Transcript of Tips for Starting a Successful Business
John Jantsch: Hello, and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch, and my guest today is Colleen DeBaise. She is a business journalist and author and a contributing editor at Inc and formerly was the small business editor at The Wall Street Journal. We’re going to talk about a book that’s new for her, Start a Successful Business: Expert Advice to Take Your Startup from Idea to Empire. So Colleen, welcome.
Colleen DeBaise: Hey, it’s nice to be here.
John Jantsch: I think that it was when you were at The Wall Street Journal is actually where you and I first came to contact because I think you were one of the first lovely people to write about-
Colleen DeBaise: I met you a while ago now.
John Jantsch: Well, you wrote about Duct Tape Marketing in The Wall Street Journal, I think, and Inc so I was happy about that, so we-
Colleen DeBaise: I’ve used you as a source numerous times, John-
John Jantsch: I know.
Colleen DeBaise: … and yeah, and I think we have been guests on the same television show together, so yeah. We’ve been in each other’s orbits for a while.
John Jantsch: That’s right. So Start a Successful Business. A lot of people want to do that these days, and I must admit I’m going to give you a little bit of trouble here, so get ready. The first chapter says, “Come up with a brilliant idea,” and I just wish I would have thought of that. That’s all it takes, huh? All right, so-
Colleen DeBaise: Yeah, that really is it. Yeah, yeah, but you know I-
John Jantsch: All right, so how does one do that?
Colleen DeBaise: I actually do note in that chapter that it does take more than that, and if it was as simple as coming up with a brilliant idea, the book would have been far, far shorter, but yes, no. What I say is, look, just backstep for a second. What I tried to do when I sat down to write this book is over the years I think we’ve interviewed countless successful entrepreneurs and some of the real, real super successful ones as well, and I tried to look at all of their stories, and I tried to see if there were any patterns or themes that emerged that an aspiring entrepreneur could maybe learn something from.
One of the things I did notice is that a lot of the successful entrepreneurs did start a company because there was a personal pain point or frustration that they wanted to solve, and if you’re looking for a brilliant business idea, I would say that would be the very first place to look is to look for that thing that’s driving you crazy for which you feel there is no solution on the market for.
John Jantsch: Yeah, it’s amazing. I have interviewed for this show hundreds of folks, and it’s amazing how often I hear that line. “Well, I really started a company to do X, but then I couldn’t get this and that, and so I just pivoted, and that’s what we became.” It’s amazing how often that happens.
Colleen DeBaise: Yeah, yeah, yeah, and that’s also … It’s funny you say that because that would be the next thing I would say is that once you do have this great idea that maybe is prompted from a personal pain point or frustration that you have, once you start the business, don’t be afraid to pivot if need be or to evolve your business or to at least, and what we see the successful entrepreneurs doing is really keeping that finger on the pulse of what customers are asking for and changing their business as need be.
Some fun examples are, of the big names out there, look at Amazon, for instance, which started out as a book seller way back when. Now it’s in the world domination category. It owns Whole Foods, and it’s probably delivering something via drone to your door right now. That has really evolved quite a bit from what it started out as, so yeah.
John Jantsch: One of the challenges I see, and I’m strategizing with a startup right now that I think has a decent idea but no business model. So in other words, “We think there’s a need for this,” but they haven’t figured out how they’re going to make money off of it, so how do you-
Colleen DeBaise: Yep, yep. I hear you.
John Jantsch: How do you discover the right kind of formula for … Is it a subscription? Do I sell a product? Do I have services around the product? I mean how do you come to that?
Colleen DeBaise: I know. That is an excellent question, and one of the things that we have noticed on Inc in recent years is a lot of people are trying the lean startup method, which of course was popularized by Eric Ries, and that was a book that came out maybe five or six years ago, but the concept is you have an idea, but you’re not sure if it’s going to work and you’re not sure what it actually will look like, so the idea is that you come up with a minimum viable product. You come up with a very bare bones version of this idea, and you put it out in the marketplace.
So you’re essentially going live with it, and then you see what happens, and by doing it in this lean way hopefully you’re not spending exorbitant amounts of money or time or energy because what you want to do is you just want to put it out there and see what happens and test it out and see maybe what the business model can be. You want to see if customers actually really do want this. You want to see if anyone will pay for it, and if none of those things happen, then you want to be able to be nimble enough that you can make some adjustments and tweaks until you finally arrive at what it is that works that you can build a business model around. Hopefully that makes sense.
John Jantsch: You bet.
