John Bradberry, the author of “6 Secrets to Startup Success“, spent over twenty years as a business advisor and strategist, and has improved the performance of more than a thousand leaders and hundreds of teams. Since 1997, he has led an independent consulting practice focused on helping businesses of all sizes elevate performance and achieve healthy growth.
Here is part two of a three-part interview with Bradberry about how passionate entrepreneurs can channel their energies and focus into the right areas, as well as what to avoid, to improve their chances of success.
How can an aspiring entrepreneur improve his or her own readiness to be a business founder?
Anyone can dramatically improve their readiness to launch a business by honestly considering a straightforward set of questions, including: Why do you want to start a business/ What do you hope to achieve? How well prepared are you to launch and build it? How well do your personality, motivation, and expertise match up with the challenges of entrepreneurship? What kinds of investments and sacrifices are your willing and able to make? What knowledge, skills, and resources do you bring to the table, and how do these relate to what the venture will require?
One of the underrated pillars of startup success is the concept of “founder readiness.” On one hand, no one is ever perfectly ready to start a business – there are too many unexpected twists and turns on the startup road. But on the other hand, it’s abundantly clear from my research and experience that any entrepreneur can dramatically improve their odds of startup success by taking an honest look at who they are, what drives them, and what they bring to the table relative to what the business will require.
How can entrepreneurs develop a market orientation?
First, I want to emphasize how critical a market orientation is for a startup. The market is more powerful than any idea or any business model. In the end, it doesn’t matter what an entrepreneur and his or her team thinks of the entrepreneur’s “great” startup idea. What matters is what the market has to say about it. An idea isn’t great until the market says it is – and no amount of passion will overcome that basic truth. Unfortunately, a lot of passionate founders get so wrapped up in their products and services that they lose sight of what customers actually want, and why.
A market orientation is a mindset, a way of seeing and thinking about business. A lot of people think of businesses as products and services, as “stuff” to be sold. But the market-oriented founder views business from the perspective of the customer need being satisfied. In fact, many of the healthiest businesses start with market demand – they identify an unmet need that customers will pay to have addressed – and then build backwards from there. I challenge my clients to build their businesses from the outside-in, rather than taking the very common approach of developing a product and then going out in search of a market.
Market-oriented entrepreneurs are obsessive about striving to understand their markets. They spend time clarifying who their core customers are, why these customers buy, how satisfied they are with service provided, and so on. Are you truly curious about your customer’s experience, and do you understand why they might choose your product over other options?
A market-orientation also means executing on market opportunity, building a sales engine that will generate quality leads, turns leads into qualified prospects, and convert prospects into paying customers/ This takes discipline, focus, and time – but few things are more important to a young business.
How can an aspiring entrepreneur make sure that his or her passion adds up, in dollars and smart business sense terms like feasibility, funding, and profitability?
Good question, because a lot of startup founders are so passionate about their business idea that they fall into a set of predictable traps when it comes to the financial aspects of the business. For instance, they offer sales projections that are far too rosy. They greatly underestimate how much money and time will be required to get the business up and running. As a result, they rarely secure enough funding, and they are trapped with their backs against the wall if things don’t go perfectly according to plan (which is very common).
The solution is taking the time to fully scrutinize your business through an economic lens. I use the notion of a “math story” as a tool to help entrepreneurs get clear about their startup plan and how it translates into economic value. I meet a lot of founders who say that making a lot of money is not their primary reason for starting a business. But I’ve never met an entrepreneur who didn’t care deeply about creating something that is healthy and viable, something that thrives. And you simply can’t achieve that unless your business performs well relative to some basic laws of economics.
Building a compelling math story means subjecting your startup to clear-eyed scrutiny. How will you generate cash? What kinds of profit margins will be generated, after costs? At expected growth rates, how long will it take you to reach a monthly breakeven point – where your business is self-funding? How much capital will you need to safely reach that milestone? What are best-, mid-, and worst-case scenarios and how will you handle each?
For most startups, answering these questions doesn’t require sophisticated financial analysis, but it does require that you go beyond best-case scenarios, that you’re realistic about what is most likely rather than what is hoped for. The result is a clear and realistic game plan and a set of priorities to help you drive your business forward.