Right now, there are more than 2 million entrepreneurs actively engaged in starting a business in the UK. Sadly, though, many of their ventures will never get off the ground. Of those that do, the majority will fail, and of those who seek out funding from business angels or venture capital investors, less than one percent will get the money they want.
So, does timing matter in starting a new venture? Indeed, often it does. But not for the reasons often posed. When timing really matters is when the changes always going on around us – new technology, for example – make it possible to do new things or offer new goods and services to consumers that they did not want or need before.
Consider Toronto’s Mimi Naghizada. In 2010, Mimi wanted to wear hair extensions for her upcoming wedding and couldn’t find what she wanted at the local shopping mall. She and her fiancé Alex Ikonn soon discovered that a confluence of new developments would make it possible – even easy – for the couple to start an e-commerce business that would sell hair extensions online. Even better, they would be able to get started with little money, $25,000, they figured.
Alex, already working for another start-up, knew that many of the building blocks were already in place. YouTube would enable Mimi and her sister Leyla to create and host videos that would focus on the hair-styling questions that people were asking on Google. With these videos, Mimi would soon build a commanding presence as a go-to resource on hair-styling issues. But that wasn’t all.
Alibaba.com provided Chinese suppliers of hair extensions on a wholesale basis, so Alex ordered samples from several, which were soon on their way. Meanwhile, WordPress made it easy to set up a website, and a company called Shipwire agreed to hold the inventory and fulfil the orders.
All Mimi and Alex needed to get started was a bit of cash for the initial inventory of hair extensions in several shades. Happily, offers of new credit cards with six months’ free interest were arriving in Alex’s mailbox regularly. The combination of credit card funding and a loan from Alex’s Mum provided the cash they needed. A mere six months after launching www.luxyhair.com, they were able to repay all the start-up funding. Within two years, sales hit seven figures and they were off to the races.
It looks easy, right? Alas, it’s not, even in 2018, with robust economic growth in Ireland and elsewhere. As most everyone knows, the entrepreneurial path is littered with failed start-ups. Why? Maybe the market wasn’t really there. Perhaps what was offered didn’t really solve any customer problem. Or the industry was brutal and a larger and deeper-pocketed competitor ate someone’s lunch. Or, all too often, the idea was good but the entrepreneurial team didn’t have what it takes.
The good news is that, by systematically assessing their opportunity up front, most entrepreneurs can avoid the typical disaster and sharply improve their chances of success. You wouldn’t buy a new car without a road test, would you? You shouldn’t start a new venture without one, either.
John Mullins, an award-winning professor at London Business School, is the author of three best-selling books for entrepreneurs, including the brand-new 5th edition of The New Business Road Test: What Entrepreneurs and Investors Should Do Before Launching a Lean Start-up. A free download of Chapter 1 is available at http://faculty.london.edu/jmullins/.