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Many startups fail because they create a product no one wants. SETsquared Entrepreneur-in-Residence, Ian James, explains how to prevent this.
If you have a burning business idea, 2017 could be the year you make it happen. But before you take the plunge to launch your new venture, leave behind a successful career, or pivot an existing company, you need to know if your idea has substance.
A good idea achieves nothing if it doesn’t make it off the drawing board. To make it work you need to adopt a planned, professional approach from the outset. Write a basic business plan that outlines the problem you aim to solve and how. Define your target audience and how you intend to reach them. Identify where your money will come from (including initial funding and regular revenue) and the costs you are likely to incur. And outline what the first six months will look like, setting regular goals that are specific, measurable, attainable, realistic and timely.
In the SETsquared Surrey incubator, we encourage entrepreneurs to think hard about eight areas of their business: from product development and market growth to delivery and back-office systems. Only when they have addressed all of these, even if only at a basic level, will they be ready to apply for funding.
Many people spend a lot of time, effort and money developing a product or solution only to discover that no one wants to buy it. In fact, this is the main reason startups fail. Before joining SETsquared, one of our entrepreneurs failed twice with products that he thought would sell, but didn’t. He has now spent 12 months researching market demand for his latest fin-tech venture, signing partnership agreements, and constantly refining the design before writing a single line of code.
Examine the market and your competition – is anyone else solving the same problem? Contrary to popular belief, it doesn’t always pay to be first to market. A lack of competitors may suggest there’s no market need for your idea. If you do have competitors, how will your business stand apart?
Make sure you test your idea on the people you think will be your customers. Don’t just rely on the opinions of family or colleagues – they may have your best interests at heart but often won’t give you the independent, honest advice you need.
Use an online survey tool such as Google Surveys, which allows you to define a particular target customer group and pose questions to them about your idea. These are then distributed by the platform for a quick response. You can repeat the survey with different segments, or experiment with variations on your idea, to see which generates the most potential. You can also chat to people on the street or ask your social media networks for feedback. Take their suggestions on board and adapt your product or service accordingly.
It’s worth attending conferences and exhibitions that are relevant to your idea and proposed sector. Not only will these provide valuable networking opportunities but you may also be inspired to further hone your plans. Search for business meetups, where you will find like-minded entrepreneurs who may have an interest in your idea, or at least will have advice for you as a new entrepreneur.
Finally, approach a business incubator for a chat. Incubators are always on the lookout for new entrepreneurs, and would be happy to give feedback on whether they think your idea has “legs” and how you could develop it into a viable business proposition.
3. Seek the right investment
If you need funding, there are plenty of available sources. Many of our startups have applied for grants from government initiatives such as Innovate UK. For more established companies, equity funding is common. This can come through high net-worth individuals in angel investor networks, such as the Surrey 100 Club of the University of Surrey.
An investor will buy into the business, not just its products, people or services, so it’s important to establish your company’s value and credibility. Entrepreneurs should demonstrate a significant market, prove existing customer engagement, outline a clear business model and show how the invested money will be spent. All of this must be condensed into a five- or 10-minute presentation that conveys the company’s proposition to customers and investors clearly.
SETsquared’s two-day Entrepreneurship Programme provides the ideal platform to test your business ideas, research your potential market and ultimately work out if you’ve got a financially viable business. It’s only a two-day programme, meaning that your time away from the office is minimal and you will be surrounded by like-minded entrepreneurs. With fully-funded places on offer – can you afford not to give it a try?
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