Entrepreneurship is about building finances conceptually. Entrepreneurs don’t buy something and wait for it to appreciate. They invent the future. Inventing has never been about being atechnical genius. It’s about creativity and having the tenacity to execute the vision. The great economist Adam Smith would use some verbose economic theory to describe the process, like ‘engineering the factors of production’ – but let’s keep it simple and call it “Inventing Money”.
So how do start-ups invent money? Just follow these simple steps:
1. Have a reasonable idea
Ideas are a bit like water – they’re vital but omnipresent. Successful execution of ideas is far rarer and more valuable. A great idea will never make a successful start-up on its own. It’s just a seed. Potential. That’s it.
Avoid highly original and ‘expensive’ business concepts that could change the behaviour of consumers, business or the world. Otherwise known as trophy ideas.
Trophy ideas are typically capital-intensive and have long lead times. They’re often the domain of inventors. The reason that trophy ideas are too onerous is that they don’t succeed very often and they take up valuable time and money. Sometimes people dedicate large portions of their life to trophy ideas. But we only ever hear about the successful ones. An example might be the Dyson vacuum.
Go for trophy ideas after you’ve had some smaller successes first. Do it when there’s passive cash-flow from another start-up, business or investments.
2. Ignore technical requirements
Never think like a technician. Ignore the fact that you don’t have the retail / consumer goods / engineering / web experience. Know what you want to deliver and focus on that end.
Entrepreneurs get Tony to design something, Paul to pay for the project, Mary to provide the widgets and Joseph to build it. They do this because they intuitively know that Lisa will pay much more for what they invented than it cost to pull together. The most valuable skills entrepreneurs need are project management and vision.
There is always someone with the required skills, and no business worth having relies on just one person’s skills. You simply can’t be good at everything, and you can’t do everything, so don’t waste time trying.
Everything your company/boss told you about improving areas of weakness was a hoax. It was just detailed in their corporate HR policy of unachievable perfection. Focus on strengths, outsource weaknesses.
3. Focus on doing, not planning
Focus on success rather than perfection. Perfection is the enemy of doing. The reason is that perfection is in a constant state of flux. If we refuse to compromise in the pursuit of perfection we’ll never make, ship or sell anything. However, there is a catch. We must keep chasing perfection during the business cycle, even though it’s unattainable. But never chase it pre-launch.
There’s plenty of great examples of sub-optimal products that became heroes as they improved with each version: the iPod, Gillette razors, Huggies nappies, Nike runners and even the Simpsons cartoon (the first episode looked more like a grade school animation).
The biggest problem with the perfect strategy is it’s pretty hard to implement the plan – maybe impossible. That’s why extensive planning isn’t the answer for smart start-ups. Create a one-page mud map, and make up the rest as you go along.
There’s no such thing as a successful start-up without a leader who can sell. This is one skill that can’t be outsourced. It’s a quality implicit in leadership. Part of the invention process is making others believe as much as you do. And that involves selling to all and sundry – suppliers, employees, investors, retailers and media. Start-up champions have thick skin.
Part of the start-up selling process is ‘inventing transactions’, especially for the web-based entrepreneur. People will rarely stumble upon any non-retail business. Make people use your product or service, even if it’s a contrived setup. There’s a real need to give the audience a user experience. Bob Ansett provides a classic example. If his Budget rental car business had no cars available, he’d rent a car from Avis or Hertz across the road, just to ensure they knew he’d go the extra mile (pun intended).
The art of ‘inventing money’ is not about planning or waiting. It’s about doing.
Stephen Sammartino escaped his cubicle after 10 years marketing global brands. He is now founder of two start-ups, recently launching rentoid – the place to rent anything – www.rentoid.com.