Night 3 – Market Opportunity Problem / Pain ID
In 2017, I attended Phase 1 of the New Frontiers Programme which is run by Enterprise Ireland. The programme ran two nights a week over six weeks. There was no fee to attend. I would highly recommend this programme to anyone starting a new enterprise, whether your idea is just an idea or is a semi-developed product. What follows is a post which gives an outline of night 3 of the course. When fully published, there will be 11 posts documenting all nights of Phase 1. To see a list of published posts, click here.
The speaker for the evening was Ron Immink. Ron started by discussing the following five related topics:
- Business Model
Ron got us thinking about our elevator pitches. The elevator pitch should succinctly cover the first three points. At this point, he asked everyone to briefly describe their product/service. My answer was ‘An online appointment booking system’. This got me thinking, though, that I need a better description. So here is the first draft of my elevator pitch:
A commission free online appointment booking and diary management system which has been proven to bring new customers through the doors of businesses using it. The system also facilitates the organisation and online bookings of events and provides credit card facilities to the business owner.
This will obviously need to be refined but it is the first draft. Ron also suggested that the single way to measure your product traction is through sales and sales alone. Until somebody has some skin in the game, the product is not worth anything.
Ron then asked the group individually write down where they would like to be with their business, 5 years from now. Here is what I wrote:
- Working for myself
- Employing about 200 people
- Have a product that has continually grown, evolved and improved
- Have developed a positive and socially responsible brand
- Run a business which is a place where people enjoy working and really want to stay in the company.
The purpose of the exercise was then to put a monetary figure on what sales would look like to support the above vision. For example, to have roughly 200 staff on an average salary of 70,000 per year, in an office large enough to hold them and nice enough to help create the brand and atmosphere I described, let’s say I need to spend 1,000,000 per year on rent. Add in another 500k for other costs. This in mind, I would need to have a turnover of 15.5 million per year. From that, assuming I double my business and turnover each year, the following turnovers must be achieved:
Year 1: €950,000. Year 2: €1.9 million. Year 3: €3.9 million. Year 4 €7.75 million and Year 5: €15.5 million.
Ron suggested that if we did not believe that this was attainable and was going to happen, perhaps we should walk away now. I take his point if we cannot believe in our products ourselves, how do we expect anybody else to. However, I am not sure that walking away is the answer if I don’t believe I will be turning over €15.5 million in 5 years time.
Ron eluded to his belief that environmental sustainability is now becoming a factor when venture capitalists (V.C.) are considering investments. Ron spoke from personal experience about living an entrepreneur and the strain it can put on relationships. This was interesting as it is not something that you hear entrepreneurs speak about. Some other thoughts that came up tonight were about picking a niche that you believe can be dominated. This goes back to Alan’s point on night 1 about there being no point in looking for 1% of a market.
Through his reading of science fictions, Ron suggested that it may be possible to spot future trends. He gave the example of how wooden floors are more in fashion the more that technology enters the home. He suggested that this is a reaction, people are trying to get back to nature. He described a pendulum swing forward, the movement forward was the action, new products, new technology etc. The pendulum swinging back was the reaction, ie, the wooden floor popularity. He said that this could be applied to several areas. For example, he spoke about how to spot new trends, what are the new words? What do they indicate/mean? Are they an indication of something that is becoming popular etc.
That was almost it for the evening. An interesting point was made about customer intimacy being an easy win for small businesses. There would be one more significant event before the evening was out, but before I get to that, I did have an interesting conversation with a fellow attendee. He had sent me on some slides which show how he has identified his ideal customer. The slides were interesting as there was a huge list of reasons that his business would not work, that he had composed. It was clear that he had actively engaged in validating his idea. Or more accurately, attempting to invalidate it. Having done so, he was now clear on the challenges that his business faced and wold be better prepared to overcome them.
The last event of the evening happened just as I thought things were winding down. Ron started to describe to a fellow attendee what he meant when he said a business must be ‘defendable’. The idea being that someone can steal your idea and build the same product as you, if they do, what will make sure you are still better than them? One or two people were confused by Ron’s explanation and they asked for clarification. At this point, he said something along the lines of ‘ok who had the appointment idea?’. I owned up and interjected that I believe the explanation of defendable can be simplified to ‘ you either do what your competitor does better than they do it, or you do it cheaper than they do it, or both’. With that, a number of people spoke up and gave reasons why it should never be ‘a race to the bottom’ (about being the cheapest) and gave examples of where this did not work. Ron said there should be something more to the product as he could find me dozens of similar products being developed in Dublin alone.
This left me with some food for thought. It is not the first indication that I have come across that I need to raise the price. In all, there have been at least 6 occasions when I have been told this by various people. I do not have a conclusion on the subject yet, but it has left me with a lot to think about. One final tip, Ron suggested that of two identical businesses pitching for the same sale, the seller that is most passionate about the product will win out.
If you know someone that would benefit from online booking, please let me know about them. I will send you a two paragraph email for you to forward to your friend so it couldn’t be less hassle for you to help a couple of Irish businesses to grow!