Do You Have Start-up Fear? Focus on the “DOME”

D.O.M.E

4 Steps To Avoid Start-up Failure As An Entrepreneur

It’s only natural to feel anxious about your new business endeavours as an entrepreneur or self-starter, especially when you’ve poured every ounce of energy and emotion that you have into it! However, we can’t let our nerves get the better of us! Fear and anxiety are toxic to a business, especially a start-up. For that reason, we’ve worked to develop a simple 4-step plan to help you avoid start-up failure as an entrepreneur!

Demand & Desire

I started my first business at the age of 15. I began by providing Meta tag services for local businesses. For those who are unfamiliar, Meta tags are snippets of text that describe a page’s content, they’re completely invisible, and they provide data about your page to search engines and website visitors, ultimately working to boost your search engine rankings. In the early, to mid-’90s, businesses were keen to get their web presence established and ensure that they ranked among the top results on search engines. In today’s world, we call this SEO, or Search Engine Optimisation – this is something that every business strives for.

How Did I Get Started?

I began by offering businesses a deal to generate 500 words a week and charged a fee based on the number of words that I was generating. Within a span of 4 weeks, I built up a customer-base of 40 businesses and was generating roughly 3000 words per week.

How To Get Started!

Just because you have an idea for a business doesn’t mean that anyone will buy what you are selling. The principles of supply and demand are elementary, but many businesses get this wrong from the start. So, before you go any further, ask yourself this question: 

“Who, besides you, actually wants what you’re selling?”

People should want to have your product or service, and they should be willing to pay for it.

Here’s Your Answer:

Learn about your target market. Figure out if your potential audience needs your solution. This will help you to determine if your business idea is worth the initial investment.

Opportunity & OpEx

Once you determine that there is a demand for your goods or services within your target market, find out how weak or strong that demand actually is. How many units can you sell per month or annually? Knowing the level of demand will help you determine your prices. With high demand, you can set a higher price. If there is low demand, you may need to lower your price a bit to remain competitive.

Size Up Your Opportunity!

Is there big enough potential to scale your business? If so, at what level can you scale?

Through my experiences of pitching business ideas to potential angel investors and venture capitalists, I’ve realised that they all have a few things in common; forget about scaling your business, what is the scale of the opportunity itself? In other words, is this profitable right from the start?

The operational expenditure of running a business is always going to be an integral component that investors and capitalists will use to determine whether or not to contribute financial resources to your venture.

Business Development

When designing your business development plan, pay attention to the right operational levers. From my previous experiences, I have learned that both “BURN & CHURN,” go hand in hand. A business is not simply about how many customers were acquired each month; it is also important to pay attention to how many customers the business managed to retain from the previous month. In the early days of most start-ups, the BURN rate seems to be high, but if the CHURN rate is moving at the same pace, then there is a serious problem.

 Market & Margin

If you’re lucky enough to have a product that people are clamouring for, that’s great! But don’t forget that there’s always more to consider. For starters, who are your competitors? In a perfect world, you hope to a have high demand for whatever you’re offering and just a few vendors competing with you for customers.

Here’s A Short Personal Story For You To Ponder:

I started a trading business globally exporting high-grade metal waste to steel producers. The main USP of my business was to supply products to steel producers globally “just in time,” and in small manageable parcels. At the time, the market for these products was worth billions of dollars. However, what I didn’t account for, was that this was a volume-driven business and margins were paper thin. There was no room for error while fulfilling orders. Any mistakes at all would wipe out your entire margin and in fact, end up costing the seller to pay the buyer to accept the goods.

There are plenty of business owners with the sole purpose of chasing revenue and they are happy to haemorrhage cash.

Admittedly though, making sales both looks and feels good. Everyone’s giving high-fives on a great sale, right? But at the end of the day, sales and revenue could be a hidden trap if you aren’t producing a healthy margin.

Fighting to maintain your margin is your best defence in a tough commercial world and volatile marketplace.

And, one of the important keys to successfully scaling your business is to invest back into it. You can’t do that if you’re short on funds due to a weak margin.

As they say, “Turnover is Vanity, Profit is Sanity, and Cash is Reality.”

Expected Growth & EXIT

Entrepreneurs will often hear investors mention the lack of scalability being the driving force behind their decision to not invest their financial resources into a new business venture.

Why?

Because investors deploy millions of dollars in search of a substantial return on that investment worth twice, three times, or even four times as much! For that very reason, venture capitalists are inclined to focus heavily on the potential for scalability and long-term sustainability within any business. If they don't believe that an idea has a long enough shelf-life, they won’t invest. It’s literally as simple as that!

What Can You Do To Attract Investors?

When you first start out, you might be thinking about your short-term and long-term goals. For instance, revenue, products, services, locations, impacts, and scalability are all important aspects to consider before you even begin to check off your action items. However, having an exit strategy will help you know how to get where you need to be and help guide you towards more sustainable business success.

If you don’t know where you’re going, how can you possibly know when you’ve arrived? An exit strategy helps to define success and provide you with a timetable for charting your progress.

 The takeaway here is that having Start-up Fear is perfectly normal. What is important is how we approach, tackle and convert this Fear. Think of this early stage as building a DOME, along your journey of building you have pace yourself and take breaks to assess. Even when you’re building a business or even while performing a challenging task it’s important to take breaks. The DOME makes for a shelter and a long term foundation for a good successful business going forward.