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    The Startup Handbook: A Founder’s Guide to Building a Business
    The Startup Handbook: A Founder’s Guide to Building a Business
    The Startup Handbook: A Founder’s Guide to Building a Business
    Ebook157 pages1 hour

    The Startup Handbook: A Founder’s Guide to Building a Business

    By Alan Shields

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    About this ebook

    Based on author Alan Shields’s experience of almost twenty-five years of building products and businesses around the world, The Startup Handbook: A Founder’s Guide to Building a Business details the critical knowledge that founders need before they embark upon the startup journey and breaks down the challenges that they’ll face as they build their business.



    The Startup Handbook speaks to the practicalities of tackling the challenges faced by entrepreneurs and focuses on the key principles that will help anyone successfully establish a thriving business. The Startup Handbook is a must-read book for anyone thinking about starting their own company or currently building a business.
    LanguageEnglish
    PublisherGatekeeper Press
    Release dateNov 18, 2024
    ISBN9781662954665
    The Startup Handbook: A Founder’s Guide to Building a Business

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      Book preview

      The Startup Handbook - Alan Shields

      CHAPTER 1

      Starting Out

      The only way to do great work is to love what you do.

      —Steve Jobs

      Where better to start than at the beginning—when the idea of starting a business was conceived. It is always tempting to look back on your life and try and make sense of decisions in a rational way. However, in the spirit of not applying retrospective logic to explain decisions that were made with intuition and emotion rather than logic and rationale, I am not going to try and convince you that I knew exactly what I was doing, what risks it entailed, and the chances of success. I just didn’t.

      That is not to say that I was completely ignorant. I had read that the average entrepreneur starts more than two businesses before they find success, and like everyone else, I had seen businesses fail in front of me in the form of cafés, shops, and restaurants. However, I didn’t necessarily equate that failure to my own chances of success.

      I am inherently a very data-driven person, and yet at no point did I look at the statistics on starting a business to understand the chances of survival. It’s easy to find: the Bureau of Labor Statistics publishes very clear data that points to the risks. The data shows that, depending on the industry, by year 1, approximately 20 percent of startups fail, and by year 5, 45 percent.¹

      Source: US Bureau of Labor Statistics

      Nor did I really sit down and think through the risks in a logical way. At no point did I weigh up the risks of starting the business with the potential upsides in some kind of table of pros and cons.

      I didn’t need to worry; the risks inherent in running a business revealed themselves over the course of building RFI. Sometimes gradually and one by one, sometimes quickly and all at once. In each case, we dealt with them as best we knew how. Sometimes well, sometimes not.

      When I reflect back on this, I often wonder if it would have been a disadvantage to have been fully aware of the risks being taken. Would I ever actually have taken the plunge, quit my job, and started RFI? I can’t answer that, but in this chapter, I want to try and articulate why I didn’t hesitate to take the step.

      I believe that, ultimately, I didn’t falter in my step because I had mitigated some of the risks without doing so deliberately. Clearly, as a founder, if you can ensure that you have managed as many of the risks as possible up front, then you will have a greater chance of success in the business endeavor you choose to embark upon. To this end, the four fundamentals that I believe are most important in helping manage risks are the following:

      1. Gain client feedback on product-market fit.

      2. Lean on experience and expertise in a known market.

      3. Recognize limits and know how to compensate for them.

      4. Manage investment exposure.

      Gain Client Feedback on Product-Market Fit

      Often, one of the unknowns when starting a business is whether the concept that you’re ultimately going to be selling—product or service—is actually going to be something that people want to buy. This is the product-market fit in business terminology. However, I prefer the expression, There is a gap in the market, but is there a market in the gap?

      We all think of things in our day-to-day lives that would provide solutions for particular problems that we have. However, we don’t know if those problems are unique to us and a small group of people or they are faced by the population at large. The answer to this is key to the successful commercialization of the solution we’re selling, and it requires market research to answer.

      In our case, the problem came from existing clients, which effectively meant that we could bypass the market research phase of understanding the product-market fit. Of course, the irony that we skipped market research in launching a market research business is not lost on me.

