We have been involved in many new ventures, either directly or through the banks and agencies where we’ve worked. Now, at Flagship Marketing we see a lot of start-ups and scale-ups and we have a special interest in helping them grow.
Following are some of our experiences of bringing a start-up to market.
My earliest memory of starting a new business venture took place when I was about 13 or 14 years old. My Dad and one of his colleagues, Peter, left the ailing chemicals firm where they had been working and set up on their own.
The business flourished and when it was finally sold it had offices all round the world, providing a good livelihood for more than 600 people and it made my Dad and his business partner financially secure for life.
Build what people want
Except in those formal moments in front of potential investors, I don’t think my Dad ever thought about what he could get out of the business. He was far more interested in what he could do for his customers, and through long experience in the industry he knew what they needed and what they would pay for.
Out of all the vital elements that go into a successful business launch, in our experience the most valuable and the most elusive is to be able to to build a product or a service that people want to buy.
We see companies take off with minimum marketing and with their organisation in a shambles, but because their product has caught the imagination of a target market, orders seem to come in with very little effort. Within 3 months of starting up, Dad and Peter were able to pay themselves what they had been earning in the previous company and although they ran an operating overdraft, they never again sought outside investment to grow their business.
So how do you build a product that people want? By solving a problem worth solving
At its simplest, a problem is worth solving if:
- A lot of people are suffering from it (i.e. there’s a big market)
- The effect of the problem is so bad that people are willing to pay for it (would you?)
- No one has managed to solve it satisfactorily yet
- Your solution is practical, accessible, affordable for your target market
We’ve been working with a sparkling scale-up company who have done just that. They noticed a problem that has been going on in the capital markets, tying up billions of dollars for years and no one knew how to resolve it. It is genuinely the elephant in the room and two clever entrepreneurs have come up with a solution which ticks all the boxes. They’ve been snapped up by a major firm and they are beginning to help their clients clean up a mess that many thought would never be tackled.
There are lots of problems that might work. How do you choose?
- Use your own experience and those of partners. The problems you are most likely to be able to address are those most closely linked to your own experiences and skills.
- Kill your passion. Passion and drive are absolutely essential to a successful start-up – but they create deadly blindspots when it comes to developing a solution that will compel prospective clients to come to you.
Never, ever allow your passion for an idea to drive your decision making. Save it for when you start to promote what you are doing, later down the line. Ask other people in your target market, “Would you buy this?” and “For how much?”
- Research size. The question you are trying to answer is, “is the market big enough to support my needs for profit and growth?”
- Research competition. To compete, your solution has to be different – more complete or effective. However, if there are lots of competitors in your space you can be sure there is a problem in that space which is worth solving.
- Blue Ocean Strategy. This is a space for something entirely new, for which there are no competitors, but even here the fundamentals hold true. It must be an opportunity worth creating for people to spend money on it and the market must be sufficiently big.
Now you’re ready to write your business case
You only have to look around at the rate of start-up failure to understand how feeble their business cases must have been.
Those who succeed build their business on objective research, not on passion, blind faith and guesswork. From our experience, entrepreneurship is not easy. There are too many stories about unfortunate ventures that have come and gone in the last few years. The message is clear.
A final thought
I started with a story of the business I’m most proud of – my father’s firm, and there’s one more lesson he has to teach – and that’s to be adaptable.
Dad’s business had developed expertise in doing business behind the bamboo and iron curtains sourcing pharmaceutical ingredients that were needed in the west but were not easily accessible. When the world opened up, that market disappeared and so the business moved into products that these countries now needed, making full use of the trust and expertise they had built up over the years.
At any stage in a business circumstances may change so dramatically that you have to pivot to seize new opportunities and discard those things that are no longer working. For us, the pandemic and the move to a highly digitalised world is a clear example – you need that vision to see what people really need now, and how to offer it to them.