Serendipity is nice. It’s exciting, thrilling, almost romantic. It is also fluke and luck and it usually happens by accident. However, experience and the track record of success cautions that serendipity has nothing to do with business; especially the tech business of startups.
In Edmonton, and throughout North America, business leaders, consultants and innovative startup incubators underscore the complex strategy and process it takes to successfully launch a startup. Yes, according to the cliché, it starts with a bright idea. Like intricate pieces of a big puzzle, there are critical steps, components and requirements for focusing and building on a bright idea and shaping it into a viable business.
In the currently-hotter-than-hot business technology age, it is a familiar caution, a well-worn cliché and a documented fact that about 90 per cent of startups fail. Stats also show that less than 50 per cent of startups will make it past their fifth year of business.
From government agencies like Alberta Innovates, to the expertise and experience of Edmonton mentoring like Startup TNT and Edmonton Unlimited to NAIT’s focused and dynamic Mawji Centre, the professionals are unanimous: There must be a plan!
- long-term vision and startup goals
- startup strategy for achieving startup goals
- recruiting employees to help achieve startup goals
- defining startup costs, securing funding and generating revenue
- estimating startup time frames
- creating a startup marketing plan
- establishing key performance indicators (KPIs) to track startup progress
Stats show that some 42 per cent of startups failed because there was no viable market need for their product or service. It is why one of the most essential aspects of a plan is diligent market research, to practically (not wishful-thinkingly) assess the marketplace and determine the feasibility of the entrepreneurial bright idea.
The post mortems also suggest that, in most cases, failure was evident long before the startup launched. Although analysis highlighted key strengths and weaknesses of the idea, human nature and enthusiasm caused entrepreneurs to overlook the hard facts.
Startup coaches, mentors and advisors constantly inspire but temper the entrepreneurial enthusiasm about business technology with tough love caution. As exhilarating the potential of a bright idea may be, ultimately the challenge is to transform it into a viable and scalable business.
After all, Walmart was once a small business with a single store. So was McDonald’s. And Facebook and Amazon were once ambitious startups. But they had a plan!
A strategic business plan is a must have. It outlines an effective company structure, the goals, the mission, the values and the business’ objectives.
In Edmonton, NAIT’s Mawji Centre is the resourceful and well-connected on-campus community dedicated to inspiring and helping Edmonton’s entrepreneurial mindset with invaluable business savvy, mentorship, guest speakers, competitions, workshops, networking, and programming.
“Learning how to build a startup is incredibly freeing,” says Dale Schaub, lead entrepreneurship consult at NAIT’s Mawji Centre for New Venture & Student Entrepreneurship.
“Yes, it can get difficult but it no longer becomes impossible or out of reach. Entrepreneurs learn that there are processes that can be used to build one. In the beginning, it’s important to really understand the problem that people are suffering through. It’s easy to fall in love with a solution or technology that you think will work but it’s far more important to create something that caters to solving the problem. If your solution isn’t a good fit, your customers won’t buy because it’s not what they are looking for.”
Schaub is an experienced business professional and, while he is inspiring up-and-coming entrepreneurs, he is wise, realistic and doesn’t mince words.
“From a speedbump perspective, there are frustrations. Students who have the guts to pursue a startup sometimes struggle with understanding the journey. They have trouble finding an idea that solves a significant enough problem that people would be willing to pay for it, and they also have to deal with the time management challenges of going to school full-time while also finding the time to keep working on their business. Not everyone makes it, a lot fail and some burn out. It’s not a path for everyone.”
A common challenging aspect of a startup’s plan is funding. It involves the age-old dilemma that it takes money to make money. It is why many Edmonton startups turn to other sources for funding, including family, friends and networking with the help of incubators and venture capitalists.
“There are entire professions dedicated to funding businesses and it is that complexity that makes funding so tricky for all entrepreneurs,” Schaub says.
“It is inevitable that if you have a strong knowledge of the space, you have a lot more options. If you don’t, it can be frustrating and hopeless. It is true for entrepreneurs already in the market and especially true for students who have even fewer options than other founders, because they tend not to have savings and good credit yet. They also have no track record of business success and that makes lenders and investors less likely to be interested in taking a risk on them.”
One of Mawji Centre’s focuses is to provide NAIT students with options and support to achieve funding.
“We offer internal grants and competitions, both internally and connecting young entrepreneurs to external competitions,” adds John Sutherland, manager of the Mawji Centre for New Venture & Student Entrepreneurship. “Our internal opportunities include NAIT Innovation Week, the Pitch it to Me! student competition and the Business Innovation Showcase. We also send students to outside competitions across the country. Some have been successful, while others have to bootstrap through pre-sales, investments from friends and family or bringing on a co-founder who can help build things they couldn’t. The Business Innovation Showcase brings the ecosystem to NAIT. Student-led businesses and business ideas are on display and students have an opportunity to gain valuable feedback and connect with potential investors,” he adds.
Edmonton’s exciting entrepreneurial spirit and support is helping to make Edmonton a startup hub. Schaub mentions the Mawji Centre mentor list has over 50 people interested in helping out, “with some top business leaders in Edmonton on the list, ensuring NAIT students are getting advice from the very best sources.”
“It is just one reason that Edmonton is such a great market to grow a business. There’s lots of support for aspiring entrepreneurs and the size of the tech scene seems to double every year,” he concludes.