The Five Toughest Challenges for Startup Companies - Part One

Starting a company is one of the most difficult things anyone can undertake.  Having started several companies, I'd like to put forth what I've found to be the most difficult challenges. 

Here's Part One:

I.  Getting Started -- Everyone has ideas, dreams and visions about how the world could be a better place in both big and small ways -- a new product, a new service, a new way of doing things.  But most ideas are not pursued for a number of reasons -- no time, no money, never done it before. 

But mostly, I believe the reason they aren't pursued is that people are either "comfortable enough" with their status quo or they are not natural risk takers.  The risk to reward ratio is too high for them to take action.

How many times have you had what you thought was a great idea, you ran it past a few friends who may loved it (or at least told you they did), but then you let it die -- only to stand on the sidelines, watching someone else who came up with a similar idea and made it a success?  If you're like me, the answer is 'too many times'.  Was it laziness?  Lack of confidence?  Fear?  Or is life just fine the way it is? 

Chances are that the other person who ran with the idea wasn't any brighter than you -- she just decided that the idea was too important, too powerful and too compelling to let it slide -- and she went for it with a 'no turning back' commitment and sense of purpose.

Being a successful entrepreneur, first and foremost, involves having a strong, inner core belief in your idea and a passionate, undying willingness to pursue it.  If you have this, then it's a simple matter of taking the first step.  That first step doesn't have to be 'quit my day job' -- in fact, I strongly recommend against that in the early stages.  It could be a simple as writing down your idea and reviewing it with some friends.  I'm amazed at how many people have what I consider to be very good ideas, but they've never even taken the time to write them down. 

Are you serious enough to take this basic first step?  If not, move on, get in your car, sit down dispassionately in your cubicle and read your e-mails.

In my experience, once you capture your somewhat vague notions and put them in writing, three things will happen: 

One, your idea will become clearer and more well-defined; 

Two, you will think of a lot of features, functions, markets, opportunities that you haven't before -- and you may throw some less than good aspects of your idea out the window; and

Three, you will have taken your first step -- and you'll start building inner momentum and confidence in your ability to turn your dream into a reality.  You'll start to visualize many good people enjoying your product or service.  That's the key.

But the simple tautology is this:  The best way to get started is --(drum roll) Get Started. 

It also means making a commitment.  Your friends and family will call you crazy, or if they're polite, they'll laugh nervously or quickly change the subject.  If they do engage, they may point to many reasons why this hasn't been done before or why it can't be done.  Or they'll call it a great idea and hope that you shut up.

Treat all that as rocket fuel for your commitment -- and keep this quote firmly in mind and close at hand:

“Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative and creation, there is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, Providence moves too.

A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents, meetings and material assistance, which no man could have dreamed would have come his way.”

Johann von Goethe

Does that seem fantastic to you?  It isn't.  I have experienced this myself, and I will tell you that most successful entrepreneurs will say the same thing -- maybe not in those words, but the essence of the message is the same.

Consumer Products -- Where's the Growth?

A recent report from PWC, cited in Consumer Goods Technology, notes sharply lower growth projections for the next 12 months from 59 "large consumer products businesses".

Like everyone else relying directly on consumer optimism and retail sales, this is  bad news.

The good news, according to the article, is that companies are seeking growth from international sales, but even that is waning, as the effects of the US economic slowdown take effect on the global stage.

Focusing on the US Market, one of the areas of growth most overlooked is what consumer product companies typically call "Alternate Channels" or "Special Markets".  What this means, in reality, is sales that don't come through the Grocery, Mass or Drug channels -- or, for short, non-Wal-Mart sales.  The alternate channels include, for example,

• Hotel Gift Shops and Pantries
• Campgrounds and other Outdoor Retailers, such as RV Parks, Marinas and Golf Courses
• Community Pharmacies
• School Fund-raising Programs
• Small format retailers, such as independently owned and operated convenience stores.

A number of consumer products companies looking for growth, including Kraft, Pepsi and Nestle, are keyed in on these markets in a big way.  This is a $50B market -- and the aggressive companies are anxious for an unfair share of this market.  Unfortunately, getting to these small, individual businesses is no easy task.  Imagine, for example, sending a rep out to meet with an individual Marriott Courtyard or a KOA.

My own company, Tradavo, small today, but growing rapidly, is working both sides of these channels -- we enable small business and retailers to purchase products from a variety of consumer products companies, while giving those companies a very cost-effective way to target and promote new and existing products to these retailers.

Of course, the direct impact we'll have on the top line of a major consumer products company is small, but the brand impact -- the "ripple effect" of consumers buying in our channels is felt very immediately in traditional retail, where the needle can indeed be moved.

For consumer product companies, ignoring these channels represents a risk -- especially where growth over the next 12 months will be hard to find.

Further to the PR Question

Reinforcing the point made and covered in my previous blog entry on this subject, PR for Startups, Seth Godin makes a few more interesting points in this post.

His main theme is that startups, or even companies at later stages that are 'ready for their closeup', don't need to count on a large multi-media splash for their success.  Seth references some household brands that never went that route, including,

Starbucks, Apple, Nike, Harry Potter, Google, William Morris, The DaVinci Code, Wikipedia, Snapple, Geico, Linux, Firefox and yes, Microsoft

People and companies love good publicity -- it wasn't too long ago that 'clipping services' were popular.  These paid-for services were provided by firms that would scour the print media for references to your company and products, compile them, and send them on in a big envelope.  But for the vanity factor (and the big scrapbook of clips in the lobby), I can't imagine the utility of these services when any old search engine will do just fine.

So, it's not unreasonable to think that getting great coverage of a company or product launch is essential to success.  However, that's also last century thinking.  PR can help, and help in big ways.  But it's far more important to realize that the people you should be spending time and treasure to impress are your customers, not print magazine or newspaper editors.  And with web services, it's far better for users to take a look for themselves, rather than to rely on the considered opinions of editors.

Of course, as we look toward our own launch event at Tradavo in the coming months, I may regret this post.  But probably not -- the less coverage we get, the harder we'll need to work to build a groundswell of excitement in our user and prospect base.