A common rule of thumb among investors in start-ups says that of 10 new business, five die within the first year, four are doing OK, and one turns out to be a star.
Running a ‘star’ start-up offers the promise of high income and reputation.
But as much as an own business may promise a better life, the risk of failure and loss of investment are also likely – especially for the inexperienced.
LIFT sat down with three business professionals and took down their tips to help ensure that your next start-up is a star.
Every business starts with an idea of a product or service that will make it in the market and a conception of what the business will look like. It is most important that the idea is new, unique and innovative.
To Sean Botta, managing director of Victory Investment Planning Group, 31, a good business idea is serious business: “A good idea is not what you heard from others who think it would be successful. In the beginning that may work, but a while later luck will fade away without creativity.” Although the idea should be new, it does not mean opening a coffeeshop doesn’t make sense anymore considering all the shops that pop out the ground like mushrooms all over Phnom Penh. Overall the places look quite successful despite a lot of competition. Coffee is nothing new but there is the chance to give coffee drinkers what they have never experienced. Botta thinks: “If you have any new idea adding to the existing one – do it.”
Similarly, Kim Chantraboth also values the uniqueness of an idea. However, he sees commitment and planning as a mechanism in any ideas. He explains that as long as people are confident, positive, and know the goal clearly and have back up plan, their idea would not die out.
A good business idea cannot live without considering the needs of costumers. Products and services have to match people’s preferences, be their favourite and on top of their shopping list. Chhun Vattanak Phakdey, Head of Corporate Salesat at WING, considers the market as the second most important aspect a start-up has to consider after the idea: “These two key points [idea and market] are very important before we move to capital investment.” says Phakdey, adding that one needs to discover “the objective and types of customers we want to sell the products to”.
The young entrepreneur should not only keep both eyes on the clients but also on the competitors in preparation for the competitive market. A competitor is nothing you should fear or seek to destroy however. “Competition is the judge of success in the business,” says Sean Botta, dividing competition into four categories – which can be legal and illegal. The marketing expert puts it short and simple: “Competition innovates and shapes business.”
Especially elderly people think marketing is no more than sales: meeting customers face-to-face to sell the product. This idea, however, is far from the purpose of marketing. The skill to build the image of a business and tell buyers what the products and services provided are depends on it.
Marketing, branding and advertising expert Phakdey (10 years experience) explains the importance of marketing:
“There are two types of businesses: corporate and retail businesses. Marketing and advertising play an important role in promoting the products and services and build the brand awareness in the market very quickly.”
Part of marketing is not only preparing the launch of a product or service but also monitoring.
“We conduct market research before product launching to have a better understanding of how customers perceive the products leading to effective marketing strategy, while we do it one or two years after the launch to see the customers’ feedbacks and adapt to the market environment changes.”
What if you have a good business idea, but lack of money to start it? Would you be brave enough to use your house or land to borrow money from the banks with very high interest rates?
Sean Botta ran a small English school as a first business with his money. He says: “Start with yourself, challenge yourself.” It is not worthwhile borrowing money. “If you don’t have money, work [as an employee] first not only to gain experience of how a business works but also to save up some cash for the start-up,” Botta explains, referring to himself working as a teacher for some years before establishing his own business.
In Botta’s view, partnerships or investments would come “if you show your business really works”. The investors’ trust comes with credibility, strength and passion in the business.
“I must not let my first business die,” repeated Sean Botta when he began his first business, believing most people would fall and hardly get up after their first time. Because of the self-motivated philosophy, he forced himself to work harder and not to fail. Botta shares some of his techniques to keep his businesses moving on and sustainable. He firstly mentioned about time management. He said: “I have to alert myself that each day I have to check all my business in order to see if it goes well.” He added that people no matter what they do they have to have good time management. He also emphasizes human resource management, considering it as an art rather than a skill. Staff encouragement can be achieved in various ways: promotion, rewards, financial assistance or even a simple ‘thank you’ or a smile. “Everyone is very happy if you say thanks to them. I want my employees to respect me rather than be scared of me.”