Are You Ready To Make Your Business A Success?: Don't Miss Our Groundbreaking Interview With John Bradberry, Author of "6 Secrets to Startup Success."

Whether you are starting a home-based business or run a large operation, entrepreneur John Bradberry discusses the keys to developing a market orientation, readying yourself as a business founder, and what can sink even a great business idea.

In "6 Secrets to Startup Success: How To Turn Your Entrepreneurial Passion Into A Thriving Business" entrepreneur and consultant John Bradberry offers a breakthrough explanation for why so many startups fail, and provides ready solutions for aspiring founders. In 2007, he launched an extensive study of the universal factors that drive new venture success. In this interview with Commitmentnow.com, he shares his expert advice on how to create a profitable business and how to save a business that is failing.

Commitmentnow.com: If someone came to you and said, ‘my business is just not working’ what are the first and best pieces of advice you would give them?

John Bradberry: First, I would ask them a series of questions to help them evaluate what’s not working and then go from there. Are they having trouble finding customers? Are they having problems with execution and operations? Is there a bad fit between their skills and what the business requires of them? 

In our consulting work at Ready Founder Services, we use a simple but powerful model to help founders look at their business idea through four lenses. If a venture is in danger or is not working, the root cause almost always falls in one of these areas:

1.    Founder.  This lens has to do with the degree of fit between a founder’s motives, expertise, resources, relationships, etc., and what will be required to get their business concept off the ground. How well do you match up with what the business needs from you?

2.    Market.  What core problem are you solving? Who is your core customer? Is their sufficient demand for your solution? If not, why not? What competitive forces are in play and what makes your offering different, better?

3.     Math.  Does your business model make economic sense? Do the numbers work? What is your game plan to get to profitability? How long do you estimate it will take you to get there (realistically)? How much funding will you need to make it to that point and beyond? Where and how will you secure these funds?  

4.    Execution. What’s required to execute on your idea? Are you effective in getting things done? If not, who can help you? Are you experimenting and learning as you go (versus putting all of your eggs in one basket)? Are you honest with yourself about what’s working and what’s not?

Commitmentnow.com: What are the five key steps every entrepreneur should take if they want to create a successful and profitable business?
 
1)    Ready yourself as a founder. Be clear about what is motivating you, and where your strengths are, relative to what your business requires. Understand how your strengths come into play, and be honest with yourself about your gaps and get help to shore up those areas.

2)    Develop a market orientation. Find out how others feel about your idea. Will it address an important need? Will people pay to have the problem solved? Are there enough of them to fund a healthy business?

3)    Do the (realistic) math. Apply the appropriate planning and rigor to ensure your idea is viable economically. This usually doesn’t require a detailed spreadsheet, but it does require a realistic look at sales, costs, margins, timelines, etc. Figure out what it will cost to launch your business – then double that number.

4)    Try an early version of your product or service and learn as you go. Treat your new venture as an experiment in which learning is more important than sales.

5)    Stay flexible.  Most great businesses look different than what the founder first envisioned. So, move forward with speed and commitment, while also staying open to new data.

Commitmentnow.com: If someone thinks they have a great idea for a business, what should they do to make their idea a reality—and what mistakes do you see people make in those early planning stages that could be avoided?

John: If you are excited by your idea, you may face a common danger that showed up in my research of startup founders. I call it the “passion trap.” It’s what happens when someone becomes emotionally attached to their idea – they literally fall in love with their business – and as a result become blind and deaf to new information.

Here are a few red flags that may indicate you’re in danger of letting your entrepreneurial passion get the best of you. Are you:

•    Thinking or saying, “This is a sure thing!”?
•    Losing patience with people who point out risks or shortcomings in your plan?
•    Measuring progress by how good you feel (versus more objective measures)?
•    Assuming you are entering a space with little or no competition?
•    Plotting global domination before releasing your first product?
•    Hearing great “buzz” but finding few (or no) paying customers?

Commitmentnow.com: How can a new company reach profitability? What are the steps and choices that will make their ‘math story’ one that spells success, not debt, but profit?

John: Good question, because a lot of startup founders are so passionate about their business idea that they fall into a set of predictable traps when it comes to the financial aspects of the business.

For instance, they offer sales projections that are far too rosy. They greatly underestimate how much money and time will be required to get the business up and running. As a result, they rarely secure enough funding, and they are trapped with their backs against the wall if things don’t go perfectly according to plan (which is very common).

The solution is taking the time to fully scrutinize your business through an economic lens. I use the notion of a “math story” as a tool to help entrepreneurs get clear about their startup plan and how it translates into economic value. I meet a lot of founders who say that making a lot of money is not their primary reason for starting a business.

