One of the first things you learn as a business owner is that there’s no such thing as “set in stone.” Everything’s a moving target, and adapting has to be part of the plan-even when it comes to your business plan itself.
In fact, it’s a good bet that the product or revenue model you originally start with will be worlds away from what you’ll end up doing. If you fail to recognize what needs changing in time, the business can evaporate faster than you might think.
The co-founder and Chairman of TripAdvisor, came to that brink. Two years into operations they found themselves a few months from running out of money and having to shutter the virtual doors. Commitment to their original business plan was the catch: they actually launched TripAdvisor as a travel search engine. They had built a complex algorithm that searched and indexed links to the best online sources of travel information from around the web (Fodor’s, Frommer’s, etc), and the revenue model was to license the technology to other web publishers.
While the product itself was on the mark, nobody was interested in paying for it-in fact, one major travel site thought they should be paying them for its use. So much for their brilliant revenue model!
Running out of funds, they took inventory of what–if anything–about the business was salvageable. There was evidence that the product itself was valuable, as traffic to their own test site, TripAdvisor.com, was steadily increasing. The growing community of users presented an entirely different opportunity: perhaps they could be a consumer facing web business and not a software licensing company.
The real business, it turned out, was morphing into a consumer facing website where they made money sending traffic to booking sites like Expedia, Travelocity, and Orbitz. Those companies were willing to pay for the steady stream of consumer leads. They tested the idea with Expedia and–voila–and had a new revenue model. Fast forward to today and TripAdvisor now has over $650 million in annual sales.
The lesson is clear: don’t be wedded to your first business plan, revenue model, or product. It pays to keep this in mind from the very beginning. In fact when pulling together a new business, I always steer clear of the 20+ page business plan with items like six year projections. It takes a lot of resources to generate that material, and it’s likely to get tossed out the window a year or two after launching.
Much more effective is a short set of powerpoint slides and a good verbal pitch. If you can grab lunch with an angel investor, you need to be able to quickly and effectively communicate the idea and show that there’s adaptability built into it. When you’ve launched, stay committed to testing new avenues.
And when your perfect business plan goes awry (and I assure you that something will not go the way you expected), don’t sweat it. Try something new. In the end you won’t be measured by your failures but only by your victories…
I can’t begin to tell you how thrilled I am to be part of the StartUp Britain family. I attended a StartUp Britain marketing event yesterday, the first in a series of events for this week. I was inspired by so many people. Successful entrepreneurs, entrepreneurs just starting up and aspiring entrepreneurs hungry for information to help them get started. We had incredible speakers from many leading businesses; including Emma Jones StartUp Britain Co-Founder, Lord Young, Intel, Intuit, Facebook, Zoe Jackson from Living a Dream and Naomi Kibble from Rocktails to name just a few.
It’s always fantastic to be in a room filled with positive people. People with a can do attitude – and that are taking steps to create the future they’ve dreamed of. It’s wonderful to see so many people in business and thinking about starting a business, there really has never been a better time.
I will tell you a story about an experience that I had with one of the attendees yesterday. It touched my heart and really hit home at just how incredible the StartUp Britain campaign is, and why I’m involved with it as a local business champion for Richmond.
I have changed the name of the character I spent time with, to protect her identity.
Maria is a Brazilian national who came to the UK 10 years ago to do a PHD. She got married and had two lovely children, a boy and a girl. Maria endured a physically abusive relationship with her husband for a number of years. She lost her self-confidence and self-esteem and very much felt trapped. She finally mustered up the courage to leave him for her own safety and that of her children. She said that she had no other choice. Maria moved in to a women’s refuge and was there for 7 years. She’s finally came out of that recently and is determined to start a business to change not only her own circumstances, but those of her children’s. She wants to lead by example and to be a good role model for her kids. Maria intends to start a business and has an incredible idea. She is so thrilled to be part of StartUp Britain because without it and with very limited funds, her business would remain an idea. Maria is thrilled with the guidance, help and support she has already received from some incredible free events and is now working with a mentor, to help her get the momentum she needs, to help her every step of the way to get her business off the ground.
Maria is an incredible woman, an inspiration. When she told her story i could see in her face just how traumatic it was for her and to this day how it still brings her to tears. She’s not bitter, she’s not stuck focusing on the past, she is very much focused on the future and realises it’s up to her and no one else to create the life she and her kids deserve.
