By Phillip Chichoni
Launching a new enterprise- whether it’s a small business, a new product or a new initiative in an existing enterprise- is a hit or miss game. With almost 80% of all start-up businesses failing, you might wonder whether entrepreneurship is worth the effort. But entrepreneurs don’t give up; they are the ones who are continuously developing new products, creating employment and creating value. They are also creating wealth for themselves that cannot they cannot earn anywhere else, reaping the fruits of taking risks.
The traditional way of business is what is very risky: write a business plan, get funding, assemble a team, introduce a product and start selling as hard as you can. This method wins only once in five attempts. This also applies to existing enterprises when they launch new products or initiate new marketing campaigns.
A new, less risky way of starting a business or new initiative has been seen to be a better alternative than the traditional method. In his bestselling 2011 book, “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses” serial entrepreneur and investor Eric Ries championed the concept that he learned after failing in two new business ventures. Ries’ first venture, Catalyst Recruiting, failed because they did not understand the wants of their target customers and also because they focused too much time and energy on the initial product launch.
The lesson: instead of working forward from the product, work backwards for the results you want. Build a minimal product and get customers’ reaction. Ask for feedback. This will tell you whether customers want the product as it is or inform you of where you must make changes or improvements.
Gauge customer demand before investing a lot in a product. The founder of Zappos (www.zappos.com), the billion dollar internet shoe retailer, started by testing whether customers were ready and willing to buy shoes online. Instead of building a website with a large database of footwear, he took pictures of shoes in local footwear stores and posted them on his website. As customers placed orders, he bought the shoes from the stores and delivered them to buyers. The high demand present gave him the green light to go full scale and expand the business to the giant it is now.
The lean start-up method also applies to your marketing. Not all marketing methods work well, so you need to be constantly testing the results of marketing activities and doing more of what works. At the same time you must be constantly creating new and innovative marketing tactics in order to stay ahead of the competition. This is a subject that will be covered at the BusinessLink Networking breakfast meeting on Wednesday 20 February, 2014. The theme will be “How to turn your business into a lean, mean marketing machine.” Full details will be available in next week’s newsletter as well as on our website from next week. Make sure not to miss it if you wan to accelerate your growth in 2014.
Phillip Chichoni is a business development consultant, trainer and author. His books include Business Planning Simplified and High Impact Low Cost Marketing Strategies for SMEs. You can contact him for all your business plans, company and PBC registration, marketing advice, tax consultancy and accounting, his email is firstname.lastname@example.org or visit http://smebusinesslink.com.