Setting up and running a start-up is becoming increasingly popular. Talented individuals are eschewing working for someone else, and instead looking to make their fortune by working for themselves. According to Startup Britain there were 581,000 new companies created in 2014, the most on record. And 2015 is expected to be another record-breaking year, with more than 600,000 expected to launch.
For the majority of entrepreneurs the journey begins with a great idea, that light bulb moment.
Many consider the inspiration the biggest challenge – that kernel, that innovation, that’s the heart of a start-up business right? Yes and no. While the idea is important, it’s only half the battle. The other part of this challenge is the actual execution in producing tangible results.
A simple concept inevitably becomes complex in the face of business and market forces. Therefore, the next step is to develop a business model that proves the concept to have genuine potential. And once this has been determined, the entrepreneur, or group of, must gain the necessary resources to execute on the service or product.
As simple as it sounds this triggers five important issues relevant to all start-ups:
Number 1: What to do first?
Typically, a chicken and egg dichotomy is at play. The options are either to go out to market quickly to on-board early users, or take the time to build a robust infrastructure before making the service available to customers. Often times, the market environment impacts this decision.
Take our business, MyCheck. We took the latter route, which was focused on ensuring the scale and security of our infrastructure. This involved integrating our product into 30 different Point-of-Sale solutions worldwide, gaining PCI level 1 certification (the only mobile payments company to achieve this to date), and connecting to the world’s major acquiring banks. This required a great deal of hard work and investment upfront. This was, in our view, essential for a company that needs to be trusted with handling large volumes of payments, and positioned as a global player.
In contrast, there are numerous start-ups that have opted for the former in an effort to validate their idea and model early on. Unfortunately without the right approach this route is prone to failure if the service and product does not live up to the marketing hype.
There are quite a few companies throwing around dubious numbers that supposedly validate their solutions. Be warned – partners and customers will investigate and will not look favorably on unsubstantiated statements and far-fetched claims. And once a start-up’s reputation is called into question it is difficult for such a young company to repair the damage.
Much better to be realistic and build the platform for future success and then grow in-line with market momentum.
Number 2: Where to focus?
One of the biggest concerns for start-ups is a loss of focus. It is easy to be diverted by clients and competitors. Start-ups are naturally eager to flex and accommodate prospects (especially if they are a big name, provide a proof point, and there is a danger that a competitor is waiting to take advantage of any opening) through a deep fear of losing them.
But professional integrity is vital. If these bespoke iterations are not going to help the core product then it is best to push back – unless it is a critical make or break reference point for the business. After all, it’s better to pass up an opportunity while retaining the clients’ respect, than agreeing, stretching the business to the detriment of other opportunities and opening the door to further “additional extras.”
As time passes what is best for all parties involved becomes more apparent, and the temptation to constantly go the extra mile is reined in and only agreed when absolutely necessary.
In terms of competitors, they are often noisy neighbours making bold statements in the press – some fact and some fiction. It is important to observe and study the competition to determine if strategic changes are required. But do not follow them blindly, or blithely. For example, I ran a restaurant in Tel Aviv where a slick new rival opened just across the road. It was a great worry to me but the owner suggested ignoring them and to simply concentrate on our restaurant. He was right. We increased sales and they closed down after just two years.
Ultimately, if you’re always looking over your shoulder, you’ll trip up somewhere on the way.
Number 3: The double sell imperative
When building a business with cutting edge products, customers need convincing of two things—that the company’s service or product is required, and that the whole concept is worthy of consideration. In most instances the customer needs to buy into the overall idea before being convinced that the service or product in question is the best way for them to realise this in their business. In the case of MyCheck it is mobile payments. We’ve had to convince prospective customers about the importance of mobile payments and to then look at selling our own solution.
The first is tougher but thankfully it is getting easier as the benefits of mobile payments are becoming broadly accepted by hospitality and retail industries. If an entrepreneur doesn’t face this double-sell situation then it’s unlikely they are truly working at the bleeding edge of innovation.
Number 4: Always be disruptive
The name of the game is changing the game. A start-up must bring something new and different to the market, with major potential. Incremental gains won’t cut the mustard. It could be something in the background of the business like a fraud management component, rather than something in the front end. Whatever it is, it needs to give the business a clear and differentiated USP to build from.
Nobody wants to be the me-too.
Number 5: Keep the dream alive
Start-ups should listen and not be afraid to make changes as the business grows and adapts. This was and still is the case with MyCheck. We originally chose to launch a consumer facing application but we listened to feedback from customers, advisors and investors and elected to offer a white label service to customers. This was a huge change but essential for our future success. It is what our customers wanted and it has allowed us to invest in innovation rather than build a consumer brand and marketing to Joe public.
The idea, the vision, must remain the objective. But the roadmap may require unexpected changes. Yes, be unwavering in your vision, but do not be afraid to make changes around it and listen to the market.
The ability to adapt just might be the difference between success and failure.
Gill Hazan, managing director for Europe, My Check