How to Start Your Own Business: Advice from Experts
ITMO University just hosted an expert session for hardware, high-tech and IT projects of the Future Technologies accelerator. This year, a record-breaking amount of participants made it to the final selection - 25 teams in total. Up until March, they’ll be finalizing their technologies, choosing and testing business models, studying their target audiences and making their first sales. Recently, the novice entrepreneurs’ projects were assessed by experts - founders and CEO’s of companies, specialists on growing markets, the financial sector and marketing. In an interview for ITMO.NEWS, they’ve shared about why most startups face common problems, the usual mistakes novice startupers face, and what there is to expect from 2018 in terms of promising technologies.
David Vasquez, expert on growth marketing, co-founder of CGO and business developer at Zenbot
What are the difficulties that startups face at the very beginning of their development? First of all, there is the necessity to promote themselves. Most of the time, the main challenges arise as a result of the inability to properly explain one’s project. We often face apt technicians who just don’t know how to present their ideas to their audience.
As a rule, the main problems of novice entrepreneurs remain the same. Apart from the inability to properly present their product and insufficient understanding of the market and their target group, sometimes they even don’t know whom they are to sell their product to or fail to properly analyze their competitors. On the other hand, it’s a rapidly changing world we’re living in, the technologies are constantly changing, and there’s always some novelty that becomes the hype - there were chat-bots, then VR, now it’s cryptocurrency - so new problems constantly emerge, and startups face new challenges. The main trends change two to three times a year, so one has to constantly monitor new technologies and just everything that can contribute to getting better profits.
One of the key mistakes many novice entrepreneurs make is thinking that they can solve everything on their own. Still, doing everything by oneself and going against the stream can be very difficult. Surely, there are people who are capable of that; yet, to my mind, one of the most important things to do is to build a team that has a common goal. One’s ability to test hypotheses is also very important, as you have to learn whether there really is a demand for your product, and so on.
Last year, we saw many startups that focused on cryptocurrencies. And I doubt things will get much different this year. Surely, blockchain and ICO will be at the center of attention, as well; I even think these fields will become even more popular. Still, personally for me, 2018 is the year when a new interesting trend has appeared, one that has to do with neural interfaces. Other promising fields I can name are VR and AR.
In general, this year there will be many new technologies waiting to be accelerated, yet we shouldn’t forget that when working on a product, the most important thing to remember is that we do it in order to solve some particular problem.
Konstantin Homchenko, CEO of Chili Marketing, co-author of черезгод.рф project
Depending on the novice entrepreneurs’ intentions and experience, their usual questions may vary. By virtue of my job, I am often asked about issues related to promoting a product, those I sometimes hear “where can I earn some” kind of questions, as well.
To my mind, the main problem of novice entrepreneurs is their lack of understanding and faith in what they do. They are just not passionate enough about it. And I’d say that the lack of understanding is one of the fundamental problems, which never changes. Few people can set goals and achieve them without straying off from the chosen path. New challenges will appear every year. This is why I can only recommend novice entrepreneurs to always stay sharp and flexible, so that they would timely adapt to new conditions.
What can be a problem at the startup’s very beginning? First of all, one has to fight their own laziness. Also, most Russian entrepreneurs dream of doing something exceptional right on the spot, create a billions-worth business from scratch in some year’s time. Pride and overconfidence prevent entrepreneurs from really listening to their clients. One has to remember that clients pay money for solutions to particular problems, and if the problem exists only in the entrepreneurs imagination, they won’t earn any. Being closer to the client is very important.
The most important thing to focus on is getting the first sales. You don’t have a ready product? Sell what you have. Only when you start selling, you’ll get the first real feedback, not some suggestions. You don’t have your own idea of a product? Sell someone elses, learn what’s wrong with it. You don’t know how to make your first sales and you don’t want to be the one making the calls? Get some good advertising and focus on warm clients. The money you’ll get from sales can help solve most of a novice entrepreneur’s problems and give you faith in what you’re doing.
