It is widely known that starting a business is a risky undertaking and carries a high risk of failure. So it is worthwhile considering why this is the case. Studies have shown that many mistakes made at the early development stage were avoidable.
The trouble with startups is that they cannot afford this “learn-as-we-go” approach, so the question is how to avoid costly mistakes? Starting a business unprepared is a fairly chaotic affair and the better option to chaos is structure. One approach is to follow a structured business startup process that will develop the business from the initial idea through each step until it is ready for customers and investors (as we do at New Frontiers).
So where to start? Perhaps you have an idea for a business or you have already started but need to get it more established. The first step must be to see if there is a business in your idea. There are five fundamentals that should be at the heart of your business:
- What issue or unmet need have you identified?
- What solution you intend to provide?
- Who and how many have the issue and will pay you for your solution?
- What business model will deliver optimal profitability?
- What skills are needed to lead, manage and drive forward the new business?
To test the idea and figure out if there is a market for the product or service, we use “market-led innovation” – the concept of getting the eventual customer engaged very early in the startup process, by involving them in the development of the product or service from the very beginning. This approach enables entrepreneurs to build their market intelligence and learn:
- Optimal product/service design
- Value and pricing
- Customer profile and target market
- Route to market
- Competitive advantage
- Marketing collateral
- Sales process and execution
This happens before the first product or service is designed. This approach process de-risks many aspects of the business and ensures there will be a demand when the entrepreneur goes
to market with the first offering. The next step is the creation of a prototype or the Minimum Viable Product – a first version which will address the customer’s problem, with secondary features coming later.
Tony O’Kelly is programme manager for New Frontiers, based at the GMIT Innovation Centre in Galway. Over €54 million has been invested in companies developed through the GMIT Innovation Centres in Galway and Mayo. This has led to the creation of 260 jobs in the region. These companies continue to grow and compete on an international scale.