Have you ever watched one year olds learn to walk? If you have, you are sure to notice a number of similar experiences. While every child learns how to walk in a similar way, each one’s experience is unique as they get up, fall down, get up, and keep trying. What is amazing is their determination, lack of fear, commitment, practice, and continuing efforts to test the situation. That’s the power of positive thinking. As a startup and turnaround business consultant, I constantly hear, read advice, and see comments focused on worries, concerns, caution, in essence, all the old paradigms related to bringing about business success. While some of these perceptions may have validity in certain situations, they’re generally not productive. [Read more…]
Avoiding the Hockey Stick Plan
After counseling over 1,500 clients seeking to start new businesses, it’s troubling so many of them seem possessed with what can be called the Zuckerberg, venture capital, or hockey stick plan to starting a business.
I typically read 3 to 5 startup business plans a week. So many are simply outrageous just because of the projected growth curves.
Everyone thinks they are the next multi-million or billion dollar startup. They find the need to project $15-20 million of revenue in a couple of years to get funding. This was illustrated recently by the response of a client. I asked her the basis of her forecast which showed a sales growth rate of 15-20% per week. When asked about her assumptions she said,
“That’s what the venture capital firms say they want.”
In contrast, many studies of entrepreneurs from IDEO to Malcolm Gladwell contend that slow but steady, multiple product developments, experience, and testing are the best predictors of success. [Read more…]
Pricing – Freemium the Maligned Option?
Pricing for Startups
As everyone in business knows, pricing is key. Pricing of products and services for startups is far more complicated today than even ten years ago. A good pricing strategy can involve new tactics such as freemium, special discounts, variable pricing, etc.
To maximize a company’s marketing efforts a well-thought-through pricing strategy can accelerate segmentation, enhance the value of your branding, maximize opportunities to remain competitive, and generate sustainable profits.
The important concept to keep in mind when considering pricing strategy is to aggressively manage and innovate one’s entire pricing package rather than simply reacting to short-term changes in the market or competitive pressures. [Read more…]
Startup Capital is the End, not the Means, to a Successful Startup Business
Several clients and consultants advocate startup capital as entrepreneurs’ greatest need. Our take on this assessment is they have put the cart before the horse.
Startupconnection argues entrepreneurs need to develop a basic business plan before they worry about raising money. Any source of startup capital will be reluctant to provide access unless one can initially address a number of key questions:
- How much does the venture/business need?
- How and when will funds be paid back?
- Why should anyone have faith to invest money in the venture?
- What is the expected risk and return?
- What are the resources the venture/entrepreneur has or plans to have to support the request?
Demographics – The Elephant in the Closet
Several decades ago, I did a long term forecast of the jeans industry. The key predictor in the study was the number of jean purchases by age group. Specifically, kids under 15 wore nothing but jeans. In contrast, no one over 30 wore jeans. We developed various models to show how the jeans market would explode as these kids grew up and continued to wear jeans. You can see the same phenomena today with the Internet. While adults are struggling to keep up with the changes, kids are being raised on apps, search, videos, you tube, social media, game phones, and other devices that they use and develop. It may be difficult to predict precise outcomes, but we know the nature and direction of these trends in future years. Demographics are typically used to learn more about a population’s characteristics and businesses must rely on demographics as a key method for planning. [Read more…]
Traditional Marketing Categories are Dead
Traditional Marketing Categories are Dead
Kodak, Twinkies, General Motors, American Airlines, Friendly’s Ice Cream and, Filene’s basement are examples of traditionally strong companies that filed for bankruptcy in recent years. There are all kinds of proposed reasons, but, basically, they could not change. I.B.M. and Samsung are probably the best examples of companies that have dramatically changed and are experiencing renewed growth and profitability.
My argument is that rational structures, marketing, and even products are dead or slowly dying. Start-Ups and small businesses have unique opportunities to capitalize on the changes. Larger companies simply refuse to acknowledge the changes and are frequently unable to move fast enough.
For example, I have over 30 years experience in the apparel and textile industries, and we simply could not adapt fast enough to the move to China, which mostly happened in a five year period. In contrast, importers were able to establish organizations with virtually no overhead and market better products with lower prices, greater efficiencies, and lower investment to capture these markets.