Colleen DeBaise: Yeah, and it differs a lot from even when I wrote my first book 10 years ago the thinking still was to start everything with the traditional business plan, which is where you sat down and you spent a lot of time researching and maybe coming with a prototype and doing a lot long before you even launched your business, and in today’s world it’s just seeming that the better way to do it is to do it in this lean way, and once you’ve got something, once you’ve got your product, your service, once you’ve got your business model, then sit down to write the traditional business plan, which there’s very much still a use for that, but so that’s where we fall on that.
John Jantsch: So we started talking about an idea, and I will say there are millions and millions of great ideas. The companies that you write about in the pages of Inc and in this book are actually the ones that execute on that idea, and I think there are a lot of companies that fail because they may have had a great idea, but they fail to execute. They fail to find the right operations people, the right IT people. So how do you go from idea to execution?
Colleen DeBaise: Yeah, that’s a great question. Well, it’s tough. One of the things I would recommend is some people don’t execute their idea because they’re really afraid to … Well, they might be afraid of a lot of things, but one thing they might be afraid of is they might be afraid of … They don’t want anyone to steal their idea, so they don’t-
John Jantsch: Nice. Yeah, that’s the [crosstalk 00:08:02]
Colleen DeBaise: Yeah. They don’t talk to anyone. They don’t get lots of feedback. They don’t seek advice because they’re so scared that someone’s going to rip off their idea. I think that fear is largely unfounded because, as you say, it really is all about the execution. If you’ve thought of an idea, chances are someone else has already thought of it too. It’s all in how you execute it. A great example is Facebook, which it was far from an original idea. Mark Zuckerberg did not invent social media, which I think nowadays people think he did, but social media in some form, social networks, had existed for 10 years before he invented Facebook, but the way he executed it made all the difference, and he also, I think, was able to take advantage of the fact that people were becoming more and more familiar and aware of how social networks work, and he was able to take advantage of the fact that other people had tested out social media, things like Friendster and MySpace. He was able to take advantage of what they knew in order to launch Facebook.
So for the people out there who aren’t getting to that execution stage, I would say … which, that sounds awful, but they haven’t executed their idea yet, I would say, “Make sure you get out there and seek feedback and advice and tips, and that will make you feel more confident to go about getting into the marketplace with your idea.” The other thing too I would say is that some people are afraid to take initiative or take the steps that they need to because they’re worried about failure. I think that failure gets a bad rap. I think in a lot of entrepreneurial circles, failure is something that has become respected almost. There’s a running joke in Silicon Valley, “What do you called a failed entrepreneur?” The answer is, “Experienced.” Failure can teach us so much, so there may be missteps that you make along the way. There probably will be, but those are things that you can learn from. You can hopefully be better ready, once you learn from those mistakes, you can be armed and ready to approach again with maybe a better way to do something.
In my book, I include some very famous examples of failures. One entrepreneur, who has probably failed the most is Richard Branson, who, of course, is also super successful. He has had any number of great companies, Virgin Records and Virgin Airlines, and he’s failed spectacularly, almost flamboyantly you might say, and it hasn’t affected him. He’s still Richard Branson, so I would say to people, if that fear of failure is what’s causing them not to execute the idea, they should reframe how they view failure.
John Jantsch: Well, it’s easier to fail when you’re a knight, so he’s got [crosstalk 00:11:34]
Colleen DeBaise: Yeah. That’s true.
John Jantsch: So one of the things that, again, I’m going to give you a little trouble, buried in chapter six and seven is this idea of customer research, and I wonder if, in the lean startup world customer discovery maybe comes first, like go find somebody who has a problem that needs to be solved.
Colleen DeBaise: Yeah, I was a little worried you would give me a hard time with that, John, because I was thinking about the things you would ask me, and I know that the customer realm and marketing is definitely more your expertise and probably what you think of first, and yeah, I know I have a little bit buried there, but hopefully I have some good stuff in there, but yeah, no, I think … I do dedicate two chapters to it, and the idea is that, yes, you do need to know your customer. You need to know your customer hopefully even better than they know themselves, and if you don’t know your customer, you’ve got to figure out ways to go about doing that, and also, once you get up and running, you need to continue to understand your customer, and you need to continue to anticipate the things that they are going to be asking for.
There’s a couple tips from the book that I like in particular that I have gathered from various experts, and one is this idea of standing in your customers’ shoes, sort of pretend to be your customer. Look around, see what your competitors are. Why is your customer choosing you? Try to figure out what it is that is making you unique and uniquely qualified to provide that product or service that is the reason your customers are choosing you over someone else, because that’s something that you can really keep. You want to emphasize that, whatever it is that people like about you.
