4 STEPS TO STARTING A SUCCESSFUL BUSINESS
Updated: Nov 14, 2019
Hey startups we're talking to you. Are you listening? Pay attention and take notes.
1. Find pain.
2. Build or find a solution to the pain (get rid of the pain).
3. Get people to pay more for the solution than it cost you to produce.
4. Repeat and scale.
I've had an impossible career.
I built and sold 4 companies, when everyone told me I couldn't.
And, I've been twice named Top 100 Most Powerful Women in Canada - and not just for my contacts! By the way - colleagues had to sneak the application into the committee because if I had found out I'd been nominated, I would have kiboshed it. I hate awards and award ceremonies...but that's another blog.
People often ask me how I was able to come up with the ideas for the businesses and, as they were in varying industries, how I was able to scale in all these different sectors.
But here's something startups will have a fit over. So take a deep breath and count to 3.
It's not about the idea that makes a company successful, it's about execution. Each and every day execution. Focus, focus, focus. And then more frightening focus.
I have exactly 4 ideas for new businesses each and every day. And I will usually discuss one or two of them with my partners at our strategy session each year. Do all of them bear fruit? NO. Do all of them get picked up as viable endeavors? NO. I have to still research, build a business plan, figure out the competitive and marketing landscape, cost it out, and then sell the idea to my partners - to see if they wish to invest time, effort, money into it. You see ms/mr startup...even with a proven track record, if you're going to inspire someone to invest in you and your idea, then you better back it up with hard numbers, proper intel, and facts... and not just visions of unicorns dancing in your heads.
But here's the raw and bitter truth.
In all the years I've built the businesses I had, and was able to get to a successful exit, not once did I have a super duper detailed business plan, venture capital raises, pitches or anything else on the list of items you're to attend to according to all the VC's out there.
Because those do not matter. Hear that?
Writing up business plans doesn’t matter (though it can help if you pay attention to the points below). Venture capital doesn’t matter. A “great” idea doesn’t matter. Your idea doesn’t have to be brilliant or special or unique or anything. It can be simple and common and done before and that’s totally fine. Some ideas may need a lot of capital and people, but frankly — these are the ideas that won't see the light of day. What happens is that you spend a lot of time pitching, looking for investment, finding partners, etc.
Those businesses get a lot of glory in the news but the truth is they absolutely fail as approaches for the vast majority of people. Especially if it’s your first time. Did you go to Stanford/Berkeley/MIT/Yale (the elite institutes of higher learning) and do you know a bunch of rich people? No? Then ignore all the crazy VC driven silliness. Here’s how to be an entrepreneur the sane way.
1. Find pain.
Pain in this sense is pretty broad. I'm one of the founders of Canada's complete AML and TF compliance system company. Do you know the pain it solves? It solves the pain of having to go research a ton of sites to get some dirt on a client that's being onboarded to a financial company's investment platform. That’s the pain. We sell the best AML checks, holy Toledo the best customer service, and the price is unreasonably reasonable.
Now listen very carefully - we're not selling the features of the system. We're selling the experience. The solution is just the monetization system.
This is not exactly the most important pain in the world. We're not curing cancer, but it is still a pain. And we're solving it, one name at a time into a dB that contains vast amounts of data.
And you know what? Our customers are super happy, not because we gave them some rocket science system - because we didn't. We gave them help. And that took care of the pain.
2. Get rid of the pain.
I want to give a universal piece of advice: Be as lazy as possible here as you can. Working hard at building and finding solutions will be the death of you. If you have to work super hard to solve the problem it means that steps 3 and 4 are going to be even harder. Lazy doesn’t mean doing a horrible job, it means focusing 100% on the stuff that you do best that moves the needle the most.
Don’t think for a minute you have to build everything yourself. Creative partnerships and alliances allow you to spread the effort around. Some of the best solutions out there will be win-win scenarios where you help related businesses and they help you.
