Learn from the new startups

Proto by Adamr @ freedigitalphotos.net

Remember when you started your business?  Did you have a formal business plan?  Did you keep your plans to yourself until you were ready to launch?  Did you want it to be perfect, with all your ducks in a row before you started?

Guess what, that’s not how it’s done these days.  According to Sean Wise, Assistant Professor of Entrepreneurship at Ryerson University, as small business owners we could benefit and learn by adopting some of the strategies used by today’s startups.

At a recent event, he outlined six ways startups are different today.

1.       Startups share, don’t keep it a secret

In the past, a new startup was hush-hush.  Everything about it was kept secret and under wraps until the owner was ready to launch.

Well, not anymore.  As part of the customer development process, the startup lets the customers try it.  In other words, as Wise said, “they get out of the building” and ask what’s working or not.

2.       Startups fail fast and often

The end product or service doesn’t need to be perfect, and so the start up is quite comfortable testing things out, and through this hypothesis testing learn what to do next.  It’s no coincidence, for example, that Amazon sends suggestions to regular customers.  They’ve tested this strategy and found out what is effective. 

Wise’s advice – Let action not assumptions drive your business.

3.       Startups don’t write business plans

Remember that lengthy document – your business plan - that you sweated over before you started your business?  Well no more.  Instead startups now use a business model canvas to scope out their plans.

Using a white board and post-it notes, the “plan” has a fluidity to it which seems appropriate given how much your initial plans can change when starting out, and later down the road.  Samples of the model can be found at www.businessmodelgeneration.com

4.   Startups get ready, fire and then aim

They don’t try to be perfect, and instead measure the results of their “launch” and adjust according to feedback.

5.   Startups co create with customers

Instead of approaching the traditional sources of funding – banks, venture capitalists, etc… these startups use crowdfunding as a way to get the necessary funds to start up. This process also involves buy-in from their potential customers, creating a better outcome for their end product/service.

6.   Startups are innovative looking at ways to deliver   

Differently

A great example of this innovation, is Netflix.  Instead of going to Blockbuster, picking up a movie, returning it and likely paying the late fees, Netflix came up with the idea of streaming movies and TV series into your home.  You don’t have to go anywhere, and if you want, can binge watch your favourite series for the same price.

Letting go of the need to be perfect seems integral to this new approach to starting a business and it’s a good outlook to have whether you are in startup mode or more seasoned in business.

So often we get hung up on everything being just right before we launch, when reality is, there is always something to learn, change and tweak.

What you would differently if you were starting up now instead of when you did?

Map reading - for the tourist and small business owner

Have you ever been to London, England and used their underground system, the Tube?  When you first look at the map, with its 14 coloured “lines” taking you across the city and beyond, it can be overwhelming.  I chuckled to myself that if you were colour blind, you would really be stuck.

Within each service line, there are junctions when you can change and go into a different direction, but the key is to work out your end destination, and from there work back on which is the best route to use to get there.  And there is never just one perfect way, so if there are problems en route, you can change course, go to another station and attack your journey from a different direction.

It is actually a very efficient system, and with a day pass, we were able to hop on and off, depending on where we wanted to go.  The trains are pretty frequent and if your plans changed, you just go on another route, which is what we did because we also walked a lot around the city and would end up having to find the nearest station and travelling from there.

All very nice, you may be thinking, glad you enjoyed your trip to London, but what has this got to do with me?  Well actually I see a straight correlation to starting and running a business.  There’s no one route to success, some of you may be on the fast lane, taking the most direct and shortest route, while others get sidetracked or take a more convoluted path to get there.  Sometimes we hit on roadblocks, but as we found with the Underground, you just “recalculate” your route and make the necessary changes.

The underlying key is that you have a plan to start with, where you have documented what you want to do and how you plan to get there.  Knowing what you want to achieve, makes it much easier to determine if you’ve actually got there or not.  Otherwise, just as the first inspection of the Underground map can seem overwhelming, so too can be starting a business without some sense of where you want to go.

Somehow getting off at the wrong station or taking a wrong turn in your business, is less scary, because you know there are alternate routes to get there and you can still reach your final destination, which may well change as your business evolves.