      The scenario was that in my previous company, we were taking publicly available data on the financial service industry to tell banks how the market was performing and how it was likely to grow and change. For example, we would produce a report on the Australian mortgage market and then provide a view of regulatory and competitive dynamics, plus a five-year forecast.

      In presenting this information to the banks, we found that the same question would keep arising:

      Great, but what do our customers want from our products and services?

      As an analyst, when you see a pattern, you want to act on it. And so, this was what we did. We realized that through market research, there was an opportunity to combine our expertise in the banking industry, in which we operated, with a view of what customers wanted from the industry.

      It sounds so simple, but at the time, nobody was doing it. There were market research firms that were generalists and covered banking alongside FMCG, automotive, and other areas. And there were specialist banking analysts. There was certainly a gap in the market, and based on our clients’ questions, we realized that there was also a market in the gap. Thus RFI was born.

      Lean on Experience and Expertise in a Known Market

      The importance of specialization quickly became clear in client interactions. We could confidently walk into a briefing with a client and skip the need for explanations about how a service or product worked, or the concepts that clients wanted to test.

      My favorite anecdote from this period is a time when I sat down with one of the large payments clients that we had. The client took out his wallet to start explaining the difference between a debit and a credit card. This might have been necessary with other market research firms, but not with RFI.

      This is a simple example, but I use it to show that we made it easier for clients to do business with us because we understood their world better than our competitors—the generalists.

      This specialization was possible because of the experience that we had in our past roles. By this time, I had spent six years analyzing the banking industry and could comfortably talk with clients about the latest developments and regulatory headwinds that the market and competitors were facing. This gave me a lot of comfort that what we were doing was going to work.

      More importantly, I was not stepping into a world that I knew nothing about. Over the last twenty years, I have met many people who have stepped out of working in one industry to start a business in an area in which they are inexperienced. This makes it really hard to succeed in what is already a hard endeavor.

      Examples of this include several banking executives that I know who have started up in food or retail, opening restaurants, cafés, and shops. Now, I am not saying that nobody should start these types of business, but to do so when your background is not in that specific area is inherently riskier than a business needs to be.

      Ultimately, I am not a retailer or a restaurateur. I am an analyst. By starting a business that played to my strengths and experience, I felt like I was doing something less risky. And this was helpful in taking the plunge.

      Recognize Limits and Know How to Compensate for Them

      Hubris is a killer when you’re starting a business, so I am certainly not saying that I thought we could never fail. In fact, I like to think that I have a healthy awareness of my personal limitations.

      After graduating from university, I developed ideas of starting my own business but was hesitant to do so. Partly because I hadn’t hit upon what I considered to be a great idea and partly because I felt like I needed real-world work experience. It’s fair to say that my drive to start a business at this point was driven more by the desire to work for myself than by any burning passion for a particular business idea.

      It’s hard to overstate the importance of the experience I gained working for other businesses. It not only taught me to recognize what I was and was not good at in the workplace, but also what I liked and did not like doing. Happily, it turned out that for the most part, the stuff I liked doing was also the stuff I was good at. I will go into more detail about these things that I enjoyed in the Establishing the Business chapter, but as a summary, they included client interactions and presentations, analysis and interpretation of data, and determining market opportunities. All these things would prove to be very useful, but they were by no means a full suite of capabilities that a new business would require.

      One of the things that scared me was new business development. I had seen enough of the workings of the sales teams in the organizations I’d worked for to know that I didn’t want to be in one. I know there is a saying that goes, One way or another, we’re all in sales. I do agree with that to a degree, but we’re not all cold-calling potential clients and chasing down deals every hour of every day. Salespeople are. In a business startup, I couldn’t see how I would succeed without a salesperson. I also knew that this wasn’t me.

      Somewhat serendipitously, Charles (my RFI cofounder) had exactly this as his background. Commission-only sales, advertising sales, door-to-door sales, and years of experience in selling to the banks that we were targeting—he was experienced

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