But I’ve never met an entrepreneur who didn’t care deeply about creating something that is healthy and viable, something that thrives. And you simply can’t achieve that unless your business performs well relative to some basic laws of economics.

Building a compelling math story means subjecting your startup to clear-eyed scrutiny. How will you generate cash? What kinds of profit margins will be generated, after costs? At expected growth rates, how long will it take you to reach a monthly breakeven point – where your business is self-funding? How much capital will you need to safely reach that milestone? What are best-, mid-, and worst-case scenarios and how will you handle each?

For most startups, answering these questions doesn’t require sophisticated financial analysis, but it does require that you go beyond best-case scenarios, that you’re realistic about what is most likely rather than what is hoped for. The result is a clear and realistic game plan and a set of priorities to help you drive your business forward.

Commitmentnow.com: What type of person makes a great entrepreneur? What qualities, personality characteristics, habits make for a person that can potentially be a successful entrepreneur—and on the flip side, what qualities make for an entrepreneur who is likely to fail?

John: This is an interesting topic because no one type of person is sure to be a successful entrepreneur. There are simply too many variables other then personality. But we do know that the following qualities are associated with success as an entrepreneur:

• Commercial Orientation — Interested in money and business, and driven to achieve bottom-line profitability.

• Conceptual Orientation — Generates ideas and continually unearths new possibilities. Able to skillfully deal with ambiguity and complexity. Discerns useful patterns from large amounts of information.

• Independence — Willing or inclined to strike out on one’s own with minimal support from others. Comfortable standing apart from the herd; typically dissatisfied working for someone else.

• Need for Achievement — Passionate, ambitious, competitive and driven. Loves a challenge, enjoys mastering new skills, displays a strong work ethic, and sets high standards for oneself and others.

• Risk Tolerance — Evaluates and takes on calculated risks. Understands that accomplishing significant goals or innovative breakthroughs usually requires risk-taking, but evaluates the probability and impact of risks and manages accordingly.

• Confidence — Understands personal abilities and contribution, optimistic but realistic. Not easily deterred by others’ negativity or criticism.

• Persuasive Ability — Appeals to others’ motives and values by tuning in to the needs and interests of others and adapting messages and behaviors to match.

• Resilience — Perseveres in the face of adversity. Maintains mental and physical reserves necessary to deal with challenges. Persistently works to overcome obstacles and is not easily derailed by setbacks.

• Reliability — Delivers on commitments to others as well as to oneself. Orderly, prompt and self-disciplined in making and following through on plans.

• People Orientation — Values, understands and leverages people. Possesses strong social antennae and communicates effectively. Treats others with dignity and respect, makes new friends easily, and builds lasting relationships.

• Integrity — Ethical, honest and trustworthy, holding oneself and others to high personal and professional standards. Behaves consistently with prevailing norms for acceptable behavior.

Interestingly, some of these same qualities, when present at extreme levels, can be the very traits that lead to entrepreneurial failure. Extreme confidence, for example, can harden into blind arrogance. Extreme independence can become dysfunctional aloofness.

And the highly conceptual entrepreneur can become the founder who can’t resist chasing every available opportunity, never following through on any of them (the “shiny object” syndrome.

The key is to understand what makes you tick as a founder: what is your personality and how well does it match up with the requirements of your particular situation. Once you’re clear about this, then you can decide how to best leverage your areas of strength and address any significant gaps.  

We’ve developed an empirically validated assessment tool to provide feedback for people interested in how their personality matches up with the above qualities. Interested readers can learn more at www.readyfounder.com.

Commitmentnow.com: What are some things that can sink even a good business idea?

John: In looking across startups of all sizes and all kinds, I see a few common entrepreneurial traps that seem to trip up new entrepreneurs. The first, featured in my book and discussed earlier, I call the “passion trap.”  The passion trap is a destructive pattern of beliefs and behaviors that occur when someone falls in love with a business concept.

Passionate founders can become emotionally attached to their idea – whether it’s a pet product, a cool technology, a napkin sketch or a heartfelt cause. This attachment causes otherwise talented, intelligent founders to make critical miscalculations and missteps—mistakes such as greatly over-estimating customer demand, severely underestimating what the venture will cost, committing too much capital to unproven concepts, or stubbornly sticking with a failing strategy until it’s too late to recover.

Two other traps are common. The second is what I call the “money trap,” where founders underestimate how much money will be required to get their idea off the ground. They either raise too little money, spend far too much money, or both – with the net result being that they find themselves rapidly running out of cash, with their backs against a financial wall. Once they are in that position, they are essentially baked. Investors and lenders are not likely to provide funding to a desperate founder.

