For the last two years I have had the pleasure of being on the judging panel for the ORIAs, the Online Retailers Industry Awards. They’re like the Oscars, but for online business. Being a judge, I get to read all the award applications and see what’s ‘under the hood’, so to speak, of how these entrepreneurs took their start-ups from zero to hero.
Let me tell you, reading those applications was like getting a PhD in entrepreneurship, digital marketing and web development, all at once. I learnt so much I wrote a book about it but the key lesson I took from that experience is that great entrepreneurs ask great questions, especially at the start of their entrepreneurial journey. Get these right and the journey will not only be smoother and more enjoyable, it’ll be more profitable more quickly.
Here are the top four questions every start-up entrepreneur must ask before they spend a cent:
- What do you want?
Getting clear about what you want the business to do for you is key and will determine every decision you make thereafter. First up, do you want a lifestyle business that enables you to be a digital nomad, work when and where you like and earn enough to fund your tuk-tuk travels and addiction to Matcha? Or do you want to build a global empire, grace the covers of Time magazine and dine with Russian oligarchs on their maxi-yachts? What you want will dictate the answer to the next question.
- What will you sell?
If you want to make a lot money, you may not be able to indulge your passion for candle-making, needle-point or blogging about horses. You may however need to consider creating a fintech/blockchain/cryptocurrency start-up that you have zero passion for but the market needs.
It’s sad but true fact – we can’t all do what we love especially if we want to make a motza doing it. Just look at Australia’s most famous billionaires, Richard Pratt and Lindsay Fox. They made their millions from boxes and trucks. Not exactly the most glamorous of industries but hey, it worked out pretty well for them. That’s not so say you can’t make money from what you love – it just might take more time to do so, that’s all.
Whatever you choose, just know that information-based businesses and/or marketplace platforms that can scale with zero marginal costs (think Facebook, AirBnB, LinkedIn, etsy, Uber, Spotify, Skype, Trip Advisor – need I go on?) are the ones most likely to succeed on a massive scale.
- What problem do you solve?
The cofounder of Singularity University, Peter Diamandis said ‘the world’s biggest problems are the world’s biggest markets’. That’s true but here’s the thing – you don’t need to be the next big disruptor solving world problems to make a million. The secret to success is to let the disruptors do all the hard work and then you swoop in and mop up the problems they create.
Think Facebook. Sure, it would be great to be the next Zuckerberg (if you don’t mind fronting up to Senate Committees to explain how your start-up up-ended world order) but why not just create a solution for all the problems (also known as opportunities) that the big disruptors create.
For example, Facebook almost single-handedly created the need for social media defamation lawyers, social media content creators, social media analytic software and so on. An entire eco-system has built up around Facebook and spawned thousands of spin-off industries, enabling others to profit from the problems Facebook created. So if you want to make a million but don’t want the publicity and headache that goes with being a disruptor, don’t seek to bea disruptor – just solve the problems the disruptors create.
- What business are you in?
Andre Eikmeir, co-founder of online wine retailer Vinomofo, realised early on that he was in the tech business, not the wine business. This changed his approach to everything. “I started off hiring wine experts but couldn’t get traction. I realised early on that I was in the tech business and that my early hires needed to reflect that. I needed two people – a hacker and a hustler; a hacker to manage the tech side of the business and a hustler to manage the sales.’ This saw his business take off and crystallised a key lesson for him. Irrespective of what you sell, you are first and foremost in the tech-business.
Getting an online business off the ground can be hard work but by asking some basic yet important questions at the outset, you may find it quicker, cheaper and easier than you think.
About the author
Bernadette Schwerdtis an online marketing specialist and author of ‘How to Build an Online Business’ (Wiley). To download a free chapter, visit www.bernadetteschwerdt.com.au