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.
6 Resources For Start-ups Looking For Funding
Here are 6 online resources that can help you pay the bills and grow your business at the same time.
Anyone who has ever considered starting their own business, or is currently in the process of doing so, knows that every little bit helps when it comes to making ends meet. Part of the charm of start-up culture is the low-budget creative atmosphere that seems to continually fuel innovation. But, eventually you’re going to have to keep the lights on and water running, and you can’t do that with creativity alone.
Whether you are a business that is just starting out, or already well on your way, there are plenty of online platforms that offer start-ups advice and funding opportunities. Here are 6 online resources that can help you pay the bills and grow your business at the same time.
At one point it seemed that anyone with a clever idea could make a video showing why the world should invest in the next big thing. While a lot of crazy projects have gotten funded over the years, utilising a crowdfunding platforms like Kickstarter continues to be a viable way to get your project off the ground. Of course, if you want to reach your funding goals, it’s best that you have already done your market research, have a solid plan, and treat crowdfunding like a global VC.
Visit Kickstarter here.
Those who are new to the start-up world might not know exactly where to start when it comes to looking for funding. While the freelance economy has grown immensely in the last 5 years, it’s important to know where to look.
Platforms like Toptal offer a wide range of freelance professionals that specialise start-up funding. Start-ups seeking a consultant on Toptal can also rest easy knowing that they carefully screen each candidate, ensuring they have the necessary professional background and experience to guarantee a successful project.
Visit Toptal here.
If you couldn’t already tell by the name, appbacker is definitely worth checking out if you are a start-up working in app technology for both Android and Iphone. The platform helps people discover different apps through the crowdsourcing model. Investors can scroll through apps from around the world, and if they like what they see, they can choose to invest. Funding incentive is based on an investor’s ability to purchase an app at the wholesale price, eventually making a profit once the app starts flying off the shelves in the official app store.
Visit Appbackr here.
Investors are more likely to invest locally, which is why Gust is an attractive option for start-ups around the world, as they represent over eighty countries worldwide. Founded by a team of investors and lawyers, Gust knows their way around the start-up world.
With portals for both start-ups and investors, the platform seamlessly connects those seeking funds and those looking to invest. Start-ups can create a profile on Gust, and also have access to tools and tips to help them regulate finances and legal matters.
Visit Gust here.
Not just for investment, although that is a major part of the platform, AngelList is also a great place to find start-up jobs as well as recruitment. Those start-ups that are looking to expand can greatly benefit from this feature, while also getting their name out there to potential investors.
Their syndicate platform, led by technology experts make room for those who are looking to invest the chance to apply to a lead or directly invest in a fund.
Visit AngelList here.
From top corporations to big name accelerators, Seedrs aims to simplify the funding process for investors. Providing a vast network of investors from 48 different countries, who tap into an additionally impressive network of start-ups, there is plenty of room for collaboration on this platform. Seeders also encourages investors and start-ups to continue their relationship after the transaction is made. Their online and offline networks aim keep both start-ups and investors in the loop.
Depending at what stage of development your company has currently reached, exploring various funding options available to you is a worthwhile endeavour. Rather than blindly pitching investors, investigating each potential platform, whether it’s crowdfunding or a hiring a freelance funding expert, will save you time and resources so you can focus on the right type of investment based on your needs.
Visit Seedrs here.
Picking Your Lane: Maximising Your Chances Of Success And Happiness
How do you choose? What do you prioritise? What’s right for me is almost certainly not right for you.
Most entrepreneurs start businesses out of necessity. They do what they have to. They don’t think far ahead. They fight fires every day. They are the foundation of every economy all over the world. Some succeed, some fail, few shoot the lights out. Some are happy, some are not.
For me, there’s nothing more thrilling than building a business. Seeing your ideas turn into reality. Seeing your team exceed your expectations every day. Seeing your customers’ lives improved by your products.
But, entrepreneurship is not for the faint-hearted. You pour blood and sweat and tears into your business. You get more than your fair share of punches in the nose. It’s hard, but if you’re lucky and you persevere, the rewards are great.
So, how do you maximise your chances of getting into the ‘happy and shooting the lights out’ club?
Picking the right lane – figuring out what you’re going to do – is probably the most important decision you’ll make. Once you’ve figured that out, you can get down to the nitty gritty of picking your team and building your business.
But, how do you choose? What do you prioritise? What’s right for me is almost certainly not right for you.
The Sweet Spot Model, which has been drifting around the web for years, provides great guidance. If you do what you love, the hard yards won’t feel like work. If you do what you’re good at, you’ll beat or (even better) outstrip the competition. If you provide something the world needs, you’ll feel a sense of purpose. If someone will pay for it, you have a business.
When I co-founded Simply, I wanted to tick all 4 boxes AND work from Cape Town AND be extremely flexible (so I could prioritise family health).
I worked on three different ideas: A GIS-platform for solar and other utilities; a transaction platform for stokvels; and a cheeky online life insurance play.
The life insurance play quickly emerged as my best choice (it helped that my partners are top actuaries J):
- What I’m good at – doing start-ups, connecting people and teams, and using technology and data to solve business problems.
- What I love – working with people I like and trust to build businesses that solve hard problems and make the world a better place.
- What the world needs – most adult South Africans have one or more funeral policies. Few have life or disability cover and policies are often very expensive. There’s a clear need for simple, convenient, well-priced life, disability and funeral cover.
- What someone will pay for – the market we’re targeting is huge – nearly R7.5Bn of new premium is written annually.
With the stars lining up, we pressed the go button in early 2016. It’s now twelve months since we launched to market and early signs are good:
- Our innovative, online products – Family Cover, Domestic Cover and Group Cover – have been well received and are improving all the time.
- We have an amazing, engaged team – inspired by the purpose of protecting vulnerable people.
- We’ve sold more than 4 500 policies to date, providing more than R2.5Bn of cover to more than 20,000 people.
- We’re based in Cape Town, working hard and having fun, and I seldom miss a swimming gala, netball game or opportunity to go mountain biking.
While picking the right lane is no guarantee of success, it definitely helps stack the odds in your favour. You’re going to need all the help you can get. So, take the time to pick your lane. I bet it’ll be worth the effort.
9 Quotes Every Entrepreneur Should Live By
Entrepreneurship takes great perseverance. Failure is common. In fact, it is expected. Over 75% of venture-backed start-ups fail.
Entrepreneurship takes great perseverance. Failure is common. In fact, it is expected. Over 75% of venture-backed start-ups fail.
There are great learning opportunities that present themselves when we fail, but we must be willing to continue on and try again in order to learn anything at all.
It can be quite an arduous task to strive for your own means, to create your own vision and to rally the support within yourself that starting and running your own business requires.
Thankfully, we’re not in it alone. The wisdom of others can greatly ameliorate the process learning from our missteps and hiccups.
Taking from sagacious investors, inventors and thinkers can help you pick yourself up and make something meaningful out of your quest to become a successful entrepreneur.
By studying the thought processes of other entrepreneurs, we can become more enriched and more aware of how to approach the challenges we face in business and in life.
Here are 9 quotes every entrepreneur should live by:
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- The Future Of Franchising Looks Smaller (And Fancier)
- As Consumers’ Tastes Change Can Your Franchise Keep Up?
- How Strong Is Your Franchise’s Quality Control?
- 3 Internet-Based Businesses You Can Start In 2018
- Founder of Five-Star Wes Boshoff Weighs In On Becoming An Entrepreneur
- 5 Thoughts To Give You The Courage To Make Change
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