Tag Archives: competition

What makes a great business idea?

As readers of this blog will know, I work with young people to help them launch their own businesses. Business start-up success is, of course, as much to do with the capabilities of the would-be entrepreneur as the quality of their business idea, but invariably I judge the latter before I know the former.

 

When I first hear a business idea, I subconsciously and unfairly assess it by whether the idea personally appeals to me. My passion for social enterprise, for example, tends to make me more positive about business ambitions that are more than just ‘making money’.

Over the past 20 months I’ve been told about over 100 possible businesses. Beyond my personal interests, what can I conclude about the elements of a potentially good business idea?

Is it a novel idea? If you take the ‘five f’s’ – fashion, food, facial treatments, photography and fitness – out of the frame, there are probably less than 50 other ideas. Of these, few have been particularly different, but two stand out.

The first is a shoe-selling service for people with different sized feet and amputees with only one leg. A young entrepreneur with mild cerebral palsy has feet that are two sizes different meaning she needs to buy two pairs of shoes to get ones that fit properly. She knows how costly this is and wants to solve the problem for herself and others by selling odd size pairs and single shoes.

The second business involves selling pearls in oysters that are then set in jewelry pieces of the customer’s choice. Each oyster (scanned at source to ensure it actually contains a pearl) is opened live on social media, with the owner looking on, creating an excitement which builds as the jewelry piece is created in the following weeks (for supply in the oyster shell?)

What are the start-up costs? Cost is as much about the time as the money it will need upfront. Even techy start-ups – with the right in-house expertise – can launch a MVP (Minimum Viable Product) to test the market without a major financial investment. I’ve written elsewhere about the value of not investing too much time and money in a new venture, making it relatively easier to ‘recover’ if/when the enterprise doesn’t take off. Some argue that a high personal investment makes the entrepreneur work harder to make the business succeed (but it can also make them blind to the dead horse they’re flogging).

What’s the competition? Novelty adds interest and ‘instant appeal’, but the most unusual business ideas may be novel for a very good reason; that others have tried unsuccessfully to make them work. This may be down to timing or location, but the rate with which some restaurants continue to change hands on the same site after successive failures makes me think that many restaurant owners believe they alone can buck the trend.

That said, there is something to be said in favour of starting a business in a crowded marketplace – a coffee shop for example. The number of people already selling coffee confirms there’s widespread demand for the product and/or service. And, to some degree, publicity for just one coffee shop benefits all coffee outlets in the locality. When competition is fierce it’s then ‘just’ a matter of doing better than the others. Like the barbershop in my home town which opened on Sundays when the other four barbers didn’t (now three of them do).

One way to tackle the competition is to go for a niche within the particular business sector – something that, with the advent of cost-effective communication through social media, is now more possible than ever. One young photographer is specialising in photoshoots with new born babies aged 5 to 10 days. The beauty of catching ’em so young is the scope for repeat business with milestone photos.

Is the idea simple to grasp? Business start-up ideas tend to be over-complicated. This is partly a reflection on the muddled thinking of the would-be entrepreneur – buzzing with too many ideas and thinking they have to be firing on all cylinders from day one. But if the product and/or service is not clearly communicated, the business tends to suffer because it expects too much of potential customers to understand the offer – they lose interest and look elsewhere.

It’s almost as if young people think a simple idea makes them sound, er, simple. But in a room full of business ideas of varying complexity, the best idea (on a particular day I’m recalling) was described quite simply in three words – cleaning people’s houses. A great business idea – easily explained, low start-up costs, repeat business practically guaranteed for an affordable quality service, and potential customers almost literally on the doorstep. The same goes for the would-be gardener, dog-walker and ‘man with van’ who knows what s/he is doing.

Does it meet a real need? The clichéd definition of marketing ‘selling things that people don’t need at prices they can’t afford’ is, happily, less common now than when the phrase was first coined. If there’s a genuine need for a product or service – rather than one which is somewhat contrived (for examples, look in one of those problem-solving household gadget catalogues that drop through the letterbox) – so much the better. I also like business ideas that try to meet more than one need (without getting over-complicated). One young entrepreneur came up with an interesting idea to provide pamper sessions for young mums at playgroup locations – so both generations could benefit from some play at the same time.