With each year, my clients become smarter: I no longer have to explain why one needs CRM systems or why contextual advertising is not the only source of traffic there is. This allows to get better results from our joint efforts. As for the global trends, I’m really happy that more and more companies are beginning to outsource marketing. Entrepreneurs should pay attention to this trend: if you can properly organize the process of rendering b2b services, you can enter a growing market. The most important thing is to listen to your clients and love them.
Dmitry Kravchuk, LinguaTrip’s co-founder and Chief Technology Officer
If we’re talking about the residents of Future Technologies, most of this and the previous year’s entrepreneurs came to us when their project was on the “we want to do this, do you think this is a good idea?” stage. At this point, their main problem is to learn whether there’s a market for their product or service. All the other problems are further down the line.
And if we were to discuss the fatal mistakes of fledgling startups, those are usually amongst the following:
1) too much effort spent on developing the product even before learning whether its relevant or not;
2) too quick to waste money;
3) the co-founders argue and break up (though it's more of a fact than a mistake);
4) too quick to give up;
Yet, if I were to recommend something to those who are only starting to think of getting their own business off the ground, I would tell them to concentrate on two things. First of all, one has to remember that you have to do something that people really need, secondly, one has to find an efficient distribution channel.
Vitaliy Yanko, executive partner at SoftwareLead Pro generation agency
As for me, in 2018 I’ll be spending a lot of time on the Robotikum startup - a former ITMO spin-off that has recently bought out the university’s share. In this project, I’m responsible for the international sales of one of the world’s most dexterous robots - the Butterfly Robot platform. We’ve recently found new ways for financing our project in Russia, and we are also starting our international expansion to Mexico and the USA.
One of the first things I heard at the expert session was “We really want to do an ICO!”. This is really similar to how everyone planned to make use of crowdfunding some five years ago. By the way, at that time our team failed to make it to Kickstarter - we spent too much time on paperwork and then faced legal hurdles. As for the most common questions, most participants want advice on bringing in the first clients, or want help with lead generation. In this case, we have to focus on the startup’s concurrent business processes.
A conversation about marketing and sales with external “marketers” usually begins with something like “You’ve been selling to Western countries for like 10 years already, and that’s great. We need proposals and sales without a budget, and we are ready to pay for successful ones”. This approach works only with markets I know well of, when I can make sense of the startuper’s offer, explain it to the potential clients, and organize a deal. Yet, usually it just doesn’t work out: the first proposals and sales have to be done by the startup’s founder or manager, otherwise they won’t have the competencies necessary for finding clients. It is even possible that they would never get such competencies at all. It’s also better when it is the founder who comes up with the main hypothesis for finding clients, and the “marketers” just embrace it.
Elita Smile, lecturer at Saint-Petersburg Academic University of Management and Economics, expert for the Vverh business school, professional with more than 20 years of experience as CFO at different companies
Last year’s main problem was finding the traffic for attracting and conducting the sales volume necessary for the development and further scaling of a project. The sooner one finds the optimal traffic, the more chance there is that the startup would survive. Otherwise, the novice entrepreneur can waste all funds on attracting sales, and fail to find additional investments if there would be none.
If a startup has an investor, the investor strictly controls the fulfillment of predictive metrics. If something goes wrong, the startup can change its general concept and test new hypotheses. If a startup works on its own, without help from an experienced mentor or investor, then the issue of managing the results can be dismissed, which hinders a startup’s development and can result in competitors getting ahead of you.
The fatal mistake of novice entrepreneurs is coming up with an idea for business and forgetting to check it against people’s actual needs, and then wondering why their product or service is not relevant.
This is why the main steps for those who plan to launch their own business should be the following: developing a minimum viable product, testing it, identifying the possible ways to attract sales (online, offline), its costs, calculating the unit economics and conducting dynamic control of results.
As for predictions for the current year, the main trend in economics is the decrease of businesses’ feasibility, which calls for even greater efficiency and professionalism. One should rely on a competent team with elaborate business processes and the necessary resources, all digitalized and managed with the help of financial planning and strict control of overall performance.
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