Everyone wants to start a company. Open the doors, get your funding, then exit with a ton of cash. It may sound easy, but nothing can be further from the truth.
You will face many obstacles as a founder. Overcoming these obstacles doesn’t mean your start-up will be a success, but it does put you on the right road.
While we can dissect failure essays all day long, I thought I would focus on some recent success stories; their struggles through the early stages and what they did to overcome them.
Explaining your value to potential customers
Letting potential customers know what you have to offer sounds easy, but it is common for start-ups to fail because they are unable to deliver their message.
Ovid is in the business of life settlements, something most of us have never heard of. In a nutshell, they help seniors sell their existing life insurance policy to a buyer for an upfront payout, avoiding loss for the policyholder, who often lets it lapse.
“Starting out, our biggest challenge was learning how to clearly communicate our service to potential customers – another way of saying we were looking for product-market fit,” says Ovid co-founder, Lingke Wang.
“A life settlement is by nature a complex financial product that not even many insurance agents – let alone consumers – know about or understand.”
“When we started, the industry primarily relied on life settlement brokers to handhold a consumer through the process. Handholding is great, but it is also quite expensive and inefficient. So, we saw a major opportunity to use software to replace the functions of this hand-holding and brokering. But how do you communicate this product online within someone’s attention span?”
Wang adds that the company also narrowed its focus to a specific target audience – senior citizens. That way, it could overcome the communication hurdle by perfecting their pitch to one group.
“We would come up with multiple ways of explaining our service and then test it on our grandparents and their friends, test and repeat.” adds Wang.
“It not only improved the clarity of our pitch, but also helped us prioritise information which at the time seemed counter-intuitive. Over time, our findings led us to develop a library of educational content that helps walk consumers through each step of the process. Today, not only has our content become crucial in converting customers, but is now also helping to drive new traffic and opportunities to our business.”
Getting investors on board
Great ideas should easily attract funding, but that is not always the case. The same even holds true if you are a venture firm taking on new investors. You must be able to explain to investors how they will make money from their investment. If you don’t, then don’t expect them to write you a check.
“One of the toughest challenges I had in the beginning was explaining to investors exactly what we do and how we make money for them,” explains JP Marony, CEO of alternative investment fund Harbor City Capital Corp.
“The reason for this is because it was such a new business model or new approach, not the fact of generating leads and not the fact of generating investment returns but the combination of the two. My strategy of digital marketing arbitrage was something, as far as I know, no one else has ever done.”
Marony adds that, while your business model may sound simple to you, potential investors may not see it that way. You need to be able to break things down for them in a way they understand. As an alternative investment company, he had to come up with a way to show people how they make money off their investment.
“This is the simplest way I was able to explain it to potential investors,” adds Marony.
“You buy advertising on the internet, send people to a page and when they fill out a form, you get paid. The difference between what you spend and what you’re getting paid is your profit, which you use to pay your investors. But, it took me quite some time to come to even that simple of an explanation.”
Deciding whether to raise money or self-fund is also a challenge that many entrepreneurs have to think about, even if you have interest from a few successful VCs.
Take, for example two entrepreneurs I met in India who are eating, sleeping and breathing the self-fund lifestyle. Shivani from Buon appetite tells me that self-funding gives her the ability to pivot the direction of the company as needed without the hindrance of investors breathing down her neck.
Similarly, Rahul of Eves24 mentioned that he didn’t want to wait for an investor to give him the capital necessary, but rather wanted to start growing the business from day one.
Making yourself known in a crowded market
It’s not easy to enter a marketplace selling widgets when everyone else is selling widgets. Over-saturation of same or similar products can often drown out new companies trying to bring a product to market.
“It may appear that certain industries are so packed with competition these days that it’s hardly worth jumping in,” writes Kelly K. Spors on Entrepreneur. “But, don’t let a crowded market deter you.”
A crowded market should not prevent you from becoming an entrepreneur. In fact, Spors adds that you really just need to find a competitive edge in order to break through. Companies who have found a way into crowded marketplaces have done so by trying to be different from the get go.
“At its outset, we wanted to be different,” says wearable technology company GOQii founder, Vishal Gondal. The company makes wearable fitness trackers and reported that it sold more than 2.5 million units in 2016. Now, while wanting to be different is a great plan, doing so can be harder than expected.
“[Being different] proved to be rather difficult,” adds Gondal, “being the strict space the company operated in. There are many groups in the fitness band industry and many of them are much bigger than we are.”
Gondal found a way to set themselves apart from the bigger players by adding personalised features and a lower price – two things that people purchasing wearables were asking for.
“GOQii was able to differentiate the fitness band space by providing personalised coaches that track your workouts and comments that helped push you to succeed with your fitness goals,” says Gondal. “We also added monitoring by professional trainers. All for a lower cost than any traditional fitness coach would be.”
In the end, GOQii focused on what customers in the wearable industry were asking for: lower prices and personalised features. In doing, the company was able to grab market share from others who were slower to respond to what people were asking for.
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.