Tuesday, January 19, 2010

Advice For The Start-Up Entrepreneur

This advice isn’t meant to be all inclusive …. but should give you a good foundation to jump off from. Hopefully it’ll help you avoid some of the problems or issues you face when you begin.

For starters (pun intended) …. Read "Art of the Start" by Guy Kawasaki to give you the right foundation.

My number one piece of advice would be to do your research BEFORE you start. Talk to potential customers, suppliers, and industry associations. Find out for sure if your business model is in demand - especially in this economy.

Is there too much competition? Are profit margins adequate? What are the key skills needed to suceed and do you have those?

In short - find out about the business before you start.

Some very general but practical tips are …..

1. Whatever it is you are trying to build, build it fast (even a prototype) and hit the market right away. You will almost never get it right the first time. But if you are lucky you will get a lot of feedback from the customers about your product.

2. Best thing that can happen to a start up is getting an industry leader as your beta customer. If you can find one, you have got a game to play.

3. If you are product company, invest in your first few accounts. Don't start being transactional and look for profit from day one. (if you can afford to do this). Products only make money when there is scale. Remember, all you are looking for from your first customers is "yee ha! this product rocks." comment. Ensure you get it.

4. When the going gets tough (and invariably it will), have the patience and the determination to stick through.

Another piece of wisdom that deserves stand alone mention for anyone starting a business is ….. "Find out what the customer wants and give it to them'. Which means listening to prospective customers and making changes to your product and service - fast.

The faster you do this the faster you will grow.

The problem is most people start a company for their own reasons and are slow to accept 'change'.

Some final insights to keep in mind are ……

1. Find something that you enjoy doing, that you are really good at and tweak it to provide a product or service of real value to people that people really need.

2. People who are looking for solutions to their problems can often be your best customers if you can squarely meet their need and add value.

3. The cost of your product or service should be a small fraction of the value they receive and you need to think of scale to drive more revenue in most cases.

4. In a competitive market find what the others are not doing well or find a segment that they are not serving and focus on that niche.

5. In real estate it is all about location, location, location. In entrepreneurship and small business it is all about specialization and niche marketing. You cannot do everything equally well.

6. Starting a company is not just knowng all about the product or service. It is also accounting, finance, strategy, cash flows, banking, taxation, contracts, legal issues, intellectual property, human resources and a lot of other things. You need the right resources.

7. Many people feel threatened by people who are smarter than them but if you need to be succesful you need to surround yourself with real smart people and you need to manage and reward them well.

8. Be generous and big hearted else the high achievers may not stay with you for long but will look for other prospects.

9. Understand your customer's needs and position your product well in the market to meet your segment's needs.

10. Be aware of barriers to entry to your market for others and think about how you can build sustainable long term competitive advantage.

Commit to your idea 100%. Dabbling in it, worrying about your day job, telling yourself you just can't afford to work at it full time because it doesn't pay yet - that will kill your business.

If you tell yourself you just can't afford to go all in, all at once, then it's just a hobby. You only get out of it what you put in.

Watch and track cash like a hawk...especially as growth increases (that is when you are most likely to run out of cash).

Be marketing and selling continuously.

Under-promise and over-deliver.

Clearly communicate why you're different than your competitors - and why they should choose you over your competitors or just doing nothing (or staying with their current provider).

When you hire, hire good people who are willing to chip in to do whatever is required - you won't be at the point for hiring specialists until you get much larger.

Enjoy the excitement and fun of a startup enterprise. As you build your business you'll think back to this time with fond memories (and forget some of the painful ones and long days).