This article first appeared August 11, 2009.
Starting a company can be a lonely, stressful, exhilarating, scary and wonderful adventure. To help guide you through the process, we’ve assembled your very own personal support group: marketing expert Colin Benjamin, accountant Sue Prestney, venture capitalist Doron Ben-Meir, search expect Chris Thomas and lawyer Peter Vitale.
With their help, we’ve put together 10 vows that will assist every entrepreneur who is starting a business.
But these vows aren’t just for start-ups. Just as romantic couples like to renew their marriage vows, it’s a good idea to return to these principals from time to time and renew your start-up vows.
There are all sorts of things you need when you start a business – a business plan, financial projections, a marketing plan. But nothing is more important than your value proposition.
“A value proposition is so important because it is what’s going to fuel your business,” says Doron Ben-Meir, chief executive of venture capital firm Prescient Capital.
It’s not enough to have a great idea, or a great piece of technology or a new invention – you’ve got to have a clear idea of who will actually buy your product or service.
“A simple definition of value proposition is: ‘Why will customers buy your offering?’ It’s not about why you think they need your product,” Ben-Meir says. “The difference between those two is fundamental and unless you can answer that question succinctly, you are not even ready to start.”
He says it’s crucial to test your business proposition by talking with potential customers before you start your business. “Continue to test your product idea until you are satisfied. If you continue to get knock-backs, you’ve got to go back to the drawing board.”
And remember, a value proposition is something that you should return to over and over again as your business grows, to refine, adjust and even entirely recreate.
How well do you know your customers, your competitors and the size of your market? Good market research is a crucial part of business planning, and it’s never more important than when you are starting out.
Colin Benjamin, a marketing expert from independent think-tank Marshall Place, says Google is a great place to be. Start by looking at the broad industry category into which your business fits, then try and figure out the keywords your customers might use to search for your product.
“This will give you a great idea of which companies are in your space,” Benjamin says.
After that, find out the name of the industry association in your space. Check out their member list and try and have a chat to some of the key people out there about the big players in the sector and the prevailing conditions.
Finally, Benjamin says it’s a good idea to check out the media for stories on your sector and potential competitors. “Particularly look at what’s available in terms of the same services under different names.”
Once you’ve got all this info, you can start thinking about drawing up a competitive analysis, a SWOT analysis (strengths, weaknesses, opportunities, threats) and a marketing plan.
Starting a business is scary. There’ll be sleepless nights, panicked phone calls to mentors and investors, and moments where you think that the whole thing just won’t work.
Colin Benjamin’s advice is simple: “Continue to panic. The disasters are already happening and you need to take action to get things sorted out.”
If you’ve got business partners or shareholders or staff, get them panicking too – explain your problem and ask them for advice and solutions. “Encourage them to start helping to reduce your panic,” Benjamin suggests.
To keep panic from becoming a regular occurrence, planning is the key. For example, if it’s money you are worried about, spend time planning your outgoings over a certain period versus your revenue over the same period – if the sums don’t work, you’re going to be eating into your capital or your savings. Not great, but at least if you’ve planned and prepared you can do something about the problem.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
