This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in June 2015 and is posted here by their kind permission
Does unique mean it will make millions for you?
You have created an innovation; congratulations. It may be a unique product, a brand new service, a new way of distributing things, a unique business model or a combination of these – but will it fly? Hopefully it will be a success and reward you, but just because it is unique is no guarantee of commercial success. The great innovations are generally those where potential customers immediately see the value, and perceive the value to be higher than the cost. Think of prepaid airtime which opened cell phone use to those who could not afford a contract.
Innovations which struggle to get off the ground are often those where the entrepreneur is passionate about it and believes potential customers should share his or her passion. This is a good way to learn that even great and creative products must be sold. Many wonderful innovations have never been launched or failed when they were introduced.
Preparing to launch
Ask yourself: Is this innovation is in response to a real market need, does the market recognise this need or are they not aware of it yet. If you are in the second category be prepared to spend a lot of time and money convincing people they really have this need.
There are two key requirements for a successful launch of a unique product; reasonable certainty that customers will buy at the proposed price and sufficient money to develop and market the innovation. Please do not ignore the marketing costs. Commercial failure of many innovations stemmed from entrepreneurs who spent all their money on perfecting the product and had nothing left to tell the market about it. Marketing innovations is expensive; the market must be convinced that the innovation works, is cost effective and gives advantages over old ways of doing things. Do not underestimate marketing costs. Continue reading
This article was written by Ed Hatton and first published by Entrepreneur Magazine as a part of the Selling your Business feature in August 2014 see copyright statement at the end of this article
When is the right time to start thinking about selling your business?
The best time to think about selling your business is when you first draft the business plan. This sounds bizarre; entrepreneurs planning a new business are filled with visions of growing the businesses, employing more and more people, branching out. However a key part of business planning should be to record your objective in starting or buying the business. This could be the need to be your own boss, wealth accumulation, social good, desire for power or others. Many entrepreneurs open or buy business with the sole intent of improving its value so that it can be sold at a large profit. Contrast this with others who build businesses in fields that interest them, and the business becomes the sole passion of the entrepreneur. If this business is sold the entrepreneur will have lost their primary interest in life. Restraint of trade is usually applicable to business sales, so the entrepreneur will not be able to start again in the same field.
What happens after?
What happens after the sale? Will you retire, go into a different field, work for charity or mentor young entrepreneurs? Or will you become bored, restless and depressed, with nothing to fill your empty days? You will probably have been working intensely, travelling a lot, taking tough decisions, overcoming difficult problems and suddenly all that goes away. If you have nothing to replace that lifestyle you will need to adjust. Continue reading
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in August 2013 and is posted here by their kind permission
What is the right type of a new business for young people?
A young relative asked me: “If you were 23 what sort of business would you open?” I realised what an interesting question this is. Imagine being 23, with the experience to know what to consider and where the opportunities lie. Thanks for the great question entrepreneur-to-be Jean!
The first answer is that if you want to be business owner you should become one. Starting a business is nowhere near as difficult as people suggest. Even desperately poor and illiterate people open sustainable businesses all over the world without business advice, bank loans or advertising. It is more difficult to launch and develop a business that can grow out of the survival phase to provide employment and value or wealth to the entrepreneur, and if that is your dream choose a business that can grow, as opposed to lifestyle entrepreneur businesses like a photographer.
Be capable of running it
You should be capable of operating the business. At 23 you may lack business experience but business owners need to be able to handle finances, marketing, sales, HR and administration. Don’t choose a very complicated business or one in a highly regulated sector, like food or medical supplies. Choose an area you know or have a passion about. Continue reading
This article was written by Ed Hatton, the Start Up Coach for the South African edition of Entrepreneur magazine, as the My Mentor column published in July 2013 and is posted here by their kind permission
What makes your business the supplier of choice for your customers?
I occasionally ask groups of entrepreneurs why they think their customers buy from them. After an awkward silence some in the group will give answers about product uniqueness, price advantage or better location, or easily copied ones like good quality and better service. At least some entrepreneurs in the group will really not know.
Entrepreneurs who do not know why customers buy take a huge risk of customers drifting away for unknown reasons. The question is even more important for start ups. Anyone who plans to open a business and does not identify clear reasons why customers would buy risks opening a business which will make no sales.
Why customers buy
There is a huge body of research about buyer motivations which is good to study. In my view the most important business differentiators are uniqueness or competitiveness
Uniqueness may mean innovative products or services, but can also be the uniqueness of the business principal. Products like trousers, perfumes, sporting equipment and coffee bars have thrived from being driven by a famous sports or entertainment star. For the average entrepreneur who is not famous or an inventor there are still options to be unique. Businesses which use a unique pricing model will rent when others sell, offer last minute sales at incredible discounts, or develop other pricing innovations. They will not simply sell at lower prices. Continue reading
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in February 2013 and is posted here by their kind permission.
Capitalising on strengths and overcoming problems are essential entrepreneurial abilities
This entrepreneur-to-be has identified her major strengths and weaknesses. She then asks for advice about a significant weakness. This is smart thinking. All too often would-be entrepreneurs simply dive into their dreams without evaluating their talents and skills and then become frustrated when they cannot get start up finance, or attract customers because they lack a vital skill or simply do not understand the complexities of the business they wish to enter.
In this case her strengths of having an eye for trends and understanding the manufacturing process are significant advantages in a business where being the first with a trend is a huge competitive advantage. She worries about her inability to get her ideas on paper, and correctly so. If she cannot overcome this weakness then all the talent for spotting trends cannot be turned into saleable garments. Continue reading