Enjoy, but look out.
I know I consider myself one. I am forever analysing business opportunities, both within and outside my own environment. Conservatively, I would say that at least once a week someone calls me about a business idea that they want to kick around. The fact is, most people who speak to me about business ideas and show a great entrepreneurial spirit, are well educated or have a great business sense. So, the question I ask myself is why do 80% of these start-ups fail?
When I reflect on my own business ventures which failed, the lack of success really boils down to half a dozen reasons. At the end of the day however, it is simple. The idea was not executed well and we ran out of cash.
I guess the important question we always need to ask ourselves is what the other landmines are.
There is no doubt that if I would have had a little bit more reflective thinking, we could have saved ourselves a lot of pain.
What is the one thing we always do as an entrepreneur? We come up with a cool idea. We might share it with a couple of people who go “wow that is so cool”. It is the next thing that we do that often leads to failure.
You see, we become so caught up with the idea, and of course scared to share it with anyone (because they’ll steal it…right? 😊). The result is that we do not actually go out and find those people who would be our perfect customer and asked them their opinions. We make the fatal mistake of assuming we know the answers, or we have the answers, or we are so sure that it is this unbelievable problem that no one else has ever thought of solving.
There is no substitute for doing market research. Now there are two types of market research – qualitative and quantitative. Qualitative research is the one that entrepreneurs are particularly good at. It involves talking to people and getting feedback. Quantitative research involves doing some questionnaires and collecting data, not a big one for entrepreneurs because they do not really want to hear that there is not a market for their idea. There is a very good book by Nathan Furr and Paul Ahlstrom called “Nail it then scale it”. It literally says, “what would you prefer to do, talk to people now or in a year’s time, after you spent thousands of dollars and find out your ideas or theories are incorrect”.
I find it so interesting when the shoe is on the other foot, in that someone is pitching me an idea. It is only then, I learned to appreciate the need for someone to be able to communicate what their business is about in a simple and clear manner. If I have to ask someone what am I missing or I don’t get it, it’s either because they cannot articulate the concept or it’s a scam. I must say, on numerous occasions I sat with a bunch of guys and asked them if they understood our friend’s business. Everyone just shakes their head and says things like “I consider myself a pretty smart guy and I don’t understand how he makes money”. To which we all concur. It’s a scam. Needless to say, at some point it will fail and get ugly.
Develop your communication skills. If you want to pitch an idea to someone, you must be crystal clear as to the benefits, how they will be delivered, and what is your differential? You need to be able to take criticism, and not get angry as people try and punch holes in your ideas.
Even the most successful, fail. The question is why? Sometimes it is self-destruction and they simply they can’t handle success. This would clearly be the saddest of all. This is not necessarily a matter of not knowing what to do with the success, it’s more to do with their lack of understanding of what it means to be a leader. To lead a company to success, means that you must have great people skills, you must be able to control your anger and you must be able to listen to the opinions of those around you. These are not a guarantee for success, but they are necessary in order to avoid a lot of pain, which if not managed correctly will lead to failure.
Let’s go back to the first comment I made about losing money. Anyone who has the entrepreneurial spirit understands that money is the barometer. If you are not making money, and I mean more than what you are spending, you will crash and burn. You can be a great communicator, you can have great ideas, you can be a good leader, you can be smart, but if you are not making money… boom.
Learning to be “a mean lean marketing machine” is important. A lot of software companies talk about failing fast. The idea is that you write the code or website, you get it up, you test it, make a few dollars and you keep going. If it doesn’t, you kill it.
Personally, I do not subscribe to this approach. From my experience if you’re writing code that is dirty and fast, it is going to be buggy. It will lead to a bad customer experience. With high expectations, an inferior experience will kill the best of ideas. I am strongly of the opinion that you need to be very smart with your money and run a lean operation. This philosophy can go on for the life of the business, because without this approach money is wasted left, right and centre.
As I reflect on a couple of businesses that we created (which have done exceptionally well), I appreciate that it was our constant need and desire to challenge the very proposition of what was being offered and constantly finding ways to improve it. For me this meant networking around the world and looking at other products and services which did things which inspired me to incorporate into our offering in one way or another. You don’t have to invent everything, you can borrow ideas from everywhere, as long as you do so ethically.
Build networks, find time to catch up with friends you have not spoken to in years, try to meet new people, especially in business, and especially those who have built their own businesses. The gems and wisdom that others will share with you is gold.
The entrepreneurial spirit is not part of everyone’s DNA. If it’s part of yours, I would suggest building a team around you from the start. This will help you get through the tough times, and honestly its too hard to do it on your own. Ask yourself a simple question, “how do you handle pressure, failure and apologising to others when you made mistakes”? It’s not all doom and gloom. Success is sort of sweet. The funny part is that once you close the big deal as an entrepreneur, you rarely have time to enjoy it because you realise that now the hard work begins, delivering on your promise.
I will promise you it’s an adventure you will never forget.