Launching a company within an industry you know nothing about isn’t impossible; nor is it necessarily an unwise move. In fact, your ignorance can be a blessing as well as a burden.
Just look at Elon Musk, who has started an array of companies in disparate industries – beginning with PayPal and continuing with SpaceX, Tesla and other ventures. With a background in fintech, economics and physics, Musk is thriving in the space exploration industry.
So, if a big name like Musk as well as countless other, lesser-known entrepreneurs have been able to successfully take on a new industry with only an idea and a lot of determination, why couldn’t I? I reasoned back when I first entered the video production industry. In actuality, I encountered obstacles as soon as I started.
Yet I’d still argue that market illiteracy can be beneficial. It sounds ironic, perhaps, but existing in blissful but enthusiastic ignorance can help you approach problems because you have no preconceived notions about their solutions. Instead, you’re coming from a fresh perspective and are likely unfamiliar with the giant challenges looming ahead
When that happens, those challenges can’t (and don’t) scare you.
Today’s struggles help you develop tomorrow’s strengths
When I entered the video production industry, I encountered plenty of naysayers who seemed to be stuck in the late 1990s, when film equipment was more expensive and less accessible, making video content harder to create.
My dream was to help companies meet consumers’ insatiable demand for video by making the production process cheaper and more efficient.
Starting a business, even in an industry you know well, is never easy. If you’re jumping into a brand-new market, things can seem downright impossible. What’s worse, I had to look past industry veterans who felt threatened by my approach and told me I didn’t know what I was doing.
Look – I’m not Elon Musk, and neither are you, but as my experience proves, you don’t have to be. While I didn’t know much about producing video content, I knew my vision was achievable. Today, Lemonlight is the company I dreamed it could be.
So, based on my experience, if you too are ready to leap into a new industry, here are three ways to set yourself up for success:
1Ignorance can be bliss, but be careful with those assumptions
Before I launched Lemonlight, I conducted research to understand the market. And I probably spent more time at this task than many of my more established competitors.
Nonetheless, I still made poor assumptions. For example, I assumed it would be easy to hire freelancers to shoot video all around the country. Right? Wrong. I quickly learned that freelancers have their own styles and agendas and that it takes a lot of work to find the great ones. Thus, many of those we worked with early on were, frankly, unqualified.
I also ran into unforeseen expenses, such as a $40,000 server or payroll for media managers to move footage around internally. These costs added up fast. To compound that, I struggled with pricing early on since I really didn’t know how much it would cost to make the product.
My experience mirrors that of Raaja Nemani and Aaron Firestein, founders of the shoe company Bucketfeet. Firestein knew how to decorate sneakers, but neither had any experience in shoe manufacturing or managing inventory.
Failing to think things through properly led to a few big missteps for Nemani and Firestein early on: They once had a huge shipment of sneakers delivered not to a warehouse loading dock, but to their own house. They had mistakenly assumed it would be no big deal to unload 2,600 pairs into their garage. With a little (paid) help from the delivery man and a few friends, however, they made it work; today, Bucketfeet has sold nearly 500,000 pairs of sneakers.
2Balance your fresh perspective with expert experience
While it’s important to maintain your can-do rookie outlook, it’s also critical to bolster it with the advice of industry insiders who have domain experience.
Like me – and all entrepreneurs – you’ll inevitably be forced to learn some tough lessons quickly. Don’t let that discourage you. When CAN Capital’s Small Business Health Index surveyed small business owners about their expectations for the upcoming year, 64 percent of those surveyed anticipated growth.
When I started Lemonlight, I often took solace in the fact that, with no customers, growth was the only option. You, too, should have a growth mindset.
If you don’t have the capacity to stay optimistic, observe others who do and reach out to them. You’ll often find them running other businesses.
After bringing on a co-founder with a background in film, I needed a while to reconcile his expectations about high-quality video content with my dream of providing it at unprecedented low prices. I wanted to sell all of our videos for $500, for example, and we managed to do that for a while!
Still, my co-founder would constantly remind me that we couldn’t hire the right teams for so little money. Without them, our business would go under. So, working in tandem, we two slowly raised our prices until we found a price point that made sense for us and for our customers.
