Being struck by a brilliant business idea can be hugely exciting; actually getting the idea off the ground – less so. Even startup founders with original and interesting business ideas can be tripped up by a range of pitfalls that means their project ends up derailed.
But how to fast track an idea from the incubation stage into a million dollar business? Techworld spoke to two seasoned entrepreneurs who have both worked with startup founders. Here are some of their best bits of advice.
Have a good business idea
Simple, right? One of the foremost requirements to becoming a successful business is having an idea that can both appeal to (at least a portion of) the general public and offers an obvious way of making money. Try not to get caught up with idealistic visions, think about the unsexy stuff too – how you’ll scale, how you’ll monetise.
“I think it makes a lot of sense for companies to think about it as a business first because in the market overall what I see is that people are building a solution that’s looking for a problem, rather than coming up with a solution for an actual problem,” says Reijo Pold, director at BGTA, an accelerator for tech companies from the UK, the EU and the US in China.
He advises that startup founders think through the viability of their idea as a business proposition first and foremost: “It needs to be a business and not just a tagline like ‘AI machine learning’ or some of these soundbites that are thrown around.”
Communicate the idea well
How much traction your initial idea gets is down to how well you can communicate it to potential investors and members of the public alike.
“While pitching for advancement it’s really important that companies have a clear concise pitch and documentations to back it up,” says Pold. “There’s a huge difference between companies who have trained and have a polished up process and companies which, while they may have a very good product or a company behind them, can’t communicate it in a concise way.”
Understand your market
The ying to any great business idea’s yang should be a conceptualisation of who exactly is the imagined ‘market’ for the business. And one of the biggest mistakes new founders can make, according to the experts, is misunderstanding the size of or other details about the market for their idea.
“People might find a really good idea for a great product that some people will like, but once they actually get it out there they realise those people in the world are 1,000 not 10 million, and you need a much bigger number to build a business,” says Rob O’Donovan, co-founder and CEO of CharlieHR, an HR platform for small businesses. Therefore, O’Donovan says that running the numbers on a prospective business idea is vital.
Try to do extensive market research in the area you’d like to launch in, as well as studying your future competitors and how you can differentiate your business from theirs. Conducting consumer research such as feedback sessions can also be useful when refining your business idea. Pouring money and time into a project only to discover at the end of it that it’s not quite right for the consumer market can be a colossal waste of effort.
Some of the most successful founders have worked in the areas they wish to build a business in. This gained them a greater understanding of these industries and what would work. Of course, this doesn’t always have to be the case, especially with consumer-facing products or services, but if you don’t have much direct experience of the industry you want to launch in, it may be beneficial to reach out to advisors from these industries.
Surround yourself with the right people
While this one may seem obvious, in practice it can be more tricky. The people you surround yourself with in your personal life may not always be the people best suited to carry a business idea forward. Getting on well with people at the startup stage is important, but their skills in business and what they can contribute to the startup is more so.
To avoid merely hiring your friends, O’Donovan has advice on how to be more objective.
“It’s important to really define the behaviours in the people that you’re looking for,” he says, pointing out that although most people stress the importance of a great team, it’s hard to know what this actually looks like. “Some people think ‘great’ is about particular skills, or particular experiences, or sometimes characteristics. We’ve really honed in on this idea of behaviours – so what does it look like when people are really awesome in an organisation? How do they behave?
“It’s understanding what those are and explaining them really clearly. You can then look to hire people that exhibit those behaviours.”
What might these behaviours look like? “Whether they give energy to situations, is a really important behaviour. They’ll behave in a way that excites people and inspires people, not in a way that sucks energy from the room,” says O’Donovan. He says looking for people that thrive in situations which make them uncomfortable can imply they are happy to be in situations that they’re uncertain about.
Try to look into the future and decide what kind of environment you would want your company to have. “It’s not so much statistics but really thinking about what kind of a culture you want to build, and then really thinking on top of that, about what do people look like when that culture exists,” says O’Donovan. The people you hire at the early stages can define how your company evolves so be careful about who you bring on.
Look for the right funding
Some startups with an idea for a popular consumer product may seek out funding through crowdsourcing, some may seek angel investing and some, more mature startups may instead seek funding from venture capitalists. It is important to keep in mind however that funding from the latter is usually tied to stringent expectations about high rates of growth and returns.
In the early stages especially, it can be beneficial to access investment from a source that you are aligned with in terms of business aims.
“Strategic investment is someone who is vertical focused – whatever vertical or industry that you come from,” says Pold. “Now that vertical focus investor, they may have one corporation who they’re really well in touch with and who they’re on a very friendly basis, say or who they kind of sweet deal with.
“What that means is they can then not only invest but also give the startup founder a commercial contract, which means that the technology will be provided to that big corporation, which means that instantly, not only do they have capital but they also have massive sales channels, which is very useful to help them along their way,” says Pold.
Read next: How to fund your startup
It’s rare – perhaps even impossible – that a startup idea will run smoothly from inception to fruition. It’s inevitable that you will hit stumbling blocks along the way, but it’s how you react to these that’s important. O’Donovan makes the point that how a startup handles problems along the way can be the difference between success and failure.
“The only thing you can be 100% certain about is that you’re wrong,” says O’Donovan, describing receiving this advice when putting a financial plan together for a previous business endeavour. His advisor told him that the only thing he could be sure of was that it was wrong, and it was just a matter of how wrong, and how he reacted to this that mattered.
“How do you respond?” he says. “I think this a really good framing to realise that it isn’t about creating plans and following them through to execution, it’s about creating plans as a framework around how to think about the problem you’re trying to solve, and then ‘what happens when you plan isn’t right?'”
And this problem can afflict entrepreneurs from every background. In fact, the more certain you are right, sometimes the hardest you will fail. “Sometimes very talented people who are very clever really struggle with that,” says O’Donovan. “Because they’ve been through school and university basically getting everything right – because they’ve been studying stuff that’s black and white – and then suddenly they’re in a situation where what they thought turns out to be wrong and it’s not a very familiar thing for them.”
To avoid problems like this, it’s again helpful to be surrounded by the right people.
“Anywhere that you see a company die, it tends to be in my view, from a culture issue,” says O’Donovan. “If you have a really strong, really adaptable, high performance culture and business, you just tend to find a solution. For example, for the original idea that they launched with, maybe it turns out that the market’s too small, or they can’t develop the technology that they believed they could. But if you’ve got the right people, you tend to find that they can find another opportunity somewhere else.”