There’s no such thing as “overnight success” in business. It may seem that way when a relatively unknown company suddenly receives widespread recognition for a successful endeavour, but you don’t see the bumps and scrapes the company endured along the way.
At Spark Centre, our trusted Advisors — experts with lived experience in a wide range of fields like finance, marketing, sales, investment and more — guide our clients through the bumps and scrapes of business to help them achieve success. So who better to speak to how to overcome challenges in business?
We asked six of these incredible Advisors about challenges that many entrepreneurs (or they themselves) have faced and the lessons that can be learned to overcome them.
THE CHALLENGE: I think one of the biggest challenges to business is staying focused on your long-term growth goals at the same time working on your short-term monthly and quarterly revenues.
THE LESSON: I try to get start-ups and early-stage companies to get into the habit of meeting weekly to discuss their sales pipeline. In these meetings, we focus on what business they have recently closed and what business they will be closing over the next 30, 60 and 90 days.
By doing this weekly, they stay focused on and committed to the activities they need to keep the current sales funnel healthy. And meeting your short-term revenue goal eventually stacks up to a successful business quarter and year-end.
THE CHALLENGE: Finding (and keeping) good, productive and happy talent.
THE LESSON: You have to be open and honest with employees, partners and consultants to enable your stakeholders to be the same with you and then you have a much better chance of finding a mutually beneficial work situation. And you have to be very flexible to be able to cast the widest net for gaining access to and retaining top notch stakeholders. As the Rolling Stones said, ‘we all need somebody we can lean on’.
THE CHALLENGE: One of the biggest “corporate” challenges I had was making sure that customers actually used the product. When I was at Dell, we acquired a small tech company that had a fair amount of customers and sales. But as I dug into the numbers to build out their growth plan I realized that 80% of their customers only bought 16 licenses – basically a trial version of the product. After interviewing a number of customers I realized that they had purchased it with the intent of using it but got busy with other IT projects. And this was not cheap stuff – the trial license was $50K, but a customer who adopted it fully could spend many hundreds of thousands to millions of dollars. So we paid for a tech team to visit the clients, install it for them, and train them. It cost us another $15K per client but those clients soon started to use the product and then buy more.
On a personal level, scaling is always harder than you think. My own business started as a “Solopreneur” and as I built expertise, new clients demanded to work with “me”. That makes it very hard to scale, especially when the business is mostly professional services and consulting. But over the last couple of years, I’ve been identifying specific services, tasks, and functions of services that I can decouple from myself. Because of that I’ve been able to scale the amount of work I can do while taking on more clients. I’m almost at the point where it makes sense to hire another “me”.
THE LESSON: From my experience with Dell, customer activation is critical. If the customer doesn’t “get” or understand your product and doesn’t use it, you won’t retain them, and you won’t grow.
From my personal experience, Identifying scaling bottlenecks is critical because they can slow down or stall your progress, just as you start to achieve product-market fit and see demand start to tick up. It can take time to scale up or work through specific bottlenecks – especially if they require hiring and training people, writing software or code, or scaling up manufacturing.
THE CHALLENGE: There is a quote that says most startup founders completely overestimate the interest that customers will have in their product no matter how great or disruptive it is and secondly, they greatly underestimate the amount of time, energy, and resources they will need to make those early sales.
Startups will budget most of their financial resources on building the product and
trying to make it perfect before they have tested the market and try to make sales. They need a substantial budget for marketing, advertising and sales.
THE LESSON: In my experience, once a startup has a product or service idea they need to go out and sell it. Stop building and perfecting the product and instead, get in front of 30 potential customers and see if they would be willing to buy what you are building. Be prepared to spend 80% of your time meeting and talking to potential customers to find out if you have something that people will pay for.
According to the US Patent Office, over 97% of products never make money for their inventors. You may think an idea is great, but it’s having customers willing to buy your product or service that actually validates your business.
THE CHALLENGE: A key challenge all businesses face is delivering a product/service with a sustainable competitive advantage. While company brand, familiarity and reputation play an important role in product acceptance, for a startup, this usually means providing a quantifiable 10X improvement in some product/service characteristic (e.g. performance, fit/form, features, quality, reliability, price etc.).
Given customers’ resistance to change and other barriers to market entry, failing to offer a material competitive advantage leads to a “me too” product with little chance of market traction. For large market opportunities, failure to possess a sustainable competitive advantage will allow well-resourced competitors to simply out-spend you on research and development and/or subsidize below-market product pricing to force you out of business.
THE LESSON: For technology companies, innovation plays a key role in sustainable competitive advantage. Unique, novel intellectual property (IP) development that is protected by patents, non-disclosure agreements and trade secrets is also key. Investing in an appropriate research and engineering infrastructure (e.g. tools, equipment, software, lab etc.) is necessary. Assessing the current “state of the art” through a thorough patent search is required to ensure company IP does not infringe on existing patents. Consider outsourcing non-critical activities. However, careful analysis of financial benefits vs intangible value creation is necessary to ensure core value is not outsourced. For example, if you are a hardware product company, it might be detrimental to outsource all hardware development since retaining in-house hardware expertise is valuable for future product development. Complete and thorough knowledge of your competitors and target market is necessary to formulate company strategy, identity your strengths and weaknesses, and adjust to competitive threats (hopefully with more innovation).
For startups, sustainable competitive advantage is critical. Investors look for it. They search for new disruptive, novel technologies and business models with large market and revenue upside. Customers look for it. Barriers to switching to new and unknown products or companies encourage customers to maintain the status quo. You need it to project market power and beat entrenched competitors.
THE CHALLENGE: Building trust with people, whether with clients or colleagues, takes time. Trust is enhanced through mutual relationships and so networking is extremely important to build those connections.
THE LESSON: Dedicating time to learning about clients, sharing information and being open to learning more about them are all ways of paying value to them. The same is true when it comes to colleagues. Making a conscious effort to learn as much as you can about the people who surround you is the shortest path to building trust.