3Resist and persist: Be open without conforming
You’ll definitely need expert advice, but that doesn’t mean you should always act on it.
Jeff Kear, the founder of Planning Pod, said the worst business advice he ever received came from another start-up founder: That founder told Kear that he must secure outside angel or venture capitalist funding if he ever hoped to be taken seriously and get off the ground.
Deciding to go it alone and bootstrap his business instead of heeding that advice, Kear ultimately built a company that serves more than 1 200 customers and upwards of 20 000 users. Planning Pod has been in the black since its fourth month.
It’s important to consider the feedback and ideas of people who have been in your industry for a long time; however, you don’t always have to agree with them. Typically, those who possess the mindset that created an industry aren’t going to disrupt that industry. Be gracious when having tough conversations with industry veterans, but remember that it’s okay to challenge anyone and everyone around you if it’s going to move you forward.
As an entrepreneur in a new industry or one you’re deeply familiar with, you’re going to run into challenges, setbacks and failures. Don’t let them stop you.
By staying your own unique course, you can learn your own lessons, turn your vision into a reality, achieve your goals and live your wildest dreams – just like Elon and me.
This article was originally posted here on Entrepreneur.com.
Put On Your Wellies: It’s Time To Wade Into Risk
Entrepreneurs aren’t all leaping into the unknown like lemmings off a cliff, but they do need to consider it…
You’ve had a great idea. You’ve looked into its development. You’ve recognised that it has potential beyond just what Auntie Mabel and Mike From The Grocer think. And you’ve clearly nailed a pain point that can make money. Now it is time to take the risk of running with it.
Every big idea comes with risk. You can’t step out into the world of entrepreneurial thinking and business development without it. Your idea may fail. It will also be time consuming, demanding, hungry for money, and hard work. It is unrealistic to expect that your project will leap out into the world and be an unmitigated success.
It is also unrealistic to assume that it isn’t worth taking this risk.
There are steps that you can follow to ensure that your risk is managed so you aren’t blindly leaping off that cliff…
Step 01: Do your research
No, canvassing your neighbours, friends and family is not doing research. You need to know that your idea will appeal to a broad market and that it will have significant legs. This may sound like daft advice, but you would be surprised how many people think an idea will take off just because Susan in Accounting said so.
Step 02: Understand the costs
Projects are hungry for money and investment. Realistically work out your budgets and how much it will cost to take your project off the ground and then stick to it.
A calculated risk is a far better bet than one that shoots from the hip and hopes for the best. You can also use this as an opportunity to draw a clear line under where you will stop investing and end the project. If it keeps eating money and isn’t getting anywhere with results you need to be able to walk away.
Step 03: Know when to walk away
As mentioned before, this can be defined by a line you’ve drawn in the proverbial sand (and budget) but no matter where you draw this line, you have to stick to it. Often, when time, money and energy have been poured into a project it can be incredibly hard to walk away.
You think ‘but I have put so much into this, just one more’ and then it gets to a point where the ‘just one more’ has taken you so far down the line that walking away feels impossible. Leave. Learn the lessons. Apply them to your next project.
Mind The Gap
The entrepreneur’s guide to finding the gaps and building the right solutions.
Innovation may very well be the key to business success but finding the gap into which your innovative thinking can fit is often a lot harder than people realise. Some may be struck by inspiration in the shower, others by that moment of blinding insight in a meeting, however, for most people finding that big idea isn’t that simple. They want to be an entrepreneur and start their own high-growth business, but they need some ideas on how to find that big idea.
Here are five…
It sounds trite but networking is actually an excellent way of picking up on patterns and trends in conversation and business problems. The trick is to note them down and pay attention. Soon, you will find patterns emerging and ideas forming.
2. Look for pain
Just as networking can reveal trends in the market, so can spending time reading. The latter will also help you find common business pain points. These are the touchpoints that frustrate people, annoy business owners, affect productivity, or impact employee engagement.
Be the Panado that fixes these pains.
This is probably the most annoying of the ideas, but it is unfortunately (or fortunately) very true. Luck does play a role in helping you capture that big idea. However, luck isn’t just standing around and random people offering you opportunities. Luck is found at networking events, it is found in research and it is found in conversations with other entrepreneurs.
