I have run parts of big businesses and have advised a number of startups during my career.
Starting a business brings with it many challenges. Jess lays out some of the many human challenges involved in his excellent response. He also mentioned - but didn't elaborate on - perhaps the most important thing of all, namely, do you have a viable BUSINESS MODEL. Unless you have a viable business model, no amount of marketing, salesmanship or consulting skills will get your business off the ground.
The best business model framework available today is Alex Osterwalder's Business Model Generation framework http://www.businessmodelgeneration.com/book This was spun out of Osterwalder’s PhD looking at different business models. You can download a very useful 72 page preview setting out the core concepts from http://www.businessmodelgeneration.com/downloads/businessmodelgener... The BMGen framework provides a canvas on which you can sketch out your assumptions about your business model as a prelude to taking them to market to test them.
Startups have a very low rate of success; research shows that a huge 92% of startups fail within the first two years. One of the biggest reasons they fail is, surprise, surprise, that they do not have a viable business model. Steve Blank, with a series of Silicon Valley startups to his credit, has created an approach, the Customer Development Methodology http://www.slideshare.net/Alex.Osterwalder/successful-entrepreneurs... which any startup can use to test their business model. It is based on the deceptively simple idea that there are 'no facts inside the building'; that you need to get out into the market to test your business model assumptions as quickly as possible, to see which ones are right and to fix those that are not.
Blank also teaches entrepreneurship at Stanford B-school. He recently ran a Lean LaunchPad class as an experiment to test a new model of teaching startup entrepreneurship http://steveblank.com/2011/05/10/the-lean-launchpad-at-stanford-–-the-final-presentations/ In the 9 blog posts in the Lean LaunchPad series, Blank set out step-by-step how a number of teams went from startup idea, through testing their business model in the market, to early success, all in a couple of months.
One final observation. I attended the recent Service Design Jam at KISD in Köln. It was great to be able to meet and work with many new design and business people on a common theme. There were many very creative ideas that came out of the 'Superheroes' theme. But over 90% of the ideas had one thing in common; they lacked even a basic business model. No matter how brilliantly creative the ideas were, they would never work in real life. Creativity and design thinking is nothing without a business model to take the ideas generated to market. And a willingness to get out of the building as soon as possible to test the ideas.
Than you very much for such sound advice and the references. Food for thought, definitely...
You touched upon a concept that (as you said) and I came to realise is vital for a business to succeed, and that is the notion of "viable business model".
When I started this thread in 2009 (oh God... time flies) I was actually thinking about setting up a business in Service Design / Design Thinking.
I partnered with a friend and together we started to draft a plan on how to approach clients and how to sell a service which, in itself, is not easy to explain to people new to the realm of Service Design.
After developing an intervention methodology and following several meetings with prospective clients we came to realise that the most difficult part in every meeting was to make the concepts of Design Thinking and Service Design understandable. Specificaly, it was difficult for clients to perceive how those concepts would bring results to them. Even if they had understood the concepts the question was always "Ok, but how would translate that into practical results?"
We worked on the project for almost 9 months and we endend up putting it on hold (clients were not willing to invest at thart particular time, although the feedback we had was very good).It is still on hold.
Not that we don't believe in it, but we found out that actually if there was something missing in our business plan that something was actually a ... viable business plan!
We were so excited with the apparent opportunities "out there" that we forgot to devise a model on how to get hold of those same opportunities.
Another thing had to do with the notion of "Stop talking about it. Start doing it". As we also learned this is, most of the times, easier said than done.
It is not easy to start a business. And one reason is money. Yes we can stop "talking about it" and get out ther and start "doing it", but unless there is a financial safety net, one could never predict when the first pitch will be gained. Businesses need money, and when money runs out businesses close. Simple as. It is even worse when businesses without money try to start.
And finally, you are absolutely right when you go back to the questions laid out by Jess. These are of the utmost importance. One thing I am always suspicious about is when someone tells the story of a one man band that started in a garage and after 6 months became a multi million pound enterprise with 300+ staff on board.
In my opinion the notion of the "lonely entrepreneur" could be dangerous for a business' success. Dealing with everything on your own is demanding and could take us to places that we are not tailored to deal with. Some people could be excelent strategists but are horrible salesmen. We had that problem in our business venture.
This is not to to say that I gave up my idea. On the contrary: I think about it every single day.
What I gave up though, was trying to go to business without a strong business plan. And unfortunately I haven't devised it yet.
I had excelent ideas on how to approach clients, on how to devise strategies.
Unfortunately, I did not have excelent ideas on how to devise a strong business plan for my own business.
I am more than happy to continue this discussion. And wellcome more points of view.
The information you presented to me is excellent. I particularly loved Osterwalder's Business Model Generation.
And as I am based in Newcastle, who knows whether we could meet in one of my visits to London and be able to share some ideas face to face.
Thank you once more, Ricardo
Just spotted this on the Fast Company Design blog:
A New VC Model That Turns Designers, Not Techies, Into Startup CEOs
Right up your street. Perhaps there is hope for design-driven startups after all.
Read the article. I hope this means that eventually mentalities will be changing. Talks of Design, UX Design, Service Design are becoming more frequent when you read stuff about startups...maybe it is a sign.
Ricardo. How is the thing going, have you started to implement anything? How is it going? I myself am very interested in Service Design. An expression wich i didn't know existed since recently. While i didn't knew the expression i am a Comunication Designer, so my work is always about methods, form, functions, targets, etc, and have always applied those principles to all the work i do.
Since i came to know of the expressions UX, Service Design, Design Thinking i can focus a bit more and came to realize i would also love to do my work on these kind of services, so your post quite interested me.