Innovation should pay off. Whether it does depends on the business case. More precisely, the…
Do Startups need consulting? One might think it’s unnecessary. Established companies regard startups with some envy. Innovative, creative, great publicity, and plenty of eager investors. On the other hand, there is talk of 90-hour weeks, long dry spells. And, after all, 90% of startups fail in the end.
So what now? Are startups the perfect role models for innovation, or are they just as helpless as everyone else? Here are a few experiences that suggest why startups can also benefit from consulting.
Startups need different consulting than established companies
Blinkers, no ideas, ossified structures and work conducted by the book. Established companies struggle with issues like these. In startups, these issues rarely emerge. There are plenty of ideas. More ideas than you can ever implement. Motivated team members are teeming everywhere. And there’s barely any structure anyway.
But there is a profound lack of experience. In the beginning, most startups consist of teams of people who have never successfully launched a product to market. In most cases, experience in sales, corporate management, scaling, product management, strategy development and success controlling are similarly deficient.
The most important problems startups face
The challenges are as numerous as they are diverse. And yet, there are recurring patterns that emerge, no matter the industry.
1. A bag full of ideas does not make a product: Product definition
Startups rarely lack ideas. The challenge is to focus on the ideas that are relevant, and then bring them together into a consistent product or an attractive service offer. But how do you do that? Which features do the customers really need? What are they willing to pay for? Which functionalities do you start with? What additional properties come later?
Minimum Viable Product is the oft-heard buzzword – and is certainly an important step.
This involves product strategy, multi-generation plan and appropriate target group definition. But how do you create this MVP? What kind of market positioning is necessary? Where will you get burned by the competition, and where is that unoccupied niche in which a startup can grow? Good product definition provides answers to all these questions.
With experienced consulting and support, good product definition takes about a week. It will go even faster with advance, preparatory groundwork in terms of customer and market understanding.
2. the best youth science project is no guarantee of success: business model
The latest technologies, a great product, and the target group is enthusiastic. But no one is buying. Doubts begin to arise: How do we monetize our great products? Who’ll buy it? And just how should customers pay for them? Per article? Per minute? Flat rate? Ad-financed? Freemium pricing model?
A functioning business model is a prerequisite for any long-term profitable business. Together with experienced consultants, a solid business model can be outlined in one to two days.
3. The fish, not the fisherman, has to like how the bait tastes: Validation
Great ideas, big pats on the back, developers and jurors are thrilled. Many startups can boast of innovation prizes and awards. And if the spotlight attracts investors and a round of financing, then a founder’s ego can quickly grow beyond his experience or competence.
This often leads to taking action based on one’s hunches despite better advice and being blind to everything except one’s own rosy picture of a bright future. But the line between success and failure is narrow. And only one factor will tell whether there’s a dark red brick wall waiting behind that lovely, pink cloud. The market. The customer. The buyer.
Validating assumptions is a crucial step toward distinguishing starry-eyed visions from guarantors of success. But how do I talk to the customer? What questions should I ask? How do I avoid slipping into missionary mode, eager to elicit those words I want to hear – “Yes, great, super product” – when people don’t really mean it, and then, in the end, nobody buys?
Identifying the most important target groups, defining validation interviews and testing, and designing channels for addressing them: this can all be done in two days. Three more days for actual interviews will then quickly achieve clarity, necessary disillusionment, and in the best of cases, down-to-earth, reliable prospects for success.
4. Visionary ideas don’t pay the rent: a sellable “Minimum Viable Product” MVP
Visions are good – indeed, indispensable. Especially for long-term and sustainable success. In order to generate sales, however, an initial product must be launched on the market. But where to start? Which features can be omitted