Secrets to a Successful Startup. Trevor Blake
customers (and convince them to buy), how your product or service fits in the current marketplace, and how the company will be structured to survive financially until your winning idea is the runaway success that you hope.
To get all this information, you need to talk to people. Writing a business plan requires interviewing or surveying potential customers, particularly those who have used similar products or services recently within the market you will be joining. You want to learn what they like and don’t like, what they value, and what improvements they’d like to see. Customers have given me some of the best ideas for product improvements and marketing campaigns. It also means investigating the competition and evaluating what others do well and do badly, along with figuring out how to distinguish yourself from what already exists.
Social networks and various web-based analytical tools can provide basic data for customer profiling, but by themselves, they rarely provide the deeper insights you need. Your prospective customer is not a set of digital fingerprints. Your customer is a real person with real feelings and opinions that often cannot be expressed appropriately online. When you research prospective customers, your goal is not just to understand the statistical profile of a group but to appreciate the subtle nuances of individual buyers and their thought processes.
What I find odd and disconcerting is that, given all the advice available about this topic, hardly anyone recommends getting away from your desk and actually speaking to people. Many times, I have listened to a business-plan presentation only to learn that the entrepreneur has not bothered to discuss anything with potential customers, distributors, or manufacturers. Many entrepreneurs think that they can understand their customers without actually meeting any in person, but those same entrepreneurs are often unable to answer even the simplest questions with confidence. It shouldn’t be a revolutionary idea, but it almost is: As you research prospective customers, meet and greet real, living-and-breathing human beings.
What people say may surprise you, and what you learn can provide crucial insight, shortcuts, strategies, and inspiration that allow you to adapt to and take advantage of the constantly changing conditions in the marketplace. Ultimately, this reflects one of the “secrets” to success: Successful entrepreneurs adapt to the state of the market and the needs of customers. Yet the ability to adapt and make effective decisions depends on the depth of your knowledge and understanding, which is what you improve through the business-plan process.
For instance, one time I was able to significantly raise the price of a product when I discovered that a larger company had recently increased its price of a product tenfold. I was interviewing a prospective customer who was hopping mad about the larger company’s decision and who vented his feelings throughout our conversation. My product was in the same regulatory field, but specifically targeting a different need. I decided to reprice my product significantly prior to launch with the knowledge that I would not draw the same negative attention, since my product would still be priced below the larger company’s product. Plus, no one would know I had changed the price.
Another time a prospective customer was assessing the product I intended to launch when she commented that she had seen something similar from a local manufacturer. She showed me a sample hidden away in a drawer. With a little detective work, I found a competitor had illegally entered the market despite the patent protection around my invention. Before that company could create too much market damage, I was able to use my strong patent position to get an injunction on their marketing. Eventually they withdrew from the market altogether. Without the business-plan process, I might not have discovered the competitor until much later.
How to Engage Your Stakeholders
Personally, I find the business-plan process the most exciting part of the startup phase because it requires face-to-face discussions about how to turn an idea into a company. To engage with potential customers, I usually go where I know they will be gathered in large numbers. Typically, that will be at a major exhibition running at a convention center, which is also where lots of my potential competition will be showcasing their products and services. I also go to shopping malls and markets where I can conduct surveys with prospective customers. Sometimes I have rented a small exhibit space at a relevant trade show and conducted a market research survey with attendees. People love to talk about themselves and answer survey questions, especially if I offer free coffee, bagels, or some other gift in return. What I learn in these events often takes my business idea in different directions than I would otherwise have envisaged. This sounds “old school,” but it is an essential. There simply is no substitute for a free-flowing conversation between an entrepreneur and a prospective customer.
How do you conduct effective face-to-face research? Do you conduct formal surveys or simply chat to people? How many contacts is enough? There are no rules. I think the right approach really depends on your idea and its related market. I have done all of these things. I find that a generic-style survey with multiple-choice answers results in generic responses. Alternatively, I find that having a casual, friendly chat with a prospective customer using the art of conversation eventually reveals exceptionally deep information about their true feelings. These might not be the feelings I imagined they would have, and I might or might not have thought to include them as an option on a multiple-choice questionnaire, but they are genuine emotionally driven opinions.
People enjoy surveys and quizzes, and the anonymity of the internet can get you more realistic responses through a website or social media group chat than a bland paper survey. That helps, but I feel that to really understand a customer’s perspective requires actual human interaction. In all cases, I believe authenticity wins the day. Typically, I’m up-front with people and explain that I’m planning a company to fix a certain problem, and that I don’t yet know the answers to all the questions. This gains support and fosters camaraderie. People open up more; as humans, most of us have a natural inclination to want to help the underdog succeed.
I can’t say how much information is enough, but I know when my intuition is kicking in and pulling me in a certain direction. When that happens, I have enough data to form a strategy. This is why deepening your intuition is so valuable.
Even if you have started a business already but have avoided going through this process, I recommend you go through it now. It is never too late, and you will never regret making the effort. These conversations teach you so much about how others see you and your business, which is information that gives you the opportunity to mirror, adapt, and improve.
Psychologists say there are three perspectives on ourselves: There is the way we see ourselves, there is the way we think others see us, and then there is the way others actually see us. Only by getting away from our desk and talking face-to-face with our stakeholders can we grasp all three views.
Creating a Business Plan
As I say, the process of researching a business plan is more important than the shape or size of the final document. How you organize and write your plan is less critical than the information you gather through the process.
Many entrepreneurs get bogged down by the idea of the written document. That is not the goal of this whole process. No investor cares if your final document is ten pages or a hundred pages. An investor wants insight. That’s the goal. What makes your winning idea different? What need does it serve? What is the market size? How is the investment going to be used? What are the barriers for competitor entry? Why is it exciting?
A potential manufacturing vendor needs to know about your forecasts for growth. A commercial partner wants to know what benefits your product provides to customers and what they in turn think about your prototype. When vendors ask you for the information they need, you typically pull that data from your plan and give them just what they ask for and no more. The information is important, not the document’s style, format, size, or even structure. No one cares about the document.
Here’s the hard truth: No one but you will ever read the entire business plan. And you will probably only ever read it all through once, on the day it is finished. That’s my experience. Investors will read the executive summary. Vendors might read the sections that apply to their role. Later, after you start your company, you’ll find that much of your plan will become irrelevant as things surprise you and you adapt to survive. Eventually, the business-plan document you spent so many months