Tips for Launching Your Start-up Right
Discovery is simply a starting point from which the product and business with evolve, iterate, and be refined as the concept meets the customers, the market, and the investors.
By Cynthia Kocialski
Are you considering launching or financing a start-up company? This author’s
expertise and experiences have led to the creation of a series of tips that can help you move forward with your decision.
These tips include:
It’s Not About the Product
Start-ups are not about the technology or product or service. The product is the heart of the company, but the product no more makes a company than a heart makes a human being. There are many components to a company that all have to work together harmoniously in order to achieve a success outcome.
What does this mean to the entrepreneur just starting his business? A new business should create a minimal product or service — don’t spend extra time adding bells and whistles. Getting the product into the hands of the customers and getting their feedback as soon as possible is worth far more than all those fancy features. Don’t agonize over perfecting the first product.
The entrepreneur needs to start thinking about those other pieces of a company on day one. You’ve got the product, but what about marketing, sales, distribution, manufacturing, financial planning, funding and so on? It’s not a serial process. You can’t develop the product and then start the marketing. Many of these functions need to overlap.
Don’t Be Afraid to Discover
The early stage start-up process is a discovery process, not a step-by-step execution process. Many first-time entrepreneurs believe you come up with a great product idea, then they come up with a detailed business plan, and finally they hire the people to execute the steps in the plan. Discovery is simply a starting point from which the product and business with evolve, iterate, and be refined as the concept meets the customers, the market, and the investors.
Too often, entrepreneurs write a business plan because some expert told them that’s what they should do. The result is a business plan that is a work of fiction. You will eventually need the business plan, but it doesn’t come first. Entrepreneurs should focus on developing a concept plan in the beginning. This is a shortened version of the business plan. It outlines what the product is and how the business surrounding the product operates, but it does so mostly through all the assumptions that the business hinges upon. The concept plan is the discovery plan. Once the entrepreneur has worked through the concept phase and has a firm idea of the product and its business, then it’s time to write the detailed business plan.
Along with don’t be afraid to discover is don’t be afraid to admit the product won’t work at all and it’s time for a major change. It takes time to find the right product to market mix.
Retool and Revise
The first product idea is never the final product that makes the company famous. In reality, the worst work you will ever do is the first work you do. Press forward past the first iteration, and make use of the lessons you learn along the way.
How do you really iterate? It sounds easy, but it’s not. You’re going to get a lot of conflicting opinions and wants from the customers and marketplace. Once you’ve got the product in the hands of the customer, you’ll find some customers love your product and many don’t. Many entrepreneurs make the mistake of trying to please every customer because they feel every initial customer is precious. As a result, they spend a lot of resources adding features and fixing problems for the customers who aren’t truly excited by the product. Don’t do this. Instead, focus on the customers that really love your product. Establish relationships with these customers. If they want new features, add theirs to the baseline.
Next, reframe your marketing so that the benefits your thrilled customers experience are the ones featured most prominently in your marketing materials. This will showcase your strengths and attract more customers like those that love your product. This will also help you develop customers who will act as your informal sales force and attract customers willing to provide testimonials. Future prospects are more likely to buy if your customer testimonials and referrals are from others like themselves.
Build Your Team
You need a team, but not just any team. You need the right team for that stage of a company’s life. You wouldn’t hire a college professor to teach kindergarten. For that, you need to find early elementary teachers. Ditto for start-ups. Find the right people for the right job, as well as the right attitude and stage of their careers to make them a match for working with a start-up.
In the beginning, the two most important people to have on your team are the person who can guide the overall development process and the marketing person who can start creating demand for your product as soon as possible.
Your team is not just comprised of the founders, owners, and employees. It is also the outside mentors, advisors, vendors, and consultants. Unless a start-up happens to have a lot of funding on day one, these outsiders are key to a new business thriving. Not many start-ups can afford to hire full time employees to do a specific task, and so it becomes easier to hire short-term people to do these tasks. While founders often question why they should hire someone to do what they could do themselves, remember that building a company takes many people, and you can never do it alone. CEO does not stand for Chief Everything Officer.
Think Like an Investor
Investors know and accept that investing in a start-up is a very high-risk proposition. If investors wanted a moderate return, they’d invest in publicly-traded bellwether companies like IBM and Coca-Cola. What entrepreneurs don’t get is that, to investors, the company itself is THEIR product. Entrepreneurs need to understand the investors’ perspectives. Entrepreneurs engage in the deliberate creation of their end-user products, but what they also need to do is engage in the deliberate creation of their companies. Investors buy into companies, not end-user products. For an investor, the best case scenario is a tested, proven business with a market that is poised to expand and grow rapidly.
While many entrepreneurs never intend to accept outside funding, Kocialski still thinks it’s helpful to contact these investors. They have seen so many business start and fail and a few start and thrive, that they can often shed valuable insight on various aspects of the entrepreneur’s plans. Outsiders are sometimes able to see the big picture better than the entrepreneur who is deep into the details of the product and company.
The spirit of American business is embodied in the start-up. Innovation and guts make up the foundation of the start-up, and those qualities also happen to be characteristic of the most successful mega-firms ever to hit the market. Let those qualities form the dynamic of your start-up, and you’ll be off to a good start.” HBM
Cynthia Kocialski is the founder of three companies — two fabless semiconductor and one software company. Currently, she is a consultant for start-up companies. What makes her unique is that she has experienced many start-ups and has seen them from the inside out, including the day-to-day trials and tribulations, not just the milestones and status presented to passive investors and outsiders. In the past 15 years, she has been involved in dozens of start-ups and has served on various advisory boards. These companies have collectively returned billions of dollars to investors. She also writes the popular Start-up Entrepreneurs’ Blog and has written many articles on emerging technologies.