I believe two of the biggest setbacks a new business can experience are lack of funding to grow and a lack of clarity.
Let’s look at clarity first.
If you don’t know exactly who you serve, and exactly how you’re serving them (and why) then how can you possibly build an outstanding business with a supreme focus on delivery of your product or service? So many business owners make the same mistake when they start out – they rush to incorporate and get the bones of the business set up before they’ve fully developed their offering or done the due diligence market research to support what they ‘think’ the market wants.
It’s one thing to have an idea that you think is brilliant, but it’s quite another to verify that with market data to confirm your target market is actually willing to pay for it what you need to charge to turn a profit.
It comes down to Keith Cunningham’s 3 steps to success:
- Find out what they want
- Go and get that thing
- Give it to your customers!
Alas, a lot of people fail at point 1 and fail to actually find out and verify what their clients truly want. A lot of this is because they look at the surface level of what clients say they want without digging down and revealing what pain their product/service is alleviating. Find out what the market wants and needs, develop your product around that, and then set about delivering to the best of your ability.
There’s a lot to be said for the mantra of ‘start now, get perfect later’ as it’s a great philosophy to overcome procrastination and inaction due to indecisiveness, however, there’s no point in going to all the effort of developing a business around a product/service if no one wants it or is willing to pay any money for it.
Similarly, don’t try and develop an offering that appeals to everyone! The result of trying this tactic (which again is a curse of so many businesses) is that your marketing copy is generalised and fails to connect with your ideal client. There are 67 million people in the UK, and around 300 million people in the USA – you really don’t need to appeal to everyone! Even if you captured 0.01% of each population with your targeted marketing campaigns, that’s still 6,700 people in the UK and 30,000 people in the USA… convert 10% of them and you’ve got yourself a healthy client base of 670 people (UK) and 3,000 people (USA). How many clients do you need per annum? Get clear on this number, and make sure your target market meets those requirements.
The other big issue is lack of funding. It’s particularly difficult to get funding from traditional financial institutions these days, and it seems that the traditional banks want a few ounces of blood and all of your personal assets signed over to them before they’ll even consider an application for funding. The best advice is to work out how you can start your business on a minimal budget whilst still achieving the results you want, and then set about speaking to friends and family to see if you can persuade them to invest in your new business. This should result in much more favourable terms, and more understanding and supportive lenders. There are also grants and business loans available for start-ups which vary from country to country and even region to region so this is also worth exploring if you’re a new business.
Either way, one thing is key – you must do the numbers and make sure you know how much capital you need in order to get your business off the ground BEFORE you start. This should all form part of your business plan, and this document should be used as a sort of road map to success. Preparing a detailed and well thought out business plan will also help you get serious clarity on who you’re business intends to serve, how, and will include the appropriate market data to support the proposed plan. In other words, you should be able to give your business plan to someone else and they should be able to see from reading it whether or not the business makes sense (and this document is key in obtaining any form of funding, either by way of government grant or loan from a friend or family member).
The third and final point I’d like to touch on is having the right support in place by way of a business coach. When I started working with my first coach my business went from £2.2m turnover to £4.5m turnover in just 12 months (with some important insights and lessons along the way). There is no substitute for working with a coach who has already got experience in building businesses and can help you avoid all the expensive mistakes and pitfalls that come from not knowing what you don’t know – if you don’t know what questions to ask, you have no hope of asking them, and this can be very expensive (trust me, I know from personal experience). A great coach will be an investment of thousands, but it will save you hundreds of thousands by doing things right the first time round.