1. Don’t go it alone.
You may be very clever and your idea may be revolutionary, but being a lone wolf is ill-advised. In The Disciplined Entrepreneurship1 (really good read btw, has a formula for startups similar to the business model canvas) they discuss a study done by MIT that looked at the key ingredients for startup success. Surprisingly, the quantity of founders and breadth of skill sets was the biggest factor. You might have had an epiphany around a product that would make Da Vinci proud, but if you’re not willing to collaborate and get help, the chances are you will end up dead in the water.
2. Don’t poke the bear, straight away.
The behemoths in your industry have large balance sheets, substantial experience and resources, significant brand equity and market awareness.
Even if your product is majorly disruptive and the market leader is as unwieldy as an aircraft carrier, once they mobilise your still up against an aircraft carrier! Who could crush you with their marketing spend alone.
An example of an aircraft carrier doing a U-turn is General Motors; traditionally a peddler of carbon intensive combustion engines, killers of the electric car and a business with rapidly dropping market value. Fast forward a few years and they are now the leader in mass market electric cars with the Chevrolet Volt and in a great position to capitalise on the consumerisation of sustainable technology. While you might think the big players have lost touch and are unable to change they also have exceptional resources to effect change. Read more here.
3. Beware Marketing can turn into a bottomless pit.
Countless times in my career, I have seen marketing budgets burnt with bupkas to show. In big business as well as with startups. This waste is often driven by unscrupulous agencies who will spin up work if you’re not super tight on your brief. At a client of mine a brand agency charged hundreds of thousands of dollars to do a brand strategy piece. The output of which was to tell us the companies personality and guide us on a congruent color and style guide for the said personality.
Maybe it’s the bean counter lurking in my subconscious, but you have to be kidding me. I get it if you are a big company spending tens of millions on above the line advertising, sure find out your companies’ personality but not when you’re a $5M company. If you are not crystal clear about the output and metrics, prepare to be robbed.
Implementing paid search without consulting a solid digital marketer is thwart with danger. I got burnt big time using broad match keywords, rookie error! I could have gone large in Vegas for what I burnt in a month. I now have an agency who have made this a very efficient and lucrative channel for me (happy to put you in touch if you like).
Preferably hire someone or employ an agency that is incentivised to perform, get some metrics in place and monitor them regularly.
4. Do your Research Rookie!
Customer personas enhance your ability to truly empathise and think like your customers. Which should correlate directly with your capacity to solve their problem and build a resonate marketing message, right?
Personas are an interpretation of what your organisation think your customers want. They need to be based on substance and breadth not a single anecdote from your babysitters, best friends, sister at yoga.
How much on the ground research have you done? If your idea is based on the grumbles of some of your friends, you really have no idea if there is a market. Sorry to say it, but the use cases you and your buddie’s come up with may not be reflective of the wider markets needs and you could end up with Coke Life.
5.Location, Location, Location.
You may dream of kicking back in Costa Rica with a Pina Colada in hand, using skype and slack to communicate with your developers and stakeholders’, in-between scuba and massage sessions. This is doable if you’re a Freelancer completing tasks. But if your developing, strategising, motivating, selling, marketing, influencing or any other of a thousand verbs that describe the tasks an Entrepreneur performs, the most effective way to do this is face to face.
Your business may be web or app based, but your physical location is still an important factor to consider. It’s critical to network with your local startup community to find employees and investors and tap into the collective’s creativity and most important of all, to get early feedback on your product from smart folks that are in the know.
6.Attack a Beachhead
Before you start burning through your development money like a Hummer does petrol, make sure you have a very specific market in your sights.
In WW2 the Allies cleared smallish beachheads of the enemy, then used them as staging areas for troops, supplies and weapons to then attack and win more beaches as part of the Normandy invasion, which lead to eventually freeing the European mainland from the Nazis. This is a strategy that can be employed by startups too. It’s better to start in a market that you can dominate in a short period of time, than thinking too big and grand and getting little traction. Early wins such as acquiring free users from a small segment, send a compelling proof in the pudding message to potential investors, whilst reinforcing this message to your existing investors.
Selecting your “Beachhead” also has the added advantage of not instigating a confrontation with the Bear – at least in the early stages when cash is tight, hunting season comes later, once your well-funded.
1 Bill Aulet, Disciplined Entrepreneurship, Wiley Press, 2015
James Malcolm – CFOs on demand is based in Sydney offering startup CFO services, contact us for a free consultation.