How to test new business ideas before you start

The most common thing people say about starting a business is that it is risky.  I am not convinced paid employment is a safer way to earn a living than starting a business.  You can get sacked! Just follow the business section of any news report to know how easily this can happen.  You might also be forced to take a salary cut with all the attendant frustrations.  There is a lot that can go wrong there.  Being employed has its own risks and they are just as daunting as the risks associated with starting your own business.

The nice thing about starting a business is that we now know nearly all the reasons why they fail and what to do to avoid that failure.  Here are eight ideas for testing you new business idea, before you start.  “Be bold but, look before you leap.”

1.       Conduct a random survey. Stop people at a convenient and safe place and ask them what they think about your idea.  Be very polite and gentle about this please.

2.       Ask consumers of the product or service you want to offer what they think. Ask them what improvements they would like to see.  Ask them why they buy and pay so much.  It will help if you show them mock-ups or prototypes.

3.       Convene a small group discussion.  Gather a few people together preferably people that do not know each other but all have a good head on their shoulders.  Tell them about your idea and then ask them to give you feedback.  You might have to pay for lunch or dinner.

4.       Ask friends and other people around you that you can trust to tell you what they think, honestly.  Make sure the people you ask can be blunt and can explain why they take a certain position.  People who just endorse or criticize your idea without any explanation are not really helpful.  The explanations will help you decide what improvements to make, how to manage risks, etc.

5.       Find out who has tried what you are about to start and go talk to them.  You can almost bet that someone somewhere has gone ahead of you.  Please go learn from their mistakes if they will let you.

6.       Talk to advertising, marketing and branding experts.  These professionals spend their lives think out ways to sell new products and services.  The good ones will tell you what might sell and what might not sell, almost on the spot.

7.       Blog you idea.  Invite feedback on the internet.  Do not be too afraid someone will steal your idea and start it.  This fear is usually unfounded but very incapacitating.

8.       Publish your idea in a trade journal or other publication that consumers read and invite comments from readers.  If your idea newsworthy, editors might publish it without charge.

END.

Staffing problems and ideas for solving them

Most small businesses have major staffing challenges that can actually be managed with careful planning and action.  These challenges arise from weaknesses that are inherent in the typical small business.

First, they cannot afford to compete with the larger companies for the most qualified employees.  While a multinational company can afford to offer a fresh graduate an annual compensation package ranging anywhere from N3m to N7m, most small businesses will struggle to offer half of the figure at the lower end.  This is not because small business operators are mean people.  They simply cannot afford to pay much more.  To complicate matters, small businesses may not be able to invest a lot of money in the training and personal development of their employees, compared to the larger companies.  Thirdly, they are not able to offer long term job security because the future is too uncertain and the failure rate too high for that. 

These are the three main reasons why most qualified job seekers will accept an offer from a multinational, even if it is for a lower position.  The end result of this unfair contest for talent is that entrepreneurs often have to find their employees from a pool of less qualified, less competent or poorly trained job seekers because the preferred ones won’t even bother to submit an application.

My conclusion is that when it comes to staffing issues, the right question for small business owners and operators to ask is “why should anybody want to work for me?”  It is not, “why can’t I find competent and committed employees?”  The shortfalls are obvious and job seekers can see them. 

Here are seven ideas that may help the small business owner or operator overcome the staffing challenges.

1.       Develop a practical and employee focused value proposition that makes it clear to your staff what and how they will benefit (besides the take home pay) by working for your small business.

2.       Consider offering profit sharing arrangements or even partnership or co-ownership of the business as a way of rewarding excellent performance.

3.       Have a policy of treating staff with dignity and respect.  This must include processes and procedures for employees to air grievances and to have them adequately addressed.

4.       Include something that is important to your employees (not necessarily money) as part of your reward package.

5.       Keep your management and leadership style as “impersonal” as possible, especially in your communication.  Talk more about what the business needs and requires staff to do rather than what you as an individual want them to do or not do.

6.       As much as possible ensure they get paid on time.  Communicate as soon as you know there will be a delay in payment of salaries.

7.       Ensure everyone has a job description and a clear career progression path.

END.