How to Create a New Business from Nothing
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By Cynthia Kocialski
If everyone wants to be successful, why are there so few people who are? Why are there many people who dream of being entrepreneurs, but few successful ones?
The answer is people don’t like uncertainty. The fear of failure stops most from even trying. Since the path to success isn’t known and immediate results cannot be guaranteed, many would-be entrepreneurs remain exactly that – “would-be’s”.
Every person has heard that success is a journey. Everyone nods and agrees to this truth. However, the journey can’t be accomplished by using an online navigation system, where the path and destination are certain. In addition, most want the journey to be as short and direct as possible – better to fly direct then drive and make detours along the way. An entrepreneur is like an early explorer or discoverer. The exact route is unclear – only a general heading may be known at the beginning, and the destination is doubtful – remember Christopher Columbus set out for Asia.
This is a big reason new businesses fail. The entrepreneur researches and plans out the new venture, and outlines the step-by-step directions and expectations in the business plan. Once the business plan is written then it becomes a matter of execution. The problem is the business plan is often filled with baseless estimates, guesses, and wishful thinking. The words are only the illusion of certainty. Yet, the entrepreneur follows the business plan as if it will lead to a certain result. Most business plans are works of fiction and should start with “once upon a time”.
This is the problem with new businesses. The entrepreneur doesn’t need a business plan. In fact, it creates a mindset within the entrepreneur that’s more harmful than beneficial. What the entrepreneur really has is a product or service concept, and a vague notion of the business model for that product. With little or no direct experience with the customers and market, this is just a hypothesis and the vision for the start-up is based upon a mountain of assumptions.
Entrepreneurs would be better served if they started with a concept plan. This type of plan acknowledges the missing information, the lack of facts and experience, and the assumptions. When coupled with a strategy for conducting the business experiments necessary to uncover the facts, it becomes a power system for the creation of new businesses. The entrepreneur can learn more about this new creative concept plan by watching Your Startup Company as a Business Experiment video.
Entrepreneurs like to refer to their new businesses as early stage start-ups. They would do better to refer to them as experimental start-ups. When one applies the adjective “experimental”, then the entrepreneur allows for failure. In fact, the entrepreneur expects the opening years of the business to be a learning experience; one where the principles of the scientific method are applied to the creation of a new business. The entrepreneur gives himself permission to discover what is the right product and right business model by using an organized and thoughtful process to make this discovery. This is the idea behind the concept that every new start-up is a business experiment.
The scientific method is a way to identify the key hypotheses, conduct experiments to either disprove or validate them, repeat the process until a discovery or conclusion can be reached, expand the test to see if the results are applicable on a wider scale, and then to move the discovery to the next level of commercialization. Most entrepreneurs want to skip this experimental step and start with the end result.
Cynthia Kocialski is the founder of three start-ups and helps entrepreneurs transform their ideas into new businesses. Cynthia is the author of Startup from the Ground Up and Out of the Classroom Lessons in Success. Cynthia writes regularly at Start-up Entrepreneurs’ Blog and provides in her video series information on how to create a Concept Plan.