4. Luck needs courage
You may have found the big idea through your network, a pain point or pure blind luck, but if you don’t have the courage to take it and run with it, you will lose it to someone else.
Being bold in business is highly underrated because most people assume that everyone is bold and prepared to take big leaps into the unknown. However, not all brilliant entrepreneurs were ready to throw their family funds to the wind and leap into an idea – they were courageous enough to figure out a way of harnessing their ideas realistically.
5. Pay attention
This is probably one of the most vital ways of finding a gap in the market. Often, people are so busy that they don’t really pay attention to that niggling issue that always bothers them on a commute, or in a mall, or at a meeting. This niggling issue could very well be the next big business opportunity. Pay attention to it and find out if that issue can be solved with your innovative thinking.
5 Things To Know About Your “Toddler” Business
As you navigate this new toddler phase of your business, here are five things to bear in mind.
Ah, toddlers. Those irresistible bundles of joy bring a huge amount of energy, curiosity and fun to any family – but there’s also frustration and worry that comes with their unpredictability, as they grow and start to become more independent. If you own a business and it’s successfully past its “infancy” of the first year or so, it’s likely it will also go through a toddler stage of its lifecycle.
Pete Hammond, founder of luxury safari company SafariScapes, agrees with this. “Our business is now three and a half years old, and we’ve found that we’re not yet big enough to justify employing a large team of people to handle the day-to-day admin tasks, yet we still need to grow the business as well,” he says. “As a result, our main challenge is finding the time to step back and see the bigger picture. Kind of like when you are raising a busy toddler and you spend most of your time running after them!”
As you navigate this new toddler phase of your business, here are five things to bear in mind:
1. This too shall pass
Everything in life is temporary – and that goes for both the good and the bad. It’s as helpful to remember this when you’re facing the might of a toddler temper tantrum, as it is when you’re facing throws of uncertainty in your business. If your new(ish) venture is going through a rough patch in its first few years, it can be easy to think about giving up – but don’t. As long as you have an overall big idea that you believe can add value to your customers, keep pushing through the rough parts until you come out the other side.
2. Appreciate what this phase brings
The toddler years mean that the initial newborn joy is officially behind you. But these small humans also bring their own kinds of joy, as you watch them learn new skills, say funny things, and give affection back to you. While your two-year-old business may not hold the same exhilaration for you as it did during those first few months, there are now different things to appreciate about it: Maybe you’re expanding your product range, or employing new people who can take the workload off you.
3. Establish boundaries
Toddlers thrive on boundary and routine – and your toddler business will too. As it grows into a new phase, try and establish limits in terms of the type of clients you want to work with and the type of work you’ll do. It’s also a good idea to make a decision about the hours you’ll work and when you’ll switch off, which will help you establish a good work-life balance.
4. Take a break
Every parent with a toddler needs a break every now and then, even if that means a walk around the block (on your own!), a dinner out with friends, or even a few days away. The same is true for a demanding small business: every so often, remember to take time out to rest properly, where you switch off your laptop and completely unplug. You’ll return much more inspired and resilient to deal with the everyday uncertainty that it brings.
5. Give it space to make mistakes
While the unpredictability of a young business can be stressful and tiring, it’s also a time for trying new things without the risk of huge consequences if they don’t quite work. After all, it’s much simpler to change your USP if you’re a small business employing a few people, rather than a big company where 50 people are relying on you for their salary, or where you’ve received a huge amount of investment capital. While you may fail in some of the things you try with your business (in fact, this is almost guaranteed), see it as a toddler that’s resilient enough to pick itself up, dust its knees and keep moving forward.
During this phase of business growth it’s also essential to have the right type of medical aid cover. There are medical schemes such as Fedhealth which has a number of medical aid options and value-added benefits to ensure that your health and wellness is taken care of too. After all, the healthier you and your staff are, the more productive your business will be – during the toddler (business) stage and beyond.
While this phase can be frustrating, it’s a sign that your business is growing and adapting, rather than remaining in its infancy, and that can only be a good thing! So embrace the difficulties, learn from them, and watch as your business strides forward confidently into the next exciting phase.