You want to focus on your most powerful value-ad for your solution and nothing else. The thing you can do best, provide the most efficiently, the highest impact thing you can find.
For example, here at C&C Advisory we offer niche services that are specific to our customers' needs. We provide precisely what they need and at a price they can afford. It's' not easy. Finding the right pain and the right solution is as much an art as anything else, takes practice, and is failure prone.
In school and other formal institutes of 'being really smart', they teach you about Porter's Generic Strategies for business. In short, those are having a better focus for a client, differentiation, and price superiority.
Avoid having a pricing focus as your key approach. That doesn’t mean ignore pricing entirely, but if being cheaper is your only claim to fame then you are going to have a bad time. Sometimes that’s ok but only if “but I’m cheaper” comes with “and I can scale like mad”. Whatever your solution, being cheaper should be the last on your customer’s list for reasons to buy from you. Be different, be specific, and then making pricing palatable. For the right solution to the right people — they will pay. Which leads us to item 3.
3. Selling the solution for more than it costs you.
This is the only place where a good idea even sort of matters. Being clever at monetization can be real secret sauce for businesses. For instance, there are land developers who open shops — bakeries, bars, etc, and operate them at a loss. It makes no sense until you realize that this revitalization doubles the price of the land those businesses sit on. Then the developer flips the land for millions. Their balance sheet looks like this:
Buy land: -$10,000,000 Create shops: -$2,000,000 Sell land: $20,000,000
All those shops were money losers. Millions down the drain, but it didn’t matter because the monetization wasn’t in the shops but in the culture and perception of being an “up and coming” area. They start the gold rush, buyers rush in to catch the development wave and the developer cashes out.
What pain were they solving? Well, people want to be in the next ‘up and coming’ area. People want to buy housing where they feel property values will seriously appreciate. Once this starts to happen, they get “FOMO” — fear of missing out. Think Vancouver and Toronto. And buying up that newly expensive land means they didn’t feel the pain of missing out. BOOM, money.
4. Repeat and Scale
Depending on the business this step may be optional but for the vast majority of businesses it’s the difference between “hey I made a few bucks doing this thing” and making REAL money.
This step can be divided into two sub-steps:
a) Creating a repeatable system for sales that doesn’t require you.
b) Creating a repeatable system for delivery that doesn’t require you.
In every business you need some way of making the sale and some way of delivering your product or service. And for both of these, being creative can be very helpful. I can’t stress enough that a “great idea for a business” is mostly irrelevant but great ideas for sales and delivery can be very lucrative.
The part about “doesn’t require you” is critical.
Anything that requires you isn’t something that can scale and will cease to repeat the moment you take a vacation, get sick, etc. A real business needs to be stronger than that.
So now how do you start?
First, I would suggest analyzing existing businesses. Is there one you like OK but you think could be a lot better? Where are you unhappy as a customer?
If there is a business out there that is doing well but you think it’s “just ok” then that’s pain that isn’t being dealt with and presents opportunity. A better coffee shop, better hammer, better t-shirt, these are all totally banal but 100% valid businesses. I’m not kidding about the hammer either — Snap On will sell you a $30 hammer and for the right people, it’s worth every penny.
If you have the capital, it’s 100% worth it to try buying an existing business. Even if your purchase doesn’t result in profits, you should think of it as cheap tuition to business building school.
You can build a successful business. And the easiest way to do that is to realize that business is a skillset that can be learned and that almost none of the stuff you hear or see in articles (especially in tech) has anything to do with real success. Real success is just getting those 4 steps right. Not even perfect, good enough will do.
It takes practice, so fail as cheap as you can in time and money to learn.
That means avoid anything fancy, and just work on those 4 steps over and over. Don’t worry at all about a clever business idea, but think and think and think over different sales, delivery, and monetization strategies. That’s where the magic happens. The reason most people fail in business is because they think they need (or think they have) some amazing business idea. It's simply not necessary - and then you'll have time to do this....