You have an idea – an idea you think might translate into a successful business. But have you asked all the right questions to ensure it’s a success? Will your business appeal to customers and maybe even disrupt a stalling industry? Here are my five rules for starting a disruptive new business.
Rule 1 — Question everything
From Ford to Google, successful businesses are often disruptive businesses. It’s easy to see the power of disruption today – the world’s largest cab firm (Uber) owns no cars, the most popular media company (Facebook) creates no content, and the world’s largest accommodation provider (Airbnb) owns no property. All of these companies took an established business model and turned it on its head.
The secret is to question everything and ask yourself how things could be better. Is there a way to disintermediate and cut out the middlemen? Or can you slash costs by removing something other businesses take for granted? Can you speed up an element that once took days or weeks? Don’t fall into the trap of saying ‘because it’s always been done like that’ – think outside the box and tread your own path.
Rule 2 — Define your USP
By questioning everything you’ll eventually hit upon your unique selling point, something that sets you apart from your competitors. It could be quality of service, speed, price, or something else. But if you can, strive to make it unique.
Rule 3 — Understand the existing market
In order to disrupt, you need to identify what you’re disrupting. A full understanding of the market you’re entering is a must. You’ll need to see exactly what customers want and what they’re trying to achieve, and how existing vendors respond to these needs. What are the problems? What barriers are there to even better performance?
But a word of caution: be wary of asking customers for product development ideas directly. Any number of psychological biases can mean the answers aren’t always a true representation of customer behaviours and intents. But do ask them what their problems are. Solving problems is a great way to become a disruptive business (or just a successful business – and there’s no shame in that!).
Rule 4 — Make sure something works before spending big money on it
Marketing is essential for getting your message out to prospective customers, but try to resist the temptation to splash out on big-budget promotional work before there’s even a sniff of success. I take a test-and-learn strategy to find the optimum approach, using a range of small varied tests targeted at the primary audience.
Rule 5 — Be prepared to work hard
If you’re not outside of your comfort zone, you’re probably not making progress. Starting a business will challenge you, tire you, and no doubt take you on an emotional rollercoaster.
But if you can deal with that, and face the prospect that not everyone will necessarily want to buy your ‘killer’ product or service, then you could be heading for success. Give yourself the best chance with a good helping of resilience, a willingness to learn from failure and the ability to surround yourself with good people.
Improve, improve, improve
Once you’ve won those hard-fought first customers, seek their feedback on every aspect of the customer journey. What can you learn? Can you reduce pain points to improve your service? Could the product be better?
Remember, disruption happens because innovation has stagnated. So go innovate!
Guy Myles is chief executive of financial advice and investment company Flying Colours