This story and many stories like it are the reasons why I got involved with the StartUp Britain campaign. Thanks to Lord Young, Emma Jones and all of the other co-founders to launch and run such an incredible campaign to encourage, inspire, motivate and support so many people to go in to business for themselves and not be by themselves.
For those of you who are not part of the StartUp Britain family, sign up today and tap in to some of the best entrepreneurial brains in the country.
Here’s to inspiring and promoting enterprise throughout the length and breadth of Britain.
Many entrepreneurs seem to view employee training and development as more optional than essential…a viewpoint that can be costly to both short-term profits and long-term progress.
The primary reason training is considered optional by so many business owners is because it’s viewed more as an expense than an investment. This is completely understandable when you realize that in many companies, training and development aren’t focused on producing a targeted result for the business. As a result, business owners frequently send their people to training courses that seem right and sound good without knowing what to expect in return. But without measurable results, it’s almost impossible to view training as anything more than an expense.
Now contrast that approach to one where training’s viewed as a capital investment with thoughtful consideration as to how you’re going to obtain an acceptable rate of return on your investment. And a good place to start your “thoughtful consideration” is with a needs analysis.
As it relates to training and development, a needs analysis is really an outcome analysis–what do you want out of this training? Ask yourself, “What’s going to change in my business or in the behaviour or performance of my employees as a result of this training that’s going to help my company?” Be forewarned: This exercise requires you to take time to think it through and focus more on your processes than your products.
As you go through this analysis, consider the strengths and weaknesses in your company and try to identify the deficiencies that, when corrected, represent a potential for upside gain in your business. A common area for improvement in many companies is helping supervisors better manage for performance. Many people are promoted into managerial positions because they’re technically good at their jobs, but they aren’t trained as managers to help their subordinates achieve peak performance.
Determining your training and development needs based on targeted results is only the beginning. The next step is to establish a learning dynamic for your company.
In today’s economy, if your business isn’t learning, then you’re going to fall behind. And a business learns as its people learn. Your employees are the ones that produce, refine, protect, deliver and manage your products or services every day, year in, year out. With the rapid pace and international reach of the 21st century marketplace, continual learning is critical to your business’s continued success.
To create a learning culture in your business, begin by clearly communicating your expectation that employees should take the steps necessary to hone their skills to stay on top of their professions or fields of work. Make sure you support their efforts in this area by supplying the resources they need to accomplish this goal. Second, communicate to your employees the specific training needs and targeted results you’ve established as a result of your needs analysis.
Third, provide a sound introduction and orientation to your company’s culture, including your learning culture, to any new employees you hire. This orientation should introduce employees to your company, and provide them with proper training in the successful procedures your company’s developed and learned over time.
Every successful training and development program also includes a component that addresses your current and future leadership needs. At its core, this component must provide for the systematic identification and development of your managers in terms of the leadership style that drives your business and makes it unique and profitable. Have you spent time thoughtfully examining the style of leadership that’s most successful in your environment and that you want to promote? What steps are you taking to develop those important leadership traits in your people?
Financial considerations related to training can be perplexing, but in most cases, the true budgetary impact depends on how well you manage the first three components (needs analysis, learning and leadership). If your training is targeted to specific business results, then you’re more likely to be happy with what you spend on training. But if the training budget isn’t related to specific outcomes, then money is more likely to be spent on courses that have no positive impact on the company.
In many organizations, training budgets are solely a function of whether the company is enjoying an economic upswing or enduring a downturn. In good times, companies tend to spend money on training that’s not significant to the organization, and in bad times, the pendulum swings to the other extreme and training is eliminated altogether. In any economic environment, the training expense should be determined by the targeted business results you want, not other budget-related factors.
To help counter this tendency, sit down and assess your training and development needs once or twice a year to identify your needs and brainstorm how to achieve your desired results effectively and efficiently.
Your employees are your principle business asset. Invest in them thoughtfully and strategically, and you’ll reap rewards that pay off now and for years to come.
If you don’t have a business model; how can you expect to be successful in business. A Business Model is imperative to each and every business.
It shows investors precisely how your business will create a profitable niche in the marketplace.
Why do investors place so much emphasis on business models? What do they mean?
“What’s your business model?” is a common question among investors and entrepreneurs. It’s another way of asking the critical questions: How do you plan to engage the market? How do you plan to make money? Do you plan to sell your product directly or through other channels? Do you plan to provide services or manufacture product? Do you plan to charge users, advertisers, or some other party who gains value from your offering?
