By Ged Fitton, Guest Blogger
The British Innovation Gateway (BIG) is a great Cisco-led initiative to foster innovation and entrepreneurship in the UK. A great part of my work on BIG involves the support of IDEALondon – Cisco’s innovation centre -- and its start-ups. And I have to say I’m always impressed with the enthusiasm and determination of companies to think outside the box, and challenge the status quo. It’s a fantastically exciting space to work in. In my role of helping companies monetise their innovation, I thought I’d share a few tips on how not to fall into the traps that I’ve seen many start-ups fall into.
1. I can’t see the wood for the trees
It’s so easy when you live and breathe your idea that you think everyone understands what your unique value is and why it’s so much better than anything else. And all those words that make so much sense to you must make sense to everyone else? Sadly – that’s not always the case! Remember the customer that loves your idea – and has told you that he wants to buy it -- probably doesn’t own the budget. He or she will have to go to their bosses, explain your proposition, and convince them to invest. So think long and hard about this one. Can a lay person understand what you do, why it’s important and the value they would derive from buying your product?
2. My product is unique, no one comes close
And this may be the case, but in the vast majority of cases you’ll have competitors. They may have a slightly different approach, a slightly different focus, but in the eyes of the customer, you are in the same bucket! Make sure you know your competitors, and make sure that you can clearly articulate what sets you apart. You don’t have to overtly declare your competitors, but rest assured, your customers may well get courted by those very same companies that compete with you, and you’ll be surprised how many times you’ll hear the phrase “so what makes you so different from these guys?”
3. Avoid the elephants – if you possibly can
Everyone has heard the phrase about eating an elephant, and the resulting indigestion that can result. Whilst a big company with a big brand, may seem like an ideal first customer for a small start-up, treat these opportunities with caution. Big companies are complicated things and you can easily find yourself jumping through hoops to impress them with your boundless agility and flexibility. However, before long, your product starts to look very different from how it looked at the start – it’s likely to have been highly customised, and you’ll have spent a disproportionate amount of time winning a piece of business that at the end is very unprofitable. Follow the 80/20 rule – make the majority of your business repeatable and predictable so that you know what your cost model looks like, and keep the big customised engagements under tight control. Don’t be afraid to walk away from bad business; trust your gut feelings – they are often remarkably good at sniffing out good business!
4. Show me the money
There comes a time when all those early direct sales have been completed, and it’s time to build a sales channel. Follow a very simple two step rule. Firstly, make sure that your partner is equipped with everything they need to make a sale, but don’t expect them to be as good as you -- they never will be. They will always need support, so focus on creating tools and processes to enable them to become as self-sufficient as possible. Secondly, make sure that they clearly understand the money that they can make from selling your solution. Profit margins are king. Make sure you really understand the impact of selling your product on their business and the investment they will make to sell it. A well executing Sales Channel is worth its weight in gold.
5. Grow slow – partnerships versus payroll
This is one of those tips that is so obvious, that it’s often ignored. In the changing and fast paced world of innovation, building an eco-system of partners and suppliers will become an increasingly important facet of any business. But remember that this is always about Core vs. Context. Now that you have developed the ‘most amazing, never been seen, everyone will want to buy one’ product, you will likely need to grow your team. In the early days it was all about people whose expertise represented the core of what you did. Everyone was irreplaceable, and everyone was critical to the company’s success. But once you start growing, you need people that perhaps aren’t core to the business – they are facilitators or executors of your strategy. Hire with caution, and if possible, partner with other companies to deliver these contextual services. Project Managers, Sales Administrators, Support staff can all be outsourced to partners initially. Over time you can cherry pick the best to join your growing company. By partnering you can define very tight deliverables and performance metrics so you know what you are getting for every pound you spend. And when things don’t work out, you can walk away!
About Cisco British Innovation Gateway (BIG)
BIG supports and nurtures tech entrepreneurship across the whole country, to help ensure the UK is at the forefront of innovation. Through mentoring, business acceleration, financial and business support and much more BIG is enabling the technology companies of tomorrow, today.
Author. Ged Fitton, Senior Business Development Manager, Technology & Solutions Innovation, Cisco UK & Ireland