A
ll businesses start from the
same point: an idea. It is
what happens to that idea
that determines business success.
According to Entrepreneur
magazine, nearly half of all new
start-ups fail within the first three
years. Beating the odds at start-up
is tough. First and foremost an idea,
no matter how good, must be
combined with entrepreneurial
spirit, defined as the willingness
to take risk. Without entrepreneurial
spirit a great idea might never be
pursued. Not all ideas are good
ones though; it would be a foolish
entrepreneur who rushed a product
to market without careful thought,
research, and detailed planning.
Risk might be inherent in business
enterprise, but successful
entrepreneurs are those who are
not only willing to take risks, but
are also able to manage risk.
Realistic propositions
Having an idea is the first step—
the next hurdle is finance. Some
start-ups require very little capital,
and a few require none at all.
However, many require significant
backing, and most will need to seek
funding at some stage in the
growth process. An entrepreneur
must be able to convince financial
backers that the concept is valid
and that they have the skills and
knowledge to turn the original
concept into a successful business.
It follows that the idea must
be profitable. Sometimes, an idea
may look great on paper, but turn
out to be uncommercial when put
into practice. Determining whether
an idea has potential requires a
study of the competition and the
relevant market. Who is competing
for customers’ time and money?
Are these competitors selling
directly competitive products or
possible substitutes? How are
competitors perceived in the
market? How big is the market?
Most markets are increasingly
global, crowded, and competitive.
Few companies are lucky enough tofind a profitable niche—to succeed,
companies need to do something
different in order to stand out in
the market. The strategy for most
companies is to differentiate; this
means demonstrating to customers
that they offer something that is not
available from competitors—a
Unique or Emotional Selling
Proposition (USP or ESP).
Such attempts to stand out are
everywhere. Every business, and
at every stage of production, from
raw-material extraction to after-
sales service, tries to distinguish
its products or services from all
others. Walk into any bookstore,
for example, and you will see
countless examples of books, often
on the same topic, using design,
style, and even size (large or small)
to stand out from the competition.
Gaining an edge often depends
on one of two things: being first
into a new market niche, or being
different from the competition. For
example, in 1995 eBay was first
into the online auction market,
and has dominated it ever since.
Similarly, Volvo was first to identify
the opportunity for luxury bus sales
in India, and has enjoyed healthy
sales. In contrast, Facebook was by
no means the first social network,
but it is the most successful; its
edge was having a better product.18 INTRODUCTION
The only thing worse
than starting something
and failing ... is not
starting something.
Seth Godin
US entrepreneur (1960 –)