But the term “business model” refers to more than how you make money. It also covers where you are positioned in your industry. It answers the questions: How do you fit in? Are you disruptive? Are you creating a new way of doing business?
An entrepreneur might describe his/her business as a new approach to video surveillance, conveying the need, market, and scale of the opportunity—and then jump to a description of his/her technology’s unique intellectual property. That is his/her pitch—but it’s not a description of the business model. You still need to explain exactly how the business will engage the market. What role will it have in the distribution or supply chain? Is the business a surveillance-equipment manufacturer, a supplier of unique intellectual property that is embedded in each camera, or a provider of video surveillance services?
A Critical Choice
Depending on precisely what a business has to offer, you usually have many choices on how you want to engage the market. Know that your choice of business model has profound implications on your rate of revenue, the amount of capital you will need, and the competition you will face.
For example, software companies often have to decide if they want to license their software to enterprises and rely on significant one-time license fees and annual maintenance fees, or “rent” the software on a monthly basis. The licensing model translates into a large amount of revenue per sale; the renting model means smaller fees but can readily reach a broader market. Salesforce.com is renowned for redefining the software-as-service business model.
And sometimes it is the business model itself that is the essence of the breakthrough idea. Take Starbucks. It created an atmosphere for people to enjoy the experience of a special treat. Each outlet felt warm and personal. Customers were invited to order to go, or sit and stay indefinitely. But what made Starbucks a household name? The sheer number of its outlets. Its business model created a stellar retail experience, and then blanketed neighborhoods with that experience. Now consider what the chain would have been if the business model had been to create a unique blend of roasted beans, and sell them in gourmet food shops and retail outlets across the globe. Very different indeed. This is an example of a business model that changed the way we experience coffee.
You may be tempted to choose more than one business model, but you’ll be pushed to pick just one—the model you think is most likely to succeed, and give you and your investors a home run! Know that your choice of business model will affect your capital requirements, competition, resources required, types of skills you’ll need, and just about everything else about your business. Your decision also tests just how clearly and thoroughly you’ve thought about your business.
And of course, it’s one more make-or-break decision you’ll have to make as you lead your company. Make sure you consult with several different advisers, from different parts of the industry you’re in or entering, and then be sure to find at least one trusted adviser from a completely different industry—just to give you some out-of-the-box thinking. Be prepared for constantly conflicting advice. Then model the financials—even if you have to hire someone to help you do this. This exercise will prepare you well for the next steps and for discussions with potential investors and partners.
Do you have a business model in your business? If not, it’s time to implement one ASAP.
Join us for our FREE webinar to go through a step by step guide to building your business model. Click on the link and register for our free webinar now.
The true formula to success, personal or professional, is seldom disclosed. Why? Is it because no-one really wants to acknowledge that there is no quick-fix to success, overnight success, or Success for Dummies guide.
World renowned golf player Gary Player is known for saying: “The more I practice, the luckier I get!”
General Colin Powell shares the same belief. He said: “There are no secrets to success. It is the result of preparation, hard work and learning from failure.”
A bitter pill to swallow? Yes! We don’t want to hear the hard work, perseverance and discipline involved in making one’s life a success. The media has groomed us to believe that success is there for the taking; dream it, envision it, and it is all yours for the taking.
But what is success? How do you measure success? What does success mean to you?
At this time, I’d like to share a well-known story with you about a fisherman in Mexico and his encounter with an investment banker.
An investment banker stood at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The banker complimented the fisherman on the quality of his fish and asked how long it took to catch them.
The fisherman replied, “Only a little while.”
The banker then asked why didn’t he stay out longer and catch more fish?
The fisherman said he had enough to support his family’s immediate needs.
The banker then asked, “But what do you do with the rest of your time?”
The fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life.”
The investor scoffed, “I am an Ivy League MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, and eventually you would have a fleet of fishing boats.
“The investor continued, “And instead of selling your catch to a middleman you would then sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution! You would need to leave this small coastal fishing village and move to Mexico City, then Los Angeles and eventually New York City, where you will run your expanding enterprise.”
The fisherman asked, “But how long will this all take?”
To which the banker replied, “Perhaps 15 to 20 years.”
“But what then?” asked the fisherman.
The banker laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You would make millions!”
“Millions. Okay, then what?” wondered the fisherman.
To which the investment banker replied, “Then you would retire. You could move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, and stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”
Life is not always what you envision it to be… sometimes it can be better! What do you determine as success? What is your ideal life?