Building an entrepreneurial society

Archive for the month “August, 2014”

Business building should be open ended

In years past the business building process involved putting together a plan with milestones and deadlines.  Often the plan building process took months and was completed before any discussions with potential customers were done.  The entrepreneur stayed tightly within the bounds of the plan forging ahead even when things weren’t working.  If there was outside funding this adherence to the plan was even more strict.  The introduction of a lean approach to business building removed these problems by pushing the plan aside in favour of a learn as you go process.  But many who teach, mentor or incubate start-ups have introduced a new model that reintroduces some of these problems.

Classes on business building and incubator programs or competitions have set time frames with some end project such as a pitch or business plan.  Forced into this time box entrepreneurs are limited in their ability to explore or make course corrections as they become necessary.  Time is further compressed as the teams approach the end date and move from building their business to practising their pitch.  The team will also avoid any changes in direction prior to working on their pitch since the changes may hamper their ability to get the pitch ready.  So we can see that the process itself actually takes away from the likelihood of success for the business.

Business building has to be open ended letting the problem/solution testing and customer discovery process find its course.  The team will usually need to conduct many discussions with potential users before they adequately define the need, the solution that solves the need and the initial user base.  The time it takes to get through these processes can’t be reasonably predicted.  Trying to force closure before the process is completed increases the risk of failure.

The incubators and entrepreneur classes get most of the attention but the truth is most successful companies do not come from these programs.  Very few school projects become sustainable businesses after graduation and incubators tend to work with a very small proportion of start-ups.  There is no evidence to indicate that start-ups coming from incubators have any greater chance of success than they would have on their own.  While we look for short cuts and magic formulas sometimes it is old fashioned hard work that still makes the difference.

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