Let’s start on the right note. I believe that we learn as long as we live. I am still learning to start businesses right and grow businesses better. But I recognize that I have already made many mistakes and learned a great deal from them. My goal with the School for Startups is to ensure that as many people as possible profit from the mistakes I’ve made and the lessons I’ve learned.
Furthermore, this is not merely about starting right. It’s also about growing your business. After all, the only problem any small business has is ultimately about growth. The proximate problem may be your team or your cash flow but it all ties back to the question of growth. So I suppose this conversation is about how one organizes a business to successfully grow.
At the same time, my views on early stage business are changing. And I think that, if we are going to have a productive discussion, its worth you knowing some of the biases I bring to the conversation.
My first bias is that I however spendthrift I may be in my personal life, in business I am frugal if not cheap. I am not a big fan of possessions generally. I don’t particularly like offices, or desks, or company cars or, well, pretty much anything. I think one should question just about everything one spends in a startup. Think of it as weight. The more money you spend the heavier your business is and the more it weighs you down. The less you spend the easier it is to keep afloat, the less revenue it takes to stick around and the more likely you are to survive your first year. Like a balloon in a breeze the lightest waft of revenue will gently push your business up.
My second bias is about speed. I think that great businesses start slow and gain momentum. For the same reasons that Warren Buffett has had a 50 year love affair with compounding; I think that there is a difference between speed and momentum and if you start fast you make mistakes. You will grow rich more quickly if you grow rich slowly.
My last bias is about focus. Focus is what you achieve after your business is fully built and that is not what is happening in your early days. In your early days you are experimenting. You are a social anthropologist observing the natives in their habitat trying to understand them. Your products will change, your market segments will change, your pricing will change, the wrong customers will show up, people will buy what you sell for reasons you don’t understand and that’s all fine. If you are focused before you know your business then you are merely dogmatic not entrprenurial. Until the model is sorted you are an opportunist at heart.
Simone Brummelhuis
21 July 2009
9:45 am
Thanks for these 3 views: don’t spend much, grow rich slowly and don’t focus untill it’s sorted. Going to use it as an opportunist!
Ollie C
21 July 2009
10:05 am
Interesting paradox here, that in the early stages a business is about exploration and discovery, and yet in the background there’s this pressure to know all the answers and be able to write a business plan. I’m feeling my way, testing different models, and optimistic this will at least take me to interesting places, and hopefully also a strong, viable business.
Nancy
15 January 2010
9:57 pm
Actually, Doug has spoken extensively about his belief that you do not need and should not have a business plan when you start a business. You need a well considered “business model” which act as your “hypothesis” for how your business will meet the needs of customers profitably. During startup you test that hypothesis, modifying your business until it runs at a profit. Then, when it is time to search for funding, you document what you’ve done and how you will go forward for your financial partners.
Nancy Fulton Mazur — School for Startups Editor
Mark Bower
21 July 2009
12:42 pm
Thanks Doug, you’ve inspired me today with some sensible advice, just when I needed it. More please.
Alison Lapping
21 July 2009
1:50 pm
Always love hearing your pearls of wisdom! Am currently in the early days and experimenting – trying to put together a “remarkable” product launch! It’s good to know that we all experiment at the start and focus comes as the business develops. And, when we are desperate to get things going fast, taking the time to build positive momentum is really important.
Tom Gaskell
21 July 2009
3:31 pm
Pretty insightful for a “first blog”
, thanks for sharing the thoughts!
The third point – focus – is a particularly interesting one. I have worked with several startups that have dramatically changed direction after spending a lot of time and effort (I guess that’s your points 1 and 2…)and I always saw that as a weakness but you’re saying it can be a strength.
In this recession I find it difficult to judge the market interest in products and services. I am getting a slow take-up for my consultancy services and it’s not obvious to me whether it’s because (a) the services I offer are of little interest, period, (b) “don’t you know there’s a recession on?” – persevere and the market will recover, or (c) The services are fine but I’m not marketing them properly.
Hence my attendance last Saturday to try to address (c). But maybe I need to listen to your third point and contemplate some broadening or re-direction of my services.
Doug
21 July 2009
8:45 pm
Tom,
One thing is true. If people need your service then they will somehow get it. The slow take up could be your price, it could be that you are not scratching a serious enough itch or it could be that you have not successfully communicated what you can do and would do for them. If business is slow, maybe you should take a client on on a contingency basis and prove your worth and make them an evangelist for you. Don’t make them pay until you’ve proved your worth but let them know that when you do you expect them to star in your video….
Jack Lenox
22 July 2009
1:27 am
Thanks for this Doug, very interesting.
It’s difficult for me to have much of an opinion on this as I really am in the early days.
I find your point about speed particularly intriguing what with so many businesses these days seemingly springing up overnight. I really enjoyed the session on Saturday and hopefully I’ll be able to employ the techniques you, Luke and Murray went through while keeping everything under control!
Looking forward to September 19th…
Tom Gaskell
23 July 2009
8:49 am
Thanks very much for the feedback, Doug. I got a lot of ideas about communicating what I can do from the School For Startups event; I’m working on these and will speak to my main client about word-of-mouth. It’s the itch scratching that I need to look at next – I want to be a “must have” not merely a “nice to have”!
John Richards
23 July 2009
9:13 am
Can anyone give me an example of a ‘must have’?
Glendon Lloyd
23 July 2009
11:29 am
Firstly, Doug thank you for a very informative (and amusing session) on Saturday. Filled with insightful information.
John, my dear ole Pappy used to say that there were only 3 ‘must haves’ in life – food, clothing and shelter the rest are ‘just haves’ (as in just have to have me one of those), ‘nice to haves’ and ‘who needs to have’. Any business is about avoiding the ‘who needs to haves’ and progressing your service or product from being ‘nice to have’ to a ‘just have’
Doug
23 July 2009
9:28 pm
John,
Id be happy to. Airlines must have an effective reservation system. Construction companies must have project managements processes or systems. Department stores must have inventory stock control. Financial traders must have real-time information feeds. Farmers must have weather forecasting systems. Oil companies must have the latest ground penetrating sonar for detection of new oil fields, baseball teams must have effective coaches and the School for Startups must have effective event booking systems….
Every company has a must have. You want to be the guy who supplies it.
Doug
Michael Lu
15 August 2009
3:32 am
Hi Doug,
Great biases, which all goes against what majority of business startups do – over-capitlising on initial costs, wanting to get rich quick, and dwelling on the now rather than looking at the future goal. But then again, most startups go bust, don’t they?
The biggest mistake I’ve observed is that people come out with a product, and then try to find the market for it. It’s so much easier discovering the market, find out its biggest frustrations and needs, and then designing a product around that.
Look forward to learning more from your insights.
Cheers,
Michael
SiewAllen
27 December 2009
1:51 pm
Hello Michael,
I do agree with you about rediscovering the market.I have always experienced as a consumer myself, that I perhaps can get better results myself if i had the right tools.Hence the advent of the DIY era and tools to go with it.
In the world of self health and self massage,especially in the west where we are gadget minded, finding professional massage techniques and tool is a must have.
So glad to read your comments to Doug about helping consumers frustration and needs, as it confirms my own business idea launched a year ago.
Cheers ,
Siew