Another tip is to staple yourself to your customer’s order. In other words, when someone goes about patronizing your business in some way, buying your product or service, go from start to finish to see what that experience is like for the customer so that you understand it and that you can see whether or not there are things that you need to do differently. That idea comes from actually the medical world. In hospitals, some interns are asked to check in as fake patients so they understand what it’s like for a patient to come into the hospital, and they get a sense of how treatment can be better and what needs to happen. So I think that is a good tip. Hopefully you agree with me to understand-
John Jantsch: Well, no, absolutely. You can find that exact tip in Duct Tape Marketing, as a matter of fact because I’ve long believed-
Colleen DeBaise: Oh, great. Good.
John Jantsch: I’ve long believed that, and as business owners, we forget. I mean we don’t go to our website and fill out a form anymore. I mean we set that up 10 years ago-
Colleen DeBaise: Yep, yep. Exactly.
John Jantsch: … and so we forget what the experience actually is.
Colleen DeBaise: Totally.
John Jantsch: Let’s talk a little bit about funding. That’s a topic that I guess people, especially startup world, really excited, go out and get a bunch of money, get the thing going, and I think it’s a valid question to say, “Should you actually take that approach or not?”
Colleen DeBaise: In terms of going out there and getting money?
John Jantsch: Yeah. I mean are you better off bootstrapping a company and building it to something and then maybe deciding, or are you better off going out and saying, “Here’s my great idea. Give me $5 million, and I’ll try to make it work.”
Colleen DeBaise: Well, I think you’re probably always better off bootstrapping anyhow, but I would also add that most people really actually realistically don’t have any other choice. We love to watch these shows like Shark Tank, and we love to think that maybe it’s somewhat easy to go out there and raise money, but in reality, it really isn’t. Most people don’t have businesses that are appropriate really for raising huge amounts of funding and certainly not huge amounts of investment, like venture capital or anything like that. Really only a handful of very high-growth startups are going to be the ones that should be seeking investors.
I would say most businesses or the majority of businesses need to … if you’re thinking about starting a business probably the first place you need to look is your own pocket, your own savings, your own bank account. If that is not as flush as you would like it to be, friends and family are a next great option. They sometimes call the money that a friend or family will invest in your business love money because only people who love you are going to invest in the early stages.
John Jantsch: My family all knows what a screw-up I am. I mean I don’t stand a chance of getting a dime out of them.
Colleen DeBaise: So yeah, so for someone like you, well, that might be a different story. We’d have to explore some other area that you want to be able to come up with money, but these days, there are a number of crowd fun, found … Excuse me. I can’t speak. Crowdfunding platforms that could be appropriate if you have a product or usually it’s a product that you can go to these platforms and raise money from a crowd of people essentially. It’s small amounts of money from a whole crowd who want to see your product on store shelves or available for order or online, so they might be able to fund you. People tap into a number of other things. They tap into their home equity. They sometimes tap into 401(k)s. We don’t advise that, but that is more realistically where a lot of people end up coming up with cash to start a business.
I will say it does give one pause to go out and start a business because the failure rate, it’s fairly high for small businesses. A lot of them don’t make it past the first few years. The biggest reason really is because the business is undercapitalized, which is just a fancy way of saying that there isn’t enough money there, and I would say most entrepreneurs underestimate how much it costs to get their business up and running and they overestimate how much revenue will come in, and they also overestimate how quickly it will come in. So it can be very tough, so you really need to do your homework and figure out how much money you need, not only to get your business up and running but how much you need personally if you need income coming in to support your own expenses, your mortgage payment, your rent, your groceries, your kids’ school. You’ve got to be able to have a real handle on your own personal expenses as well.
John Jantsch: Yeah, lots of tequila too, so you [crosstalk 00:19:19]
Colleen DeBaise: Yeah. That always helps. Yep. Exactly. I definitely recommend that.
John Jantsch: So Colleen, where can people find out more about Start a Successful Business and really anything you’re up to at Inc and other places?
Colleen DeBaise: Oh, sure. Yeah, well the book is available on Amazon.com, and it also is, if you go to Inc Magazine’s website, you can find links to it there, which is, of course, Inc.com, and then there’s also links to the book from my own personal website, which is ColleenDeBaise.com.
John Jantsch: Well, thanks so much for joining us, Colleen, and hopefully I’ll bump into you next time I’m up in New York. I’m going to be up there for a wedding in a few months, so maybe-
Colleen DeBaise: Oh, great. Oh, wonderful. I would love to see you.
John Jantsch: All right. Take care.
Colleen DeBaise: All right. Thanks so much, John.
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