Entrepreneurs: Highly experiencedDuke University – Pratt School of Engineering – www.pratt.duke.edu Approximately how many years did you work for another employer prior to starting your first business? 27,6% 24,6% 23,3% 14,3% 10,3% 0-5 years 6-10 years 11-15 years 16-20 years 20+ years
Obstacles faced by entrepreneursDuke University – Pratt School of Engineering – www.pratt.duke.edu Difficulty of co-founder(s) recruitment 1,6 Family or financial pressures to keep a traditional,… 1,8 Availability of health insurance/risk of losing… 1,9 Lack of industry knowledge 2,0 Lack of available mentors or advisors 2,0 Concern about the consequences of failure 2,2 Concern about protecting companys intellectual… 2,3 Lack of prior experience in running a business 2,5 Lack of available capital/financing 2,6 Amount of time and effort required 2,9 1,0 1,5 2,0 2,5 3,0 1= Not at all a challenge, 2=Small challenge, 3=Somewhat of a challenge, 4= Big Challenge, 5=Extremely big challenge 1= Not at all a challenge, 5 = Extremely big challenge
What stops others from becoming entrepreneurs?Duke University – Pratt School of Engineering – www.pratt.duke.edu Difficulties in recruiting co-founders 2,5 Availability of health insurance/risk of losing existing 2,7 coverage Family or financial pressures to keep a traditional, 3,2 steady job Knowledge about how to start a business 3,3 Knowledge about the industry and markets 3,4 Lack of business management skills 3,6 Difficulties in raising capital/financing 3,8 Amount of time and effort required 4,0 Willingness or lack of ability to take risks 4,3 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5
Duke University – Pratt School of Engineering – www.pratt.duke.edu Building a business
Understand your market & stay focusedDuke University – Pratt School of Engineering – www.pratt.duke.edu To build a successful company, you need a great product. But a great product doesnt lead to success by itself You can have the right product for the wrong market and fail. And you can have the right product for the right market and still fail because no one knows you exist You can also be on the road to success and wake up one day to find that the market has changed and you havent adapted Stay focused on marketing at every stage of your business
Selecting a marketDuke University – Pratt School of Engineering – www.pratt.duke.edu You may have a product that can solve many problems for a broad set of customers, but you are not going to be able to reach everyone at the same time. Some will be more ready to buy from you than others Key lessons: 1. Research your market and pick your niche 2. Expect that markets will constantly change 3. Expand from a position of strength
Understand customers needsDuke University – Pratt School of Engineering – www.pratt.duke.edu Lack of customer validation is biggest cause of startup failure Learning customer needs is more important than revenue for a nascent startup Revenue doesn’t build traction for a business Needed: tested and proven products that customers are ready to buy, and that you can sell and deliver profitably
What customers do and don’t knowDuke University – Pratt School of Engineering – www.pratt.duke.edu Customers know: What their problems are What they like What they don’t need They don’t know: What they need What you can develop for them that they will really want Your challenge: Learn what you can build that customers will buy
How to learn customer needsDuke University – Pratt School of Engineering – www.pratt.duke.edu Interview customers, do what they do—feel their pain Study every product in the market space—successes and failures—related or unrelated Use your experience and vision to conceive solutions Quickly build solution/prototype. Perfection/features not important Share with potential customers. Let customers test drive Keep iterating until you have a product that customers MUST have. Don’t hesitate to trash everything you’ve built
Business Model: The 7 componentsDuke University – Pratt School of Engineering – www.pratt.duke.edu A business model is the nuts and bolts of how a business generates revenue and profits 1. Reaching customers. How are you going to find customers or have them find you? 2. Differentiating your product. What makes you better than everyone else? 3. Pricing. What can you charge that will bring profit to you and value to the customer?
7 components of a business modelDuke University – Pratt School of Engineering – www.pratt.duke.edu 4. Selling. What is your sales process? 5. Distribution strategy. How will you deliver the goods? 6. Support. What does the customer do if your product breaks? 7. Customer satisfaction. How are you going to turn customers into loyal fans?
Management team: 8 key functionsDuke University – Pratt School of Engineering – www.pratt.duke.edu 1. Company leader. Makes final decisions on business strategy, hiring and firing, and resource allocation. Responsible fr businesss success or failure, to motivate the team, communicate with the outside world, build the corporate culture, and ensure that sound ethics and values permeate the organization. The leader doesnt have to be the founder of the company. 2. Operations head. Manage operational details: watch the bottom line and make sure products are delivered on time, customers are happy, company is meeting legal obligations.
8 functions of a management teamDuke University – Pratt School of Engineering – www.pratt.duke.edu 4. Product development. Chief technology officer/head of product development 5. Marketing. Makes customers aware that business exists and differentiates products from competition 6. Sales. Closing deals is the most important part of any business. Every employee must be able to sell. 7. Finance. To balance the books, pay taxes, build financial forecasts, manage budgets, and collect revenue 8. Legal and HR. Lawyers protect company interests; human resource experts hire and help manage employees
Selling: the single most important skillDuke University – Pratt School of Engineering – www.pratt.duke.edu 1. Your goal is to fulfill the buyers personal needs: Understand why people buy Understand their need to ―win‖ Understand what they need 2. Craft your message based on customer needs Be credible and competent: know your stuff or team up with someone who does. Have testimonials from other customers Be trustworthy: be honest, fair, and stay positive 3. Communicate persuasively Talk in a way that customers understand and which fulfills their interests and needs—not yours.
What Salespeople doDuke University – Pratt School of Engineering – www.pratt.duke.edu Generate Sales Leads Qualify Leads Make Initial Contact Meet customers Handle Buyer Resistance Close the Sale Account Maintenance
Public Relations—getting knownDuke University – Pratt School of Engineering – www.pratt.duke.edu Entrepreneurs believe when they achieve success, fame will follow—Wrong 1. Build a compelling message that interests others Create a concise statement of what the company does without jargon or technical language. Test the message by speaking to ―normal‖ people Create a one-page summary of what you want to say. Create a one-line version of what you want to say. You may want to talk about every single feature, too much detail dilutes your message. Just highlight the few things that differentiate you. Your products very interesting to you, but the world doesn’t care. Others arent interested in you, but may be interested in how your product affects them.
Public Relations—getting knownDuke University – Pratt School of Engineering – www.pratt.duke.edu 2. Find the right journalists Read dozens of online and print publications. Find who covers your ―beat‖. Look for local publications, trade rags, industry websites Read blogs in your market, learn who influencers are Follow all key players on Twitter and Facebook 3. Understand journalists They want to be first to report on a topic. Read other stories by the same journalists and get a feel for what type of stories they write. Make sure that your story is relevant to their ―beat‖.
Public relations—getting knownDuke University – Pratt School of Engineering – www.pratt.duke.edu 4. Start small. Everyone wants to be in national publications, you are going to be up against stiff competition if you go after them immediately. Instead, start local, focus on trade press 5. Customize pitch for every journalist. Write or call. Most publications list email addresses on their Web sites and provide phone numbers for editors. Most journalists do respond. May not be interested in you at first, but may include you in a future story—always looking for fresh ideas and sources. Use a ―news hook‖—big news story of the day or current trends
Public relations—getting knownDuke University – Pratt School of Engineering – www.pratt.duke.edu 6. Become a Trusted Source. If you do get an interview, listen very carefully to what the journalist is interested in. Don’t talk about yourself and your product, but what journalist wants. Your goal is to become a trusted source and build a relationship so you can be at the center of future stories. 7. Be available. Journalists usually have tight deadlines and need answers fast. If you want to get press coverage, you will have to make yourself available within a short time of getting a call.