the businesses I examined was that 65% (13 out of 20) ended up doing something completely different from what they originally intended to do.

Flickr, the online photo sharing business that was sold to Yahoo for about $30 million, started out as company developing an online game. Pyra labs, the company that created Blogger, the blogging tool acquired by Google, originally set out to make project management software and ended up creating software for bloggers. The lesson from this statistic is that it pays to be adaptable as an early stage entrepreneur.

Amar Bhide called this concept “opportunistic adaptation.” He pointed out that successful entrepreneurs “start with a sketchy idea of how they want to do business which they refine and alter as they encounter unforeseen problems and opportunities”. The key as an entrepreneur is to be open and adaptable to what comes across your path. You cannot be too fickle, changing tack every day, but you also cannot be too rigid. You need to be able to recognise new opportunities and chances for what they are, evaluate them effectively and seize the ones that are going to give you a better chance of survival and success.

Andy Warhol the famous painter, avant-garde filmmaker, record producer, author, and public figure once said “starting a business is the most fascinating kind of art”. Seeing the business start-up process as a form of art is very apt. Art is the output of a creative endeavour undertaken by an individual or group of individuals. As they engage in creating a work of art, they don’t know exactly what the output will look like and whether it will be successful. The same can be said of starting a new business, it is a creative endeavour with an uncertain outcome, which can create much joy and pleasure for the people involved if they attack the challenge with the right attitude and philosophy.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

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Launch

Selling The Dream

When you’re starting a business, the secret to success is getting everyone — from customers to suppliers — buying into your vision.

Alan Knott-Craig

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I started a company in 2016 offering road building in residential areas for local municipalities. I realised that there is too much risk involved and I do not have the capital to purchase machinery. The overheads are also too high. I feel more comfortable supplying municipalities with commodities. I have been in sales and have good people skills and sales experience. However, I’m struggling to get a foot in the door. Manufacturers are reluctant to give me a credit advance. As a result, I had to let go of many opportunities. How do I overcome this obstacle? — Martin

I can only speak from my own experience selling to municipalities. I did it once, successfully. This is how I did it:

  1. I convinced the municipality to roll out public WiFi in low-income communities.
  2. The municipality awarded me a contract.
  3. With that contract in hand I shopped around to find a company that I could sub-contract. That company had to take a risk that the municipality would pay me, and I would in turn pay him. I had to take the risk that the sub-contractor wouldn’t deliver the goods.
  4. I found a sub-contractor.
  5. We deployed the WiFi.
  6. The municipality paid its bills.
  7. There was never a hint of corruption.

In retrospect I realise I was the beneficiary of a succession of benevolent miracles.

Miracle No. 1: Meeting a political leader that shared my vision and was competent.

Miracle No. 2: Getting a legitimate contract out of a municipality.

Miracle No. 3: Finding a sub-contractor I could trust, and that trusted me.

Miracle No. 4: Successfully working with the municipality to fulfil the contract.

Miracle No. 5: Getting paid by the municipality.

Miracle No. 6: Avoiding corruption.

If you believe in miracles, keep going. If you’re slightly more risk-averse (or less desperate) than I was, then rather don’t target municipalities to build your business.

You’ll note that I solved the supplier credit problem by finding a sub-contractor that trusted me. That’s the only way to do it. Not only do you have to sell the dream to the customer, you must sell the dream to the supplier. I recommend reading Shoe Dog, the story of Phil Knight and Nike.

Related: Alan Knott-Craig Answers You Questions From Business Idea To Start-up

I want to start a business, but I don’t know how to approach my local bank or investors, probably because I don’t have any experience in the business field. I am currently in a full-time job and holding on to the security of the monthly salary (which I know is wrong) but I have responsibilities. How do I break out? — Lorenzo

First, the security of a monthly salary is under-rated. Don’t be so quick to wish it away! Of course, a salary is a long-term dead-end. When you’re forced to retire at 65, you’re likely to be staring at 35 years of supporting yourself and your family relying on pension and savings alone. Assuming they don’t retrench you before age 65.

Be grateful for a salary, but be on the look-out for a way to make a living on your own terms.

That way you will learn skills that can be used after forced-retirement age, and even more important, you will be able to keep yourself busy rather than spending your old age pottering around the house in boredom and driving your significant other mad.

Forget about banks and investors. If you want to start a business, you must do it without ‘other people’s money’. Find a problem in your industry, solve that problem, get paid for solving the problem. Repeat.

Ideally find a like-minded colleague that you trust, pool your efforts and partner to find a way to make a living in your own business. Partnership massively de-risks entrepreneurship.

Related: Pay Your Dues Before Raising Capital


3-rules-for-being-an-entrepreneurAlan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.

What it’s about

It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur. For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy. This book is a collection of tips and wisdom that will help you make money without forgoing happiness.

