If you are just starting out
Or your business has been around but it’s struggling
This article is for you.
If you keep on doing the same thing
And you keep getting the same result
Then you need to change
If you want to get a different result
Old business school teaches entrepreneurs to come up with business ideas
Then to write business plans to apply for funding
With the money in their bank accounts, to then hire people and implement their business plans.
The problem with this approach is that you make too many assumptions
And the other word for assumptions is guesses
You must guess you know your customers
But you have not sold a single product to those people
You must guess your product is solving a real customer problem
But you can only be sure your product is solving a real problem when customers actually buy the product
You must assume you know your channels, how you are going to get your product in your customers’ hands
The problem is that you are only a startup
And a startup knows very little about its customers, its channels, its partners.
If you are a welder, and you decide to follow your passion and make security gates
You assume homeowners are going to love your product, because you believe your product is the best thing in the market
You write your business plan and submit it to funders.
They give you the money and you rent your new workshop & sign a 5 year lease
You buy welding machines tools and the materials that you will need
You start making security gates
Opening day arrives, and you open your doors for business
No one comes. Or if they come, they leave without buying a thing
Month end is coming and workers must be paid
The bank wants its instalment, rent must be paid.
That is big trouble.
Enter the new school of starting businesses.
You still start with a business idea, however, instead of writing a business plan, you build or make the product on a small scale.
It’s called a prototype. It is the best example of your product
It could be a security gate, confectionery, bio fuel, it could be anything.
The same goes for services too, you just need to be a little creative.
Use the little money you have to make a prototype of your product
Put a price on the product, show it to your customers.
Listen to their feedback, see how they react
The best feedback is when people vote with their wallets.
If they are buying, then you have hit the jackpot.
You have just found a way of making money with your idea.
And this is what every startup should be doing, looking for a consistent way to make money with their ideas.
When this happens, you are ready for funding. Funders will fight over you.
This is the right time to build your bankable business plan.
This is what successful startups do differently.
They focus on getting their first customer.
They focus on a few people and use their feedback to make better products.
It is easier to build something that 10 people love, than to build something that the whole neighbourhood loves.
If you can delight 10 customers with your product, it will be easier to delight 20, 40, 80, 160 and so on.
Before you realise it, the whole neighbourhood will be eating out of your hand.
Email comments to firstname.lastname@example.org
Whatsapp: +27 79 070 4395
Twitter handle @tmkconsult.