Sad to report that business hasn’t taken off… yet. Business success is never guaranteed and even the best ideas in competent hands can fail for very good reasons. ‘Back to the drawing board’ is not just for would-be architects.

Further reading:

Business ideas to launch in weeks https://startups.co.uk/10-great-start-up-business-ideas-to-launch-in-weeks/

How to turn an idea into your dream job  https://www.theguardian.com/lifeandstyle/2017/aug/14/how-to-turn-an-idea-into-a-dream-job-by-people-who-have-done-it   

Business ideas for 2018 https://startups.co.uk/business-ideas-2018

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Enterprise essentials – 21 tips from StartUp 2018

It’s January 13th 2018 and hundreds of entrepreneurs both young and old (but mainly young) are gathered in East London to consider anything and everything to do with starting a business. A great day with loads on on offer – so ‘pick and mix’ was the way to go.

The event was also refreshingly free from business bullshit and the hero-worshipping of edgy, sweary entrepreneurs spouting ‘awesome’, ‘cool’ and ‘disruptive’ all day. In no particular order (as they say on Strictly) I picked up the following tips by keeping my ears pinned back during the day.

  1. The recommended maximum number of questions and completion time for market research surveys is 22 questions and seven minutes (after that there’s a severe drop in response rates)
  2. Success in starting  business is largely down to a combination of ideas, skills and persistence, and lot of them – 90% of business start-ups fail within a year, 47% of retail businesses survive for 10 years
  3. Making products is not business, selling products is the business
  4. Focus on your passions, understand the core mission of your new business, be clear why you are different from other similar businesses (the competition)
  5. The difference between masculine and feminine marketing is the difference between ‘hard sell’ and ‘heart sell’
  6. Talk to as many people as possible- share your ideas freely. Unless your product is technical, forget patents (they’re expensive) and concentrate on protecting your trade mark
  7. Get your products out there as soon as possible – stop talking, start selling – just do it!
  8. Write down 50 people you think should know about your new business, decide how you’re going to reach them, and tell them
  9. “Success is selling something that doesn’t come back to people who do” A cliche, but true.
  10. Work hard, be nice to people, do your research, know your customers, be prepared to sacrifice sleep
  11. Start small, never stop learning and the business will grow with you
  12. When you start out in business think about your definition of success – is it making money, making a difference, or what?
  13. Ideas are worthless, execution is everything
  14. In your business pitch start with the pain for your customers
  15. When you start business planning, list all your assumptions and test each one [before someone else asks you awkward questions]
  16. Mentors are great for keeping you on track and keeping you going, particularly at start-up stage
  17. The highs and lows are more extreme when starting your own business [rather than working in someone else’s]
  18. Know your strengths and [particularly] your weaknesses when starting a business
  19. Tough times at start-up stage can be a springboard for great business development
  20. Understand your brand, focus on the core of your mission, follow your passion, talk to lots of people
  21. Starting a business takes three times as long as you think it will

Further support from www.enterprisenation.com and http://www.princes-trust.org.uk/help-for-young-people/support-starting-business

 

Trade secrets – no competition means no market

What they don’t tell you about starting a business

“If you are genuinely ground-breaking there may be no competition, but if you think that then probably you’re either looking at product and not demand, or there is no demand.” Source unknown

When someone says they have a unique business idea, they probably haven’t done enough research. It’s very unlikely that a business idea has not been thought of by someone else, but that’s not a problem in itself.

New entrepreneurs often feel they have to be original to be successful – they take the marketing phrase ‘unique selling point’ literally. But a business set up in a competitive field – a coffee shop for example – at least knows there’s a market for the products on offer.

Coffee shop promotion by the biggest brands is also promotion for coffee retailers everywhere. This means the independents don’t need to establish demand and, while creating brand recognition and winning customers from the big players is harder, creating a better offer than other providers is the same for most start-ups.

