Our company’s clients run the gamut from large muti-nationals to entrepreneurial companies. Although I have to say truly that it’s our large clients that pay the mortgage payment, I love working with startups. They are exciting, on the edge and they haven’t acquired the barnacles that attach to the hull of the older ships. While consulting is an exciting profession, it’s a lot like sailing — for every great sail you get, you have to spend a lot of time scraping the barnacles off the hull.
But as always, I digress….
What I really wanted to share with everyone was a great question that I’m always asked about a new business? It’s this. What’s the first thing you should do when starting a new business? I read this in a Linked In forum that I participate in for entrepreneurs. I saw some of the other answers. They were good things to do. A lawyer suggested that you should incorporate. Another person suggested a business plan. Usual stuff.
I don’t want to criticize these folks, they gave good answers. But it struck me that they had all missed the point. So I went on a rant. Here’s what I said was the first thing that a new business should do:
Before you do anything, you do some research. I mean ANYTHING. Do not develop a business plan, incorporate, or print those snazzy business cards. We have some templates I’d be glad to share which can guide this initial research which is very, very, simple. It doesn’t have to cost a lot. But you want to make sure that there will indeed be customers. I think it was J.P.Morgan who said, I’d rather have a customer than a factory. He was right. He was also rich:-)
Here’s what you do:
– identify a small list of people who you think have a problem that your product or service can solve.
– evolve a basic concept and a simple illustration – just enough to talk about what you are proposing and why it will work – but not too much
– make an appointment to talk to these folks and make sure you let them know you are trying to do research, not sell them anything
– when you have your meeting, make sure you do all the good stuff (look at their web-site, confirm the time you have —) but most important, have good questions to ask and when you ask them, sit down, shut up and listen. Do NOT defend your concept, listen to what the person has to say. Especially look for competition and substitution. (on a private aside, if you come to me with a business idea and say you have no competition, I think you haven’t done your research)
– assemble that research and objectively assess if you have a viable business idea. Can it make money.
Stay organized, keep good notes, think logically, but don’t invest money, resources or any of that until you know you have a prospect of real customers who will pay real money for a solution that you can provide at a reasonable cost.
A couple of reasons why people don’t do this?
– It’s “obvious”
– My idea is so secret that I can’t tell anyone
Give it a rest. It’s not obvious. Nothing is. And frankly, if your great idea is so good that just hearing about it can cause a competitor to take away all of your market — you don’t have a chance in hell. Sooner or later you have to tell someone and when you do, big money or overseas substitutes will swamp you.
Oh yes, one last thing. Don’t sell any of the people you use for research. But ask them if they will give you advice as you move forward. Later you might even ask them if they’d like to be a pilot. If you build big trust with them over time, I’ve even seen people ask for letters to show financiers – not of intent to buy, but of the potential customer’s opinion.
Anyway, that’s what you do first.
Anyway, I put the answer up there and then I started to think that this was not just about new businesses. I’m working for an established company of very smart guys right now and they fell into the same trap with a new product line (maybe with a couple of new product lines). It’s like that old 60’s poster, “suppose you gave a war and nobody came?” Only this one is done with customers.
Great idea. Lots of good conversation. No buyers.
Anybody ever seen this before? I have. Truth be told, I’ve seen it in my own business. We get a good idea, maybe a customer buys something from us, and then we think we have a product on our hands. And before you know it, you are doing a web-site, putting promotional material together, trying to get your processes straight and your delivery capability so that you can deal with the rush of customers – that never arrive.
If you are really big, I guess you can do what doctors do — bury your mistakes. But small or mid-sized companies can’t do this very often or they’ll be the ones that are the subject of the eulogy.
The answer is so simple. Yet so difficult for us to get our head around.
Like I said, the same thing happens to me. As many of you might know. I’ve been in negotiations with another firm for the past few months.
I’ve been through this before, so there’s one thing I watch out for. Merger, sale, re-org — whatever — you have to keep selling and delivering. Yes, you have to do things well, but you can’t take your eye off the customer. Before you know it, you’ll start to think that the internal processes are more important than talking to customers. (Big or small – there’s always an excuse not to talk to customers!)
After 35 years, I’m here to tell you…there is nothing more important that talking to customers. There may be things that are just as important. Delivering on your promises. Staying organized. Paying attention to your people. But you must make time to talk to — not analyze, not email, not send stuff to — but to talk to your customers.
My favourite musician of all time is the now deceased Willie P. Bennett. He had a great song called “Take My Own Advice”. It’s a good thing to do.
Here’s my advice to myself. I think it would work if I was in a small company or a big company. We’re somewhere in the middle right now – we’re not small and we’re not huge. I know it works for us. And here’s what I’m telling myself.
Before you set the machinery in gear. Before you start that web-site. Before you have that strategic offsite. And above all, BEFORE you try to sell them something. whatever — pick up the phone and call a customer. Ask them how it’s going. Then sit down, shut up and listen.
Thanks to the person who posted that Linked In question. And thanks to Willie for continuing to give me good advice. Oh, and thanks to you for reading this.
As always, I love your comments. Good, bad…let me know what you think.