Entrepreneurship - Surviving Year One
Insights from Geneva Business School Instructor, Dr. Dag Flachet
Being an entrepreneur is a challenging and exciting journey. The first year is often filled with obstacles and hurdles, but with the right mindset and approach, it can also be incredibly rewarding. In this article, we'll take a look at some of the key challenges and considerations entrepreneurs face in their first year, as well as some tips and strategies for overcoming them.
We spoke to Dag Flachet, an instructor at Geneva Business School whose classes focus on real business case studies, covering gamification, talent retention, and internationalization strategies. Dag gave us his advice for tackling the biggest challenges new entrepreneurs face in their first year.
What are the biggest challenges to expect in the first year?
Dag correctly identifies how business development strategies need to differ between B2C and B2B companies.
“In large-ticket B2B, getting your first paying customers is the first challenge. Being the first customer is risky. If it goes wrong, it's on you; why didn't you go with the established players?”
Impulse purchasing barely exists in the B2B world. Whether you’re selling wholesale products or SaaS-model tech, good businesses will take their time over purchasing decisions. They want to be sure they’ll get a positive ROI from their investment.
If a decision-maker takes a flyer on an unknown provider and it turns out to be a mistake, the fallout can be very negative - for the business and the employer both.
That’s why those first customers are so essential. They can make or break a business by what they tell their contacts about you. If you get rave reviews, you might start seeing customers line up at your door. But a few bad reviews from influential companies can bury your business before you get any traction.
“In small ticket B2C you would also need to get product market fit first, which means offering a product a certain audience really wants. But there is also a more important operational component in small ticket sales, you need to repeat the process reliably and efficiently at scale. So you need to set up an operational process that is efficient and scalable.”
Dag touches on two factors here that all entrepreneurs should understand in depth. Understanding your market is an unquestionable need.
If you create a product without understanding your customers, you’re simply rolling the dice on whether there’s any demand for it at all - and you’re unlikely to see any positive results. Entrepreneurs can avoid this by maximizing their understanding of their market. Speak to your buyer personas, perform market research however you can, and investigate existing markets.
Scalability is also an essential component in early business success. If you aspire to grow your business beyond your meager beginnings, you need to ensure you’re building a scalable model.
This affects not only your ability to produce more products or offer your services to a growing client base but also your employees. If your business relies on the irreplaceable talents of a few people, you will struggle to meet demand as your business grows.
How can an entrepreneur get people excited about a business idea?
“As an entrepreneur, you are always pitching. You are pitching your products to customers, your company to investors, and your vision to your team. You need a clear vision of what you want to do and you need to be good at expressing it. Motion creates emotion.”
People will pick up on the energy with which you talk about your business. Being confident, knowledgeable, and ambitious are essential in those early days of business development.
As Dag mentions, this applies equally to your customers, your investors, and your own team. Being able to talk with energy and authority about your project can transfer your genuine excitement to those around you.
What were your biggest early learning experiences in running a business?
“There will be many more costs than you can imagine, so account for all of those costs in your margins. If you buy something for 3€ and sell it for 4€, this sounds good, but if you average 2 minutes of work on the sale and 1 minute on customer support this business is not viable.”
This is a particularly tricky issue to overcome. Your finances are hugely dependent on your own business. You’ll have your own expenses to pay, and some are more predictable than others.
The best practice for first-time entrepreneurs to prepare for this comes from experience. Luckily, this doesn’t mean having your business struggle and then learning from your own mistakes.
Working on real-world case studies is the first source of experience on this matter. Seeing where real businesses have made mistakes in the past, particularly where they have miscalculated or failed to anticipate costs, is how business students learn best.
However, as stated, this might not help you to anticipate all the costs your own business will face. That’s where forming a personal network of knowledgeable experts and seasoned professionals shows its value. Having professional mentors can provide first-time entrepreneurs with early warnings about incoming costs, and help them to produce a financial plan that’s robust enough to survive all expenditures.
What is your best habit that entrepreneurs should adopt?
“Every customer complaint is an opportunity to create an ambassador for your company. As a small startup you, the founders, are the customer support. If a customer is unhappy it is a challenge for you to turn that frown around and create a loyal ambassador for your company. Anything less than superb is a failure.”
Customer complaints can truly be a goldmine for new entrepreneurs.
No matter how much research you do, there is no information more valuable than what your customers are saying. They have real experience being customers of your business, so ignoring this information is a huge mistake.
This goes double for the early complaints you get - it’s very likely that if one customer dislikes some element of your offering, then many other customers will, too.
Talking to disgruntled customers may feel like an unpleasant exercise. But, it’s essential to take their complaints seriously and take real steps to provide a better experience for them.
Show them you care about their experience, and that you’re dedicated to providing something that’s truly valuable. If you do this right, they can turn into valuable evangelists for your brand, and help build momentum for your business growth.
What advice would you give to a student hoping to become an entrepreneur?
“Do more and prepare less. As a student, you don't have all the information about the business context, industry dynamics, and customer preferences. You learn this by trying. So instead of writing a 10,000-word business plan that will be outdated 5 minutes after you start, invest your time with MVPs and experiments.”
This advice can feel scary to first-time entrepreneurs, but it’s on the money. Of course, planning for the future, anticipating possible challenges, and thinking of contingencies for when things go wrong are wise things to do. You can’t go into entrepreneurship totally blind.
However, there does come a point where you need to stop planning and start taking action. The business world moves fast, so by waiting for too long to begin, you could miss your chance to meet a market need early on.
Also, your customers are unique individuals. No business textbook can tell you exactly what they will want and how they’ll react. You can only learn this by getting out there and putting your own ideas to the test. And then, most importantly, learning from what happens and being able to adapt.
As Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” Being a highly successful entrepreneur is less about having the perfect plan, and more about surviving difficulties and coming out stronger than ever.
About Dag Flachet
Dr. Dag Flachet is the co-founder of Codific, a company that specializes in building applications in different verticals such as HR-tech, Ed-Tech, and AppSec. With a wealth of experience in the field, Dag has also helped to create several other successful businesses, such as Videolab, which specializes in securely recording patient consultations, SARA, which provides survey analysis and reporting automation, and SAMMY, which specializes in security posture management. With his extensive knowledge and experience, Dag is an expert in the field and a valuable asset to the entrepreneurial community.