How the independents are taking on the chain coffee shops  https://www.theguardian.com/small-business-network/2017/nov/14/move-over-starbucks-the-indie-coffee-shops-battling-it-out-on-the-high-street

For other Trade Secrets in this series, go to https://enterpriseessentials.wordpress.com/category/trade-secrets

Trade secrets – selling at rock bottom prices can be good business

What they don’t tell you about starting a business…

As a rule of thumb for start-up businesses, they should compete on quality not price. A price war with bigger, more established competitors is rarely won. Discounting should only be used with great care and as part of a marketing strategy, not as an act of desperation.

That said, most high street supermarkets discount food products as they come close to their sell-by dates. For them this makes absolute business sense – it reduces food waste (a tick in the corporate social responsibility box) and it costs much less to sell the product at high discount than have the cost of disposing of it themselves. It also generates good word-of-mouth publicity in the locality, and the bargain-hunter may also buy full-priced products while bargain-hunting around the supermarket aisles

The general lesson for entrepreneurs is that, in negotiating terms with suppliers, you may be in a much stronger position than you think; a quoted first price is rarely fixed.

For other Trade Secrets in this series, go to https://enterpriseessentials.wordpress.com/category/trade-secrets

Counting what counts

Last Friday I found myself staring at a quotation on a hotel wall at 7.30am. I was about to enjoy a community breakfast meeting that I attend each month at the same hotel. I’ve seen the quote many times before and I like it almost as much as a full English breakfast, even though it’s widely mis-attributed (including by the hotel) to Albert Einstein.

The correct attribution for ‘Not everything that can be counted counts and not everything that counts can be counted’ appears to be William Bruce Cameron. The first reference found is as recent as 1986, but that was 30 years after Einstein’s death in 1955. That doesn’t matter to me – it’s the insight I value – but I expect it would bother Cameron.

A day after re-admiring the quote, I had its significance confirmed at parkrun – a free timed 5 kilometres run involving over 1 million runners of all ages and abilities across the UK every Saturday morning at 9am, not to mention a vast army of volunteer marshals. The big thing for me about parkrun is (apart from it being independent of government and the 2012 Olympic legacy) that, as is always emphasised, it’s a run not a race.

We’re also told that parkrun is all about community – everyone supporting each other – it’s not about the running. But last Saturday for the first time in four years and 64 parkruns I forgot to take my barcode – essential for getting a time for my run. In my 15 + years of off-road running I’ve only run competitively on three occasions – I run for fun, not to compete with myself or anyone else. So, I was taken aback by my reaction to discovering (after my 5K run) that the time wouldn’t appear on my personal parkrun profile.

I was surprised to be bothered about not being able to get my parkrun time, although I think it was as much annoyance about my own forgetfulness. Then I remembered that William Cameron quote and I realised that what really mattered was running around a beautiful National Trust estate on a sunny Saturday morning in August with 350 lovely parkrunners.

More on measurement https://enterpriseessentials.wordpress.com/2014/05/08/measure-what-matters

Discover parkrun at www.parkrun.org.uk

Risky business

They say that entrepreneurs are risk-takers and it’s fair to say that, like most things in life, it takes an element of personal and/or professional risk to make things happen. This is not to say you can only succeed in business by being reckless, but being willing to get outside your comfort zone is pretty much essential. So, what are the main risks for the entrepreneur starting a new business? Here are six ‘Cs’ to consider:

Can’t do – Much of the talk these days is about a ‘can-do’ attitude – as if positive thinking is enough to make things happen! In reality, self-awareness about what you can’t do is probably more important – so that you can work out how to overcome your shortcomings eg filling skills gaps by training or co-opting someone else.

Competition – With a new business one of the first considerations should be the competition (direct = others doing something similar, indirect = everything that’s going to stop your would-be customers buying your product or service). If there’s no competition, you might ask yourself why not, if there’s loads of competition you need to know why people should choose you. A serious assessment of the competition can reduce the risk of failure – try to learn from other people’s mistakes. That said, I’m a firm believer that you can gain more from cooperation/collaboration than competition.

