What does it take to launch a successful business?
Did you know that the failure rate of start-ups in Singapore within the first five years is just shy of 50%? 90% don’t even make it past the ten-year mark. Tough odds for any young company!
After watching many good ideas fall short of their potential (and a few misguided ones being taken too far), I’ve made it my mission to help entrepreneurs improve their chances of success.
Based on my experiences of working with and consulting for more than 100 founders and start-ups, a set of six questions started to emerge that every successful entrepreneur should be able answer.
If you’re reading this, you’ve probably already gotten through the first two, but today I’m asking you to go further by thinking through the tough questions that really matter!
#1 What are you going to do? That elusive big idea!
This question is a big and often really exciting one, so it’s no wonder so many people get caught up here. After all, look at the Zuckerbergs of this world. It was all about that big idea!
No doubt, having a disruptive idea is definitely beneficial, but it isn’t necessarily the only thing that matters and it’s not your meal ticket to guaranteed success. Also, just because you don’t have a ground-breaking idea, doesn't mean that you will not be able to launch a great business.
So, before you hold back and never launch because you just can’t come up with that idea, remember, just because something already exists, doesn’t mean it couldn’t be done better or differently.
Once you have your (big) idea, it can be tempting to want to run with it right away and launch as quickly as possible. Before, you do that, go to question 2.
#2. How are you going to do it?
What happens if you launch your company and (surprise!) people actually want to buy what you’re offering? All of a sudden, you’re on the hook to deliver it. You better have a solid plan in place.
Before you make your first sale, consider the practicalities of how you will actually provide your product or service - and whether your proposed approach can handle the volumes you imagine. That could mean anything from optimizing your supply chain, to scaling your production, to hiring employees, to understanding taxes and legislative requirements.
No one said it would be easy. :)
Bear in mind, you don’t have to do it all alone. The unfortunate outcome that falls on many entrepreneurs is that success can lead to burnout. Before you get there, figure out what you really need to do yourself and don’t be afraid to outsource. Above all, work out how much you need to charge and how much you need to sell to outsource those parts. This is where a lot of founders get burnt.
#3 Who is your customer and why do they need what you’re offering?
A CB Insights study found that, among founders of failed start-ups, the top cited cause is a lack of need in the market for their product. If no one cares about what you do, your business won’t succeed - no matter how good your product is! Simple as that.
Before you go out and actually build a product or package up a service, you need to know who you’re doing it for. Once you understand their pains and what they appreciate, you can start solving their problems and adding value.
You may not find that elusive product-market-fit on day one, but that doesn’t mean you shouldn’t try. Research is an incredibly valuable tool, and it doesn’t have to be as expensive or time consuming as you may think. What’s really costly is launching something that no one actually wants or needs...
A side note: if your answer to this question was everyone, you need to stop and pause. Everyone is 7 billion people living on planet earth that all face completely different realities. Are you sure it’s everyone? I hate to break it to you but unless you’re selling air, you’ve probably not thought about your differentiation and positioning enough.
So, before we move on, think about the situations in which your product or service is used and see if you can really picture your target customer in that situation. What are their feelings? What are their challenges? Why are they in this situation? How does your product or service fit into your customer’s life? You will see why really understanding your customer is important in Question 4.
#4 How will you reach those people?
Let’s say you’ve figured out who you want to target… how are you going to actually get those people interested in your offering?
You guessed it: marketing - something many entrepreneurs completely underestimate, because trust me that “free” [insert social media here] page on its own is not going to cut it.
There is no one-size-fits-all solution for marketing. It all completely depends on what you want to achieve and who your target audience is. So, having a really good grasp of what your ideal target customer looks like is crucial.
Beyond that, please get an understanding of how much budget you need to achieve your objectives. If you don’t have enough, realign your expectations or find ways to raise money.
Too many companies invest everything they’ve got in building an app/a website/a product to perfection, only to find they have nothing left for marketing. Marketing needs to be consideration from day one - before you’ve even got a product to sell, because if you don’t have a marketing plan, how are you going to reach your customer? If you don’t reach your customer, how are you going to sell your product – and how will your business survive?
#5 What are your competitors doing?
There are thousands of brands of bottled water out there selling what is more or less the same thing: H20, a commodity that in many places in the world comes out of the tap for almost free. Yet somehow, many brands have been able to create a space for themselves by marketing to different people’s desires - be it luxury, a balanced pH, exotic sourcing, fancy bottles or a celebrity endorsement. In fact, Coca-Cola’s number one revenue driver is bottled water!
The lesson here is that you don’t actually have to completely disrupt anything to be innovative. But you do need to differentiate your offering from every other alternative and have a distinct proposition that your customer values.
#6 Why does it matter?
Owning a business is tough. Like with everything you will have good and bad days. To get through the rough patches, it helps to know why you’re doing this and why it’s all worth it. So, make sure you have a purpose.
Even if you’re not worried about sustaining your own motivation, consider this: purpose-driven companies are actually more likely to succeed. Your purpose matters, not just to you but also to your customers, the businesses that you work with and most importantly: your employees! Because surprise, surprise, making you a millionaire may not be a great motivator to others…
If identifying your purpose isn’t coming to you naturally, think about what need you’re fulfilling, what problem you’re solving and who will benefit from it. This is where you should find your answer.
You might have noticed that these six questions are all interrelated. None of them can stand on their own. They make up a cohesive whole, which - if answered well - should make up the workings of your company.
All of this probably sounds really obvious - and it should be. And yet, surprising as it may be, many entrepreneurs never get past Question #1 and #2. Please, don’t be one of them.
Are you still unsure if entrepreneurship is really for you? Being an entrepreneur can be tough! If you want to see if you’ve got what it takes and learn what you can do to overcome the gaps, why not join our next workshop with WeWork “Is entrepreneurship right for you?” Find out more here.