Seven top tips to help make your business ‘lucky’
In my last blog I wrote about the need to remain relevant. This week I want to talk about how smart businesses use the market to evolve their business model or do what is commonly referred to as a “pivot”.
Most successful businesses will have multiple pivots before they find the right product/market fit. In fact, almost all of the successful entrepreneurs that I have worked with have ended up with a business model that is significantly different (and better) to the idea they started with.
As the highly successful entrepreneur Steve Blank says, “A start-up is a temporary organisation in search of a scalable, repeatable, profitable business model” and the businesses that succeed are those that build that search capacity into their business planning process.
Think about the business you are in now and compare it the original vision you had for your business. Ask yourself what’s changed and why has it changed? What was the catalyst for the change?
For most business owners it will be money (i.e. the need to make more), competition or “lucking” into a previously unforeseen market opportunity.
To successfully pivot you need to have an open mindset and use a discovery-driven planning process.
Here are my tips to help you successfully pivot and build “luck” into your business:
1. Don’t let passion get in the way of change
Passion is good and is needed to provide the drive and enthusiasm to build a successful business. But blind passion is dangerous. It can make you overprotective of your business idea and blind to oblivious flaws in your business model. To successfully pivot you need to be open to change.
2. Listen and communicate with your customers
Rather than just find out what’s working and you’re doing right, ask what their real needs and problems are. Having an open discussion with them can identify new opportunities you hadn’t previously thought of and uncover where new demand will come from. Engage in a regular feedback loop to research and refine what paying customer needs are and how you can monetise solutions to them.
3. Look externally
In addition to your existing customers, constantly check what potential customer needs and expectations are and whether they are being met. If not, great, another opportunity. If so, how well are your competitors meeting those needs and is there an opportunity to match them better? You might uncover a niche opportunity that’s highly profitable with less competition.
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4. Take advantage of technology
New opportunities can be created by developments in technology. The internet has opened up the opportunity to sell to customers in diverse geographic locations and significantly reduced the cost to reach those markets. Smartphone technology has taken that a step further. What other developments are occurring that can create additional opportunities for your business to access new markets and engage with potential customers before, during and after they buy?
5. Test the waters
If pursuing the new opportunity involves minimal cost to tweak and test the response, then why not see how it goes. There are two ways you can go about this. You can either test it with new customers as a real purchase experience, or test the response using a small group of very good customers who you can ask to act as an advisory board.
You need to choose these people wisely though. They should be people you can absolutely trust to give you honest feedback, who won’t be negatively affected by the proposition of change and an alternative offering.
6. If the water’s fine, take the plunge
If it turns out the new opportunity stacks up better than the original plan, don’t be afraid to pursue it. I’ve seen many business owners who were passionate about an idea that just didn’t go anywhere or took a long time to get off the ground and still required adjustment to meet the needs of their economic customers.
7. Repeat steps one to six above
This process is commonly used by most successful start-ups coming out of Silicon Valley. They’ve built it into their business model to continually stay in tune with the buyer’s needs, identify the opportunities, test and deliver what the market wants and pays for.
Two good reads that provides insights into how they’ve done this are The Startup Owner’s Manual by Steve Blank and The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries.
Australian start-ups can take advantage of building the same process into their businesses.
Marc Peskett is a director of MPR Group, a Melbourne-based business that specialises in providing business advisory, tax, outsourced accounting and grants and funding services, to fast-growing technology and innovation businesses.
MPR Group is holding a full day workshop on April 19 to help business owners develop strategies to stay ahead of the pack. For further information click here.