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5 prerequisites to sustaining a good business idea
Business ideas sound good -- but are they sustainable? The world's most tech-hopeful event kicks off this week -- that would be CES, for those not in the industry. As a tech veteran, I have been to so many of these types of shows over the years, where the floor is chock full of caffeine and confidence, clever demos, looping videos, bubbling marketers and blaring televisions. But with 149,000 attendees and multiple shows within a show, I am again reminded that in the world of startups, even those launching from inside giant companies, that 90% will eventually fail.
Why do initiatives falter? The most basic reasons are because of a market not adequately researched, focus groups not conducted, prices too high, too little margin, partners too late, or the latest and most frequently heard -- the timing/economy was just not right. But sometimes it is because of a few missing basics. Here are my thoughts on five prerequisites for creating a sustainable company -- but I would welcome your suggested additions:
1. Leadership. Some great ideas have floated past me these last few years -- the product will track this, the user will want that, these organizations endorse the need. We are set! Sounds good, but the number one item not on the list is the leader who will capitalize on all of the above. Does this person (one person, no committees) have the track record and ability to attract both staff and investment and convince customers? Have they ever run a company before and grown it from a small x to a large Y revenue? The leader might not be the long-term CEO choice, but has the right skills to get the startup off the ground.
2. Team. It's a rare person who can design a solution, create the marketing, recruit the channels, and sell the product. Yet everyone on the team must be a walking PR advertisement -- boosting confidence of customers and investors that yes, this company has the expertise, that they CAN bring a product to market. Does this eliminate the garage inventor or the sole service inventor from entering the market? No, but unless they have substantial personal resources and are very patient, they may not be able to last long enough to see their idea thrive in the marketplace. Are they willing to be a niche player for years until a market catches up with them? If not, they must have great...
3. Marketing. Engineering and marketing are like the tree and forest cliché -- the tree can fall, but if no one is there to hear it, it didn't happen. The product simply doesn't exist. That means having a clear role-based website (what business or consumer roles are expected to grasp the message?), frequent press releases, adequate and refreshed content, links to others and other sites linking in, social media tools properly used, media resources well understood and good relationships formed. Most important of all, marketers bring feedback to the developers that the product or service idea did/did not resonate with the intended audience. Short of this, projects struggle to exit the pilot stage and eventually money runs out, unless there is also a well-understood...
4. Path to funding. So there is a clever idea, good research, a strong team and great marketing -- all on tap. But before getting too far down the path, does the team have a plan for future funding stages -- past friends and family? Good contacts? Commitment (if set objectives are met), and a schedule of when each of the prospective funders will be needed? If the initial concepts are grant-funded, is there a date planned to exit grant-based pilots and convert to commercial distribution? If not, why not? One of my concerns about emerging markets is the endless grant and pilot syndrome -- this has certainly characterized and slowed the remote health/telehealth monitoring industry -- and may have prevented realistic price pressures to get products to the price they should be.
5. Execution. Last but not least, does everyone do their part of the program, including making sure that the product works as expected and seriously, can the intended user figure out how it should be used? Other than the endless grant cycle syndrome, this is actually the most worrisome of all steps (whether it is chronic disease monitoring, PERS, communication software, hardware, or sensors). If the product cannot work in some known settings, please specify in online or brochure materials. Don't wait for your prospective customer to tell me about it a year later. If you are the reseller, tell them to let the vendor know. An industry that disappoints the end user family, that operates on rumors about non-functional technology, that has entrepreneurs running out of money, going out of business and back to their prior careers -- that can't be good for the future of older adults.