This is a sponsored post from our friends at Key Person of Influence.
Daniel Priestley has interviewed over 2500 entrepreneurs over the last three years about their business ambitions. As he listened, he sometimes had a sinking feeling that he already knew the business was off track and would probably fail.
Here’s the top 16 things that gave him that feeling:
1. You’re only doing it for the money
The business idea is based on some trend you’ve noticed that is making lot’s of money right now. It’s been written up as a big thing, you’ve noticed it and now you’re after it. This is almost like trying to catch a bus that you can see traveling in the right direction… it’s too late. The people who make money from industries that are making money are the ones who got into the industry before it was making money (I hope that made sense).
2. You sell a low cost product and you’re not funded
As soon as someone tells me that their main products sell for $10-$800, I already know the business will be in a “J-curve” and unless the entrepreneur is funded they are unlikely to make it out the other side. The business will often show promising signs in the beginning with people saying they like the product and a few even buying. Later the realization sets in that the $30k a year PA you want to hire requires you to make 57 sales per month just to cover their wage.
3. You’ve never worked in the industry as a fully paid employee
One of the surefire ways to make a successful business is to have worked in an almost identical business to the one you want to start. In addition to all the thing’s you learn, you also spot the key aspects that need to be improved and you develop an understanding of the suppliers and contacts you’ll need. I’ve often said to people who are considering starting a business to go and get a job for 90 days in a similar business (even a menial job); It improves the odds out of sight.
4. You expect people to buy your product
Google relies on sales teams, so does BMW, so does, Rolex and so will your business. Occasionally someone might buy from you, most of the time you will need to go out and make a sale (especially in the beginning). Additionally, if you can’t or won’t go out and sell your product it’s unlikely you will be able to attract, train or retain a salesperson who will do it for you. For your business to work, you will need to go out and do face to face or telephone selling… and it will probably be that way for a while.
5. You’re risk averse
Every business requires you to take risks. A lot of entrepreneurs go backwards before they go forwards. If the idea of putting an untested advertisement on your credit card in order to see what happens, makes you feel uneasy, starting a business is probably not for you.
6. You’re delusional
If your business revolves around “Improving upon what Facebook is doing wrong” or “Taking Google to the next level” or “Being the next Richard Branson” – there’s a very good chance you won’t. More to the point, there’s a very good chance that you won’t be taken seriously. Before you give me the Colonel Saunders Story or the Disney Story, try starting small and getting one thing right, like Facebook, Google and Branson did.
7. You’re bland, boring, same and predictable
If you’re unique selling proposition is based on being slightly better, faster, cheaper or friendlier it probably won’t be enough to make an impact. If you get the feeling that your business is boring, you need to figure out how to make it interesting.
8. You’re working alone
My belief is that the minimum team is two people if you’re pre-revenue and three if you’re post-revenue. Then, ASAP you should get to 4-12 people with $160k+ per person. Business is a team sport and being a solo-preneur is a recipe for unnecessary struggle.
9. You’re not crunching your numbers over and over and over again
Business owners that do well constantly crunch their numbers in their spare time. They construct spreadsheets that allow them to play with price points, costs and margins. When asked, they have a good grip on their actuals and their projections. Those who struggle often can’t tell you things like their break-even point, their gross margin or their cost per lead.
10. You aren’t willing to front your brand
If you say “I don’t want to be known as the face of this business” for any reason, it’s probably not going to take off. Not unless you have a lot of money behind the business. When a new business enters the market, people want to know who’s behind it. If you won’t front your business, you’ll be beaten by the person who will.
11. You can’t generate 1000s of hot leads
Getting one customer is great at first but in reality if the business has a future you’ll need to get 100s of clients. To get 100 clients you’ll need about 300 appointments from about 1000 warm leads. It’s important to know how you’re going to get the leads flowing and keep them flowing.
12. People aren’t clear about what you do and why it’s for them
“Every great business begins as a great pitch” was what Mike Harris told me. He’s built three multi-billion dollar brands, so he should know. If you can’t pitch your business, it’s like having a suitcase full of cash but you can’t open the case; no one know’s or cares what’s inside.
13. People can’t learn about you
These days people learn about you before they buy. They want to know your philosophy, your methods, your story, your case-studies and your ideas for the future. If they can’t learn these things they will go elsewhere. For the learning to happen, people need articles, blogs, videos, podcasts, reports or even a book that you’ve written.
14. You are the product
If this business is all about you, then it’s hard to scale and eventually you will get burned out.
15. People don’t know you exist
My belief is “you are who Google says you are” so at a very basic level people who are searching for you should get consistent, accurate and credible information about you. Beyond that, you must reach out to people and let them know you are there. Ads, cold calls, PR, events, etc. are all part of a healthy business strategy for getting known; spend the money or go broke waiting for the phone to ring.
16. You’re trying to do too many things
Your business can probably get one to three things right over the course of the next five years. Google for all of its hundreds of experiments over 15 years gets very few to become successful money makers – search advertising still represents 96% of its income. If you aren’t focused on one key thing, you’ll probably be average at quite a few things; which is dangerous. Look at the success of Twitter who focussed on a fairly minute and featureless broadcasting tool but dominated that little segment; they are now worth 4x the value of the Royal Mail (UK).
The purpose of this blog is not to be negative, it’s to point out some clear issues that I’ve seen after interviewing thousands of entrepreneurs. I hope that you’re able to look at these 16 potential issues and avoid them before they cause real strife.
About our contributor // Daniel Priestley is a successful entrepreneur, event producer and author of ‘Become a Key Person of Influence’:
Want to learn more?
KPI are running their accredited 8-hour Brand Accelerator event in February 2014 with some of Australia’s most well respected entrepreneurs and industry leaders.
- Melbourne | 7th February
- Sydney | 13th February
- Brisbane | 28th February
As one of their event partners, KPI has offered readers a 40% discount on the retail ticket price, with sale ticket prices starting from $39 for general admission.
Book your ticket for the KPI 8 hour Brand Accelerator | Business Strategy Day.