Editor’s Note: This is the second in a two-part series of blogs from consultant Gary Gustafson, featuring tips for powersports startups. To read the first blog in this series, click here.
6. Your business has key functions that are not optional, just like your body’s vital organs. Some startups basically ignore their supply chain and Cost Of Goods Sold (COGS) and go straight to promoting sales heavily. Others invest time and money to “build a better mouse trap” but neglect their business and social media launch, then are left wondering why the world didn’t beat a path to their door. Government regulations are another business consideration that some companies overlook or misunderstand. A prudent regard should be maintained for all areas of the business although, of course, priorities will change as the company grows. Ignoring an area completely or saying you will “take care of it later” is like saying you don’t need your lungs or kidneys to work right now — and how smart is that?
7. There are great ideas, and then there are great ideas whose time has come. Some ideas require a seismic market shift to catch on, even if they are good ones. Will the forces be in place for the market to accept your product? Can you tell your story strongly enough to force that market shift? Really? Appealing to early adopters or fringe users may portend big things somewhere down the road, but it will not produce significant cash flow now.
8. If you recognize a business association that is doomed to fail, get out of it quickly. One of the keys to identifying whether a business proposition will fly is if the stakeholders agree upon the value each offers the other and the expectations of each are well defined. Bad situations between business associates with fundamentally different values or mismatched assumptions seldom resolve themselves and can become very ugly indeed. Practice the 80/20 rule. Spend your resources on opportunities that have a great chance of success, and get out of the ones that do not.
9. Success is defined as having your product or service in the field for one full year, achieving financial targets, without major warranty or safety issues. Calling anything else success is premature. I have known entrepreneurs who acted as if their five-year business plan was in the bag because they had created a functional prototype. Building a prototype is like painting your house. Most smart people can figure out how to paint their own, that is, one house. That is a far cry from running a full-blown house painting business in a competitive environment, with lots of regulations, employees making mistakes … you get the idea.
10. Every launch has a panic phase with people working long hours to solve unforeseen problems. The earlier you panic, the better. Indeed, operate with a sense of urgency all the time. When it comes to growing a business Malcolm Gladwell’s 10,000-hour competence rule precedes Tim Ferriss’ four-hour workweek.
Powersports Consultant Gary Gustafson is president of G-Force Consulting, a company that offers powersports component market research, new business development, product innovation, product launches and other consulting services.