Cash (flow) – The single biggest reason that businesses fail is running out of cash. There may be lots of money tied up in the business but none available in a liquid form – cash – to cover immediate costs such as salaries and daily expenses. Not for nothing do people like me repeat the quote Turnover is vanity, profit is sanity, but cash is reality.” Keeping a close eye on the money coming in and going out of your business bank account – your cashflow – will reduce the nasty surprises.

Capacity – So your start-up is doing well and you want/ need to grow; the biggest limiting factors at this stage are time and space. You only have so many hours in the day and, if your business involves face-to-face customer services, you’ll need to be looking for people to bring in to help out (in effect, to increase the hours in the day). You may also need more space to accommodate the extra people knocking at your door. If you’re selling products, you’ll likely need extra space for production, storing stock and materials, and maybe for increased packing and distribution.

Contingency – They say that the best business people are not so bright that they keep asking ‘what if?’ all the time. But, it would be bright to do at least some contingency planning around you and your business along the lines of … What if I’m off sick for 4 weeks?  What if my mobile phone or laptop was stolen? What if a massive order comes in next week?

Coordination – Business seems so easy when you see it in terms of ‘selling the right products/services to the right people at the right price’ (whatever we mean by ‘right’). But the problems arise because real life rarely provides an easy route from A to B. Coordination – having a realistic map of your route to a clearly defined destination, and systems for coping if/when things go wrong (breakdown recovery etc), will help make the ride less bumpy.

Ultimately, the best entrepreneurs manage risk rather than letting it stifle progress – they take risks when they can afford to fail. David Robinson, former Chief Officer of Community Links in East London, makes the case for risk-taking. “If we don’t fail it means we’re not taking risks. If we’re not taking risks it means we’re not trying to do things differently, and if we’re not trying to do things differently, why are we here?”

The power of networking

Many years ago I went to a talk in Cambridge by Hilton Catt, co-author of The Power of Networking. I don’t know whether the publicity was ambiguous or what but, it being Cambridge, there was a digital divide within the audience – one half thought it would be about virtual networks, the other half thought it would be about ‘real’ human networks.

I’m pleased to say it was about the power of the face-to-face – in Hilton Catt’s case, for job-hunting. I was unemployed at the time and, while the evening didn’t result in my immediate employment, it reinforced what I’d been told by other jobhunters and confirmed my belief in the benefit of seeking and nurturing contacts for both professional and personal progression.

To this day, I still think you can’t beat close encounters of the personal kind – even in our tech-rich, time-poor working lives – and more so in an age of faux online friends, false news, and reality TV shows that suggest that, in business, someone has to lose for you to win.

Call me old-fashioned, but my experience of working with small business start-ups for more than a decade is that they have far more to gain by sharing their ideas (rather than protecting them) and seeking partners for mutually beneficial relationships. I’m not starry-eyed about collaboration and co-operation (as opposed to competition) but I recommend it daily, and will do so until someone convinces me there’s a better way.

In my day-job I support young people in their efforts to turn business ideas into viable and hopefully sustainable enterprises. Entrepreneurship can be a lonely road to take, so I encourage then to seek out like-minded people – even the competition – for advice about mistakes made, lessons learnt, and what works well.

The young entrepreneurs are constantly astonished and delighted by the helpfulness of others (people who remember when they were starting out maybe) with no expectation of a payback. I also pull in my own personal and professional contacts when I can. In the last six months, I’ve fixed a fence erector up with a van, I’ve arranged a would-be photographer’s night at a music awards ceremony in London as professional snapper’s assistant, I’ve unearthed (pun intended) a garden designer to pass judgement on a newbie designer’s work, and I’ve steered others towards potential collaborators, including business networks.

The day that ‘who you know’ becomes less important than ‘what you know’ and online communications make face-to-face connections unnecessary, I think I’ll pack up and head for the hills (preferably somewhere there’s no broadband).