Get it now

To download the free eBook or purchase a hard copy, go to www.13rules.co.za.  To browse Alan’s other books, visit bigalmanack.com/books/

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5 Lessons To Follow As You Take Your Product To Market

Don’t overly complicate things when launching your business. Instead, follow this advice from a successful entrepreneur so you’ll do things right.

Scott Duffy

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When launching a new business, product, or service, the most common mistake entrepreneurs make is trying to do too many things at once in the belief that going to market with “more” is better.

It isn’t. During your initial launch period, or when relaunching new products or services, “more” means additional risk. More also means unnecessary complexity, as well as additional time to market, so more capital will be required.

Below are some important things to remember as you prepare to take your product to market:

1. Don’t try to build Rome in a day

I have a good friend who raised $2 million in a very tough market to start a consumer internet business. Finding that much money to start a new business was amazing, and I congratulated him on a big win. He was ecstatic and told me he couldn’t wait to get to work on the site.

One year later, I ran into him again and asked how it was going. He sang the blues. He said he was doing terribly. In fact, he was on his way to his attorney’s office to shut the company down. They had launched a few months before but had already run out of money. I asked how that was possible, and he talked about his big vision, how his company aimed to provide everything their target customer could possibly want to buy in the category. Their goal was to be a one-stop shop. He and his team invested all their time and money building something big and comprehensive, confident their target customer wouldn’t want to go anywhere else once their website was up and running.

When the company got started, they were solving one problem for one target customer. It was a simple concept. But when the money came in, everyone started working on other “great ideas” and “shiny objects.” They kept building and building and building. They went from solving one problem for one very specific target customer to building a one-stop shop that did a lot of things for a lot of different people. Then they started running low on cash, so they decided to push the product out.

After the launch, they learned, much to their surprise, that about 95 percent of their users used just 5 percent of the site! And that 5 percent was the original product to solve the original problem.

So that means 95 percent of the time and money invested was essentially wasted. What can you learn from this?

Related: Hello Group’s Initial Product Failed The Night Before Launch. Today They Are An Industry Disruptor

2. Focus on one thing, the simplest thing

When kicking off a new product or service, put all your energy and focus into that product or service. Focus on one thing at a time. It shouldn’t be the hardest thing; it should be the simplest, what we’ll call the minimum viable product (MVP). The MVP provides the opportunity to learn the most about your customers, with the least amount of time, money and effort.

The MVP puts you in a position to go to market quickly, collect valuable feedback and not waste time building things customers don’t want. This strategy significantly mitigates your risk and helps avoid the trap my friend fell into. Remember, Amazon started just as an online bookseller.

3. Follow the 85-percent rule: Good is good enough

good-is-good-enough

Striving for perfection is the enemy of any product launch. As a rule of thumb, when the new business or product is 85 percent of the way there, you’re ready to go. In my experience, the level of effort required to reach 100 percent isn’t worth the additional time and expense at this stage. You’d be much better off getting something into the market and beginning to test.

4. Be great at collecting, and learning from, feedback

Once you’ve launched, listen to and learn from your users. Develop feedback loops to learn everything you possibly can.

  • What do users like and dislike about the product or service?
  • What features would they like to see added to enhance their experience?
  • Which features don’t work or generate little interest?

Do whatever you have to do to engage with your users. That may include offering incentives to get feedback on surveys or in focus groups, reaching out on social media, or generating outbound calls to learn more.

The hardest part of this process for many entrepreneurs is to be completely receptive to what customers tell you. Given your passion and all the time you’ve spent on the project, you may not want to hear negative feedback. You may be inclined to think the customer just doesn’t get it. But feedback is the most valuable tool you have as an entrepreneur. So listen, consider, and use what you learn to iterate, improve, or even throw out some of what you have built or planned.

Related: 3 Start-up Funding Tips To Help Launch Your Company

5. Avoid the shiny ball syndrome

As you start developing your MVP, you must fight “feature creep” at every step. You, your team, partners, and everyone else you share your vision with will have ideas about what should be added. While many of them will sound good at the time, they are instead shiny objects that distract you.

Your job is to stay focused on one thing, get it to market and then deliver the next thing. By focusing on one thing at a time, you can get to market quickly, learn a great deal about your product or service from actual customers and make changes based on their feedback And if your launch doesn’t fly, you have significantly mitigated your risk.

This article was originally posted here on Entrepreneur.com.

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How To Launch An Online Coaching Business

Cut through the noise and create a viral product.

Bedros Keuilian

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Work from home? Control your own schedule? Impact people across the world with your product or service?

Internet marketing is on the rise for a reason. It gives you the ability to scale your business to a global level without forfeiting your personal freedom. Still, there’s one question that still prevents entrepreneurs from entering the online space: “Is it really possible to make a living off the internet?”

Not only is it possible, it’s lucrative when done correctly. We live in the Golden Age of internet marketing. Thanks to social media, everyone can get in front of a camera and pitch their idea to the masses. Good enough, right?

Not quite. These days a big idea will only get you started; it’s what you do to bundle and package that idea that matters. Here are the three steps you need to take to launch a profitable online business.

Flesh out your idea

Of course, before you create your product, you need an idea. Your idea must solve a specific problem that a specific group of people face. Make sure you establish that before you move forward.

Now, before you begin creating your product, you need to write your sales copy. Your sales copy (or sales video, if that’s what you prefer) should be enticing enough to take prospects from “I’m interested in this” to “I need to buy this now.”

Related: Paddy Upton: People Centred Coaching

But, why write your sales copy before creating your product? Too many entrepreneurs write copy that promises a lot but delivers next to nothing. When you write your copy before creating your product, you build the blueprint to create a product that satisfies your customers’ needs –without overpromising.

Your sales copy should address the prospect’s problem, explain how your product is the solution to that problem, and include a list of bullet points that summarise the benefits of your product. Make sure you nail the first 500 words – easily the most read section of your sales copy. Finally, always create a sense of urgency or people at home won’t be motivated to buy your product.

People always ask me, “Well, what if I’m not a good writer?” That’s OK. Just say your pitch out loud, record it and send it to an online transcribing service. For a relatively inexpensive price, you’ll get your sales copy written out for you. Just review it, copy it and paste it to your website and boom – there’s your sales copy!

Build the “know, love and trust” factor

Most people believe you need to sell prospects first, then deliver results. But, what if you flip it? It’s much easier to sell someone once they know, love and trust you as an authority in your space, rather than selling them on your product before they even know if you can deliver the results you’re promising.

That’s why the most successful internet marketers – including myself – give away boatloads of free content via blogs and videos. Granted, the stuff we give away for free could easily be packaged together into a high-priced course, but that would be short-sighted. You don’t want prospects to buy from you once and move on – you want them to become long-term paying clients.

See, you deliver free quality content to your prospects, then they take it and implement it into their businesses. They start to see results in advance, which leads them to trust you more and more. Soon, they begin to crave more knowledge from you, and their willingness to pay for your products and services increases.

Eventually those prospects become your most loyal clients. They buy your front-end products, your upsells and your flagship products – all of which I’ll get to in just a second. But, before you get that far, make sure your prospects know, love and trust you before you worry about selling them anything.

Create your front-end product and upsells

Once your copy is written and you’re building the know, love and trust factor, your next move is to create a front-end product – a product that’s easy to sell. This could be an ebook, a membership site or a course that comes with follow-along videos.

Now, you might be tempted to charge a high price for that product. Here’s the thing: Most of the money is made on the back end. I’ll talk more about this in a second, but for now just remember that the front-end product is not the final product you’re really trying to sell them. I – along with many of my fellow internet marketers – don’t mind breaking even or losing money on front-end products because I know I’ll more than make my money back with my flagship product.

Instead, your aim should be to use that front-end product to upsell them instead. So, after they purchase your front-end product, offer them three different upsells. An upsell is a higher-priced product or service you offer a customer after they’ve bought something from you. These upsells should be done-for-you, and they should enhance the front-end product by making it easier to understand or more efficient at getting results.

Why are upsells so important? Besides adding value to your front-end product, you’ll be able to recruit more affiliates to promote your business. An affiliate promotes your product to their own audience for a commission fee. If you make money through upsells, affiliates will choose to work with your business over your competitors because you can pay them higher commissions. The payoff? You get more traffic going to your webpage and ultimately more bottom line revenue.

Related: 6 Questions You Should Be Asking When Coaching

Move them to your flagship product

That’s how you set up the front end of your online business. But, what about the back end? Remember I said that most of your money will be made on the back end and not the front end?

That’s why you need a flagship product to pitch your clients once they’re done with your front-end product. But, what in the world does a flagship product look like?

It could be high-end coaching sessions. It could be a spot in your exclusive mastermind group. It could even be a suite of software that teaches them everything they need to know about their industry. The front-end product is a way to get your clients through the door; your back-end product is the money-maker product, the one they’re more likely to buy once they’ve already purchased something from you.

I’ll give you an example. People will often find my products online. Usually when they finish using those products, they’re still hungry for more knowledge and advice. At this point, they’re considered qualified leads for my mastermind program, so we make sure they know about that programme and how to become a member of it.

That leaves you with one problem: How do you send marketing emails to every single person that buys your front-end product/upsells? It’s basically impossible, unless you’re in front of your computer screen 24/7 (which I’m sure you’re not). Fear not, because it’s actually easy to do when you use an auto-responder system to send out all those emails on your behalf.

It’s simple: When your clients purchase your front-end product, the system automatically sends them emails from you. That way, you can build a sequence where you give away even more of your best free content before sending them an offer for your flagship product. By the time they get to your flagship product, they’ll be so confident in your expertise and results that they happily pay the higher price for your higher level of service.

That’s the simple science behind converting your prospects into clients, and your clients into fiercely loyal clients. It’s how you sell your highest-priced online programmes without running into any of the typical sales objections. Follow these three steps and start building your own online business empire today.

This article was originally posted here on Entrepreneur.com.

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