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    Strategy: Start-up lessons

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    aa14-feb-mar-2006-strategy-start-up-lessonsThe New Year is often a perfect time to take stock and reflect on the lessons learned thus far in your venture. While all businesses are different, and the path to market is anything but standard, there are some useful ‘canons’ that apply to almost all new ventures:

     
    nothing changes overnight
     

    Optimism is a pre-requisite for almost any entrepreneurial endeavour. However, business founders often let their optimism cloud their judgement about the likely timeframe for their company’s success. It takes longer and costs significantly more than most expect to gain a foothold in the market.

     
    no-one thinks like you do
     

    Many founders, particularly those with a technical or technological bent, are often blindsided by poor initial market reception. The primary cause for this is that they believe all consumers think the way they do, and will immediately recognise the benefits of the new product/service. Your consumer isn’t you. They have different needs, wants and motivations. They buy products for many different reasons. You must understand who they are if you are to have any chance of selling to them.

     
    new stuff doesn’t displace old stuff
     

    Every entrepreneur has a vision of a world in which their new product fundamentally changes the market. This almost never occurs. Your new product will need to fi ght for market share, usually against well-resourced incumbents. However, cashed up competitors aren’t your biggest threat – consumer inertia is. Your would-be customers have managed to survive thus far without your product, so convincing them to change their behaviour is always a diffi cult sell.

     
    chief ‘pain’ officer
     

    As a founder, your only focus should be on solving pain. Find a pain that consumers have, and for which they will pay to access a solution, and your business not only becomes ‘recession-proof’, it becomes almost failure-proof.

     
    know when to step aside
     

    There are many painful instances of business founders who over-stayed their welcome in the CEO role, literally destroying their business. The skills and characteristics required to launch and aggressively grow a new venture are often the antithesis of what is required to take it to the next level. Very few founder- CEOs are able to make that transition. It is important to keep your ego in check and recognise when your company needs a new CEO.

     
    no deal is done until the cheque clears
     

    Raising capital is a tough, all-consuming process. No deal – whether it be a handshake, an investment memorandum or even an initial sale – is done until you have the cash in your hand. Don’t commit resources or change your game plan unless you have a clear and binding path to payment.

     
    the first hires make your company
     

    Few founders can do it all. It is important to surround yourself with talented individuals who can augment your capabilities. Rounding out the management team and devising marketing campaigns comes later. The first hires should be individuals who can accelerate the development of your new product. Keep high standards and only hire the right candidates.

     
    fail fast
     

    In the 3-5 year timeframe it takes to launch a new company and its products, a founder is going to make thousands of decisions. Some will be wrong. Even if you make the right decision, execution errors will occur. It is important to accept this reality and not allow fear of failure to impact your decision-making process. Recognise and remedy mistakes as soon as possible, and learn from them. Be prepared to make significant changes to your business plan, product design and launch strategies as you go along.

     

    And, of course, keep your chin up. The New Year offers a fresh start, but good business builders keep their eye on the ball 365 days a year. Hopefully, these ‘canons’ will keep your business firing and hitting the right targets in 2006.

     

    Mark Neely is a lawyer, technology commercialization consultant and author of 10 books, including The Business Internet Companion.