At Forbury Investment Network we have the pleasure of interacting with a large number of early stage businesses. We feel privileged to have the opportunity to interact with founders who are intelligent, passionate and energetic. However, we do also see a number of these individuals succumb to pitfalls which drastically reduce the odds of success for their businesses. Running a business is a necessarily dynamic process, so there are never any clear cut answers. This goes for the four pitfalls discussed below, but at the very least awareness of these issues will dramatically increase chances of success.
In our experience, this is probably one of the most common pitfalls to which entrepreneurs succumb. This goes back to the earlier comment relating to a dynamic approach to building a business. The product or service being brought to market needs to solve a problem for the customer. Its development therefore needs to consider the end user and should incorporate their views, thoughts and opinions in the process. An entrepreneur who sticks to a vision and doesn’t treat the product or service as malleable will end up with something that the market doesn’t want or need.
It is surprising how many entrepreneurs approach us with an uninformed view of the market in which they operate. Competition is an ever existing threat and always present, be it direct or indirect. Stating that your business faces no competition is the fast track to failure. For example, a start-up may not have any direct competition, but if barriers to entry are low and there are indirect competitor operating on the periphery of its market, there is bound to be competition on the horizon. Awareness of such basics will put the business on a surer footing as it looks to dominate its market.
Good idea vs good business
There is a distinct difference between a good idea and a good business. Good ideas are ubiquitous, so translating a good idea into a good business suggests that the ‘secret sauce’ relates to good execution. This point relates back to product-market fit, the process of which helps transition an entrepreneur’s vision from simply a good idea to a good business. Don’t be fooled into thinking a good idea will sell itself; it’s rarely the case that an entrepreneur’s initial vision of a business plan manifests itself into a good business in reality. A dynamic approach is important.
The Three Ts: Team, Technology and Traction. Achieving the combination of the three will likely give the business its best chance of success.
It’s rare that a sole entrepreneur has the skill set and bandwidth to build a truly disruptive business. Any entrepreneur should therefore carefully consider the skills he or she lacks which need to be plugged in the early stages.
Technology refers to the product or service being brought to market.
Traction doesn’t necessarily mean revenue. It simply refers to evidence that there is a market for the product or service and there are sufficient numbers of potential paying customers. This could be in the form of early customer trials, for example. Traction is perhaps the most important of the three Ts; with it, there is a business and the Team/Technology can be refined as needed but without it there is no business.