Friday, January 16, 2015

You Can Do Magic

Start-ups have gone from dime a dozen to becoming legion. That's both good and bad. Adjectives like exciting, enticing, and vibrant, describe our business environment, yet on the down side, the resulting competition for funds and for the market is simply awful.

Working as a consultant to start-ups is fun and very challenging. I've been through a longish string so far, and though the projects were diverse, as the start-ups scene has heated up, some common challenges and solutions have emerged. From my experience, here are just a few of the commonest failure scenarios.
Challenge 1 – The Dream Machine. A lovely product/service that addresses major pain points, is well designed, passionately believed in and yet won't fly. Very often the problem is over confidence. The start-up's mindset runs something like this: “My product is truly revolutionary and it's going places. The market needs me, potential customers are begging for me, so here we come!”
Taking this product or service on to the market usually ends in disaster. Typically, when all the attention has been on the development and there is an assumption of ready demand, the basic questions of timing, needing a 'fit' in the existing market space, developing channels, marketing costs etc. would not have been adequately thought through. If you then have to create a new niche for your revolution, that can be very costly – and just a bit too risky. Risky is a word that neither the Angels nor VCs relish, so when you go looking for funds...
Challenge 2 – The Me Too. 2 or 3 friends get together and look with longing at this busy and exciting start-ups dominated market. Everyone seems to be getting into the action, and perhaps some of their friends have already gotten through the 1st funding phase. Why not? It's simple enough, we have to just brainstorm, so let's put some ideas together and hash it out.
Luckily, most of such never get to Go. There never was the innovation and inventiveness present in the first place. More often than not, the resulting products/services will be copies, and unless they have a lot of luck and also can pool the funds to launch themselves and afford get some brilliant, market savvy folks on board, the results will be either a quiet fade out, or sometimes a spectacular flop. Again, it's unlikely that funding will come through, for copies just don't get much of a bite from funders. You also have a narrow time window, unless what you are copying itself goes big time.
Challenge 3 – Good But Unscalable. After lots of hard work getting all the bits and pieces to fit together, when the funding folks start asking questions on scalability, the big blind spot shows up and that's that.
A lack of market experience and not having good advisers early on very often results in unscalable start-ups. Not every good idea can be scaled up, and if it can't scale, it will not get funded!
Challenge 4 – Built To Offload. Here the idea is to hit the market running, demo the potential and then quickly get someone to buy you out. Sometimes, if the launch and initial publicity are done right, and if the market was receptive, it will work just as planned.
Unfortunately, sometimes not. If you assume that your buyers are out there waiting, and then can't identify them, you might have to go ahead and carry your baby through. Then, as you have already committed so much, it's to the funders that you will go. As the Angel/VC 's needs would not have been accounted for, you might just find that you have multiple problems and are stuck between the proverbial rock and a very hard place.

There are of course many more start-up types, but you get my point. I called each a challenge because, when us consultant types are called in and recognise a failure type, we have a real challenge getting our budding entrepreneurs to rethink their babies!

All start-ups must pay attention to The Market - while bold innovation and brilliant designs can go a very long way, scanty are the concepts/ideas that will 'just naturally' go viral and fly themselves into something much bigger. Do get good marketing advice early on, and keep that advice in mind when looking for funding and launching out.

Finally, supposing you have this great idea, and it is marketable, and even though you failed to get funded, you decide to launch anyway, remember that marketing can be done effectively even on a shoestring budget.The provisos are, IF and only if your service/product has a place to jump in in the market AND whether you will survive and sustain until you succeed.

Where is the point of no return? It's very important here to decide at the beginning when you will know that it's not panning out, and what your jumping off point is!

Study your market as deeply as you can. SWOT out your competition. Targeting is the first priority. Effective social media use with a well designed and promoted web presence (good SEO helps) will get you started, and neither demands a huge big budget. Go for good people (not just high priced!), interview in depth, and then train them as a team. Build commitment, efficiency, responsiveness, a marketing orientation, and give exceptional service (CRM helps) so that 'word of mouth' will also pitch in. If you need a distribution net, pick the small and medium players, work on loyalty, and give them the best returns in the market. Debug and keep debugging.
In short, you know you have a really great idea, think things through, get good market advice early on, be prepared to sweat, and go for it -
pitch and don't stop pitching.

Believe – you can do MAGIC!

This was originally posted in LinkedIn Pulse 

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