When the money clock ticks
THE announcement earlier this week that local start-up BetTech had officially broken cover caught my eye, as it highlights just how misunderstood the concept of time is when it comes to building a business.
I profiled founders Jesse Hemson-Struthers and Mark Bosman for Finweek on April 12 2010, just after the company had received backing from 4Di Capital. Thirteen months later a product and business were brought to market. BetTech itself was founded in 2009.
If you are an entrepreneur planning to take your business to market, stop for a moment and let that sink in - these two guys have spent two years conceptualising a business, taking it to a point where it is fundable and then finally bringing a product to market.
They spent two years trying to understand products, markets, and their systems and trying to clarify what it is they were trying to build.
I contrast this to a lot of the enquiries we get at Fin24 from would-be entrepreneurs looking to throw in their day jobs, raise some money and get a business going in a matter of months.
Hang on to your day job
In his book How not to start and run your small business, leading entrepreneur and marketer Scott Cundill makes the point that one of the worst moves you can make is to chuck in your day job and rush headlong into starting a business.
In short, the reason for not doing this is because there is an above-average chance you are going to fail. It is brutal but true.
It will work something like this: you will leave your nice comfortable job, tell your friends that you have set up your business, get an office and have some cards printed.
Then you will scrabble around for a piece of business and when you eventually do convince somebody to look at you, they are going to discount your services because they will see your desperation. Then the bills start rolling in and you start viewing your business by saying that your living expenses are X, and dividing your hours or widgets simply to make the bare minimum.
Either time or money runs out.
By laying the groundwork upfront, you can at least buy yourself the former when the money clock starts ticking.
We've used the example of Discovery before. They didn't just one day open up their doors and say: "Right, we're going to sell thousands of medical aid packages to South Africans." Rather, they secured Rand Merchant Bank on their concept long before they had the final product in place.
Similarly, those businesses which go out and get a few trial clients upfront to use their product or service will be far more successful than those who simply adopt the "build it and they will come" approach.