The third trap actually occurs after a bit of success. It’s what I call the “capacity trap,” where the founder never lets go of the core functions of the business, thus becoming the limiting factor. They fail to build something that stands apart from themselves.  

Commitmentnow.com: How can a new business reach their market, and what are some of the ways to test if there really is a market for your idea? How important is market orientation?

John: First, I want to emphasize how critical a market orientation is for a startup. The market is more powerful than any idea or any business model. In the end, it doesn’t matter what an entrepreneur and his or her team things of the entrepreneur’s “great” startup idea. What matters is how customers experience it and what they have to say about it.

An idea isn’t great until the market says it is – and no amount of passion will overcome that basic truth. Unfortunately, a lot of passionate founders get so wrapped up in their products and services that they lose sight of what customers actually want, and why.

Market-oriented entrepreneurs are obsessive about striving to understand their markets. They spend time clarifying who their core customers are, why these customers buy, how satisfied they are with service provided, and so on. Are you truly curious about your customer’s experience, and do you understand why they might choose your product over other options?

The simplest way to answering these questions is the old-fashioned way: get out and talk to people. Talk to prospective customers, partners, investors, even competitors. If you carry an open mind, you’ll be surprised how much you can learn about the viability of your idea.

Commitmentnow.com: What are the most common mistakes new businesses make?

John: Here are the six most common dangers I have found in working with early-stage businesses:

1    Founder misalignment: I often see a poor fit between the founder’s skills and what the new venture requires. More often than not, startup founders fail to honestly assess how well their capabilities and motivations match up with what it will take to successfully launch their idea. They end up floundering in an ill-suited role, and the idea doesn’t get the right mix of talent around it to drive success.

2    Missing the market:  Somewhere out there in the cosmos is a massive graveyard of “great” business ideas. One of the most common by-products of entrepreneurial passion is the founder’s assumption – even certainty – that customer demand is high when, in fact, little or none exists. I spend a lot of time with new founders helping them orient their venture to the marketplace. We adhere to a simple principle: an idea isn’t great until the market says it is.

3    Rose-colored planning (or none at all):  More often than not, strong belief in an idea leads to overly rosy projections on the part of the founding team. It’s very typical – even on the part of seasoned entrepreneurs – to over-estimate early sales and underestimate costs and timelines. This leads to cash crises that consume and distract founders at the worst possible moment.

4    Unforgiving strategies:  Over-confident founders sometimes put the bulk of their resources into a single business strategy, essentially putting all of their eggs in one basket, rather than preserving flexibility to experiment and iterating their way to profitability.

5    Reality distortion:  In the book, I cite examples of how founding teams get trapped inside a “feel-good bubble,” where bad news is avoided or glossed over, and tough issues are rarely tackled.  Everyone’s drinking the same Kool-Aid, even as the venture is heading toward the edge of a cliff.

6    Evaporating runway: Some or all of the above dangers can lead to a rude awakening for founders who are caught in the passion trap.  What was assumed to be a lengthy startup “runway” evaporates quickly as the venture runs out of cash and time.

Commitmentnow.com: As a consultant, what do you see as some of the biggest predictors of a potential business failure? How were you able to make your consulting business a success?

John: Probably the most common root cause of early business failure is hubris. Think of the mythological Greek boy Icarus circling higher and higher toward the sun, ignoring his father’s cries. Eventually Icarus’ wings melted and he fell to his death.  In the modern world of startups, hubris causes founders to assume that the world will beat a door to their doorstep eager to buy their first product, but the reality is that most ventures (9 or 10) find that their first efforts are “duds.” Sometimes their second and third are duds, as well. But, if they stick with it, and learn and adapt as they go, they will eventually strike gold.

The core lesson here is that business success is about focusing on the marketplace. Do paying customers care as much as you do? This is the highest priority question to answer. You cannot assume the answer in advance, and, in fact, there is only on sure way to answer the question – through actual sales!

To Purchase Six Secrets To Startup Success click here.

About the Author: John Bradberry is CEO of Ready Founder Services, a provider of tools and consulting services for entrepreneurs and investors. Over 20 years he has worked to improve the performance of leaders and teams in a wide range of organizations.

In 2007, John launched an extended study to identify the universal factors that drive startup success, and has written his first book on the subject, 6 Secrets to Startup Success.

After graduating from Davidson College in 1983, John earned a master's degree in psychology from the University of Richmond, and helped found the Blue Dogs, a nationally touring band based in Charleston, SC.