Just as the map you are given at the Underground is pocket-sized so it is easy to take with you, so too can your business plan be compact.  It doesn’t have to be a 150-page document.  In fact there are books out there promoting the one-page business plan, which still demand the same due diligence and thought process as a more formal plan you might do for the bank, for example, but mean that you are more likely to check in and see if you are on track.

Whether you are travelling or growing your business, it helps to know where you are going and if you are headed in the right direction. What you don’t want is to get lost – be it in London or in life. Take time to make a map for yourself.

QUICK ASSUMPTIONS

Have you ever noticed how some words take on a whole meaning of their own? How we can get the wrong end of the stick by making quick assumptions?

For example, much is written these days about social media and if you just latch on to the word social you could assume, wrongly in my view, that it was just about making friends and being social, rather than being about business and involve work.

When I worked in government I reported to someone who didn’t like the word play with regards to children – it sounded too frivolous to him – so we had to change all the wording in documents to read knowledge-based activities. Given that children learn through play this wasn’t far off the mark, but why make it so complicated and what was wrong with saying it as it is?

More recently, I’ve come across the book The One Page Business Plan which my Me Inc participants asked me to include in the program. Now this is a useful book and it does walk you through the process, but the words one-page do imply a quick fix, an easy task. That you can boil down your plans to one page, actually requires a lot of work. You still have to go through the research, do your homework and think through what you actually want to achieve. The fact that you can capture it on one page is the bonus, but without doing the work required to get there, it’s a waste of paper.

We live in a world that wants instant fixes, that makes quick assumptions and judgments, and sometimes, we just have to slow down, and do it the old-fashioned way –one step at a time.

PLANNING FOR SUCCESS

With hours to kill waiting for my plane at Manchester airport, I bought a few books, one of which was Common Sense Rules: What you really need to know about business by Deborah Meaden. Now Meaden is the UK’s version of Arlene Dickinson on their Dragon’s Den, and from reading her book, I would conclude she is one smart, tough cookie, who has earned a reputation for her straight-talking, no-nonsense approach.

She also raises some important points on making the pitch and getting investors onboard. Just as the title of her book conveys, much of it is common sense. Yet we seem to forget that in our passion to market our business idea.

She observes that entrepreneurs rarely give would-be investors enough information to persuade them to part with their hard-earned money. As she says “today, more than ever, an entrepreneur has to present some pretty compelling reasons for an investor to part with cash, which means presenting a rock-solid pitch as well as some convincing numbers.”

She encourages entrepreneurs to think carefully about how they contact potential investors and what they send by way of introduction. Do your homework and find out who actually makes the investment decisions at a company, she suggests.

Rarely do people get their business plans right, she shares. They either do not include enough information or they don’t include the right information, or it becomes a lengthy document sharing minutia that is of no interest to an investor.

Before ever approaching a potential investor, the business plan needs to be in place. It should be a simple, step-by-step document outlining timescales and milestones, what has to be done in the run up to the launch and what it is all going to cost. What investors, like Meaden, are looking for is something that “outlines in a punchy way what the business is all about, where it is going and what it needs to get there.”

As Meaden concludes, having a business plan is not just for raising money, it keeps you on track and makes you think through all the different aspects of running your business – competition, marketing, financial, etc…

Do you have one? Even if you have been in business for several years, it is not too late to start. You might be surprised at how the process makes you focus and gives you the tools and confidence to succeed.

(You can find business plan templates at www.bdc.ca)

NAVIGATING YOUR WAY TO SUCCESS

This morning we had fun and games with the GPS in my car. I am not used to it, so thought I would test it when I was going on a trip when I knew where I was going.

This GPS machine is single-minded, unlike other GPS systems where the voice will say re-calculating the route, this one was stuck on one route to reach our destination and I didn’t want to go that way. So at every turn, it was trying to get me to turn around and follow directions. Quite irritating actually.

But it made me think of what it is like when you start a business and need to be flexible. There’s no one route to success, and for some of us, we’ve made some detours on the way. We need the GPS that will recalculate the route and allow for us to make mistakes, take the wrong turning but still end up at the desired destination.

There’s mixed views on whether you need a business plan to successfully launch a business. I see it like a big journey – few of us would set off on an exciting trip across Canada say, without first checking a map. So why would you set off on a business venture without doing the same.

I’m not saying you have to have a 80-page document, but when you put your goals down on paper, do some homework and give some thought to how you are going to build your business, you give yourself a head start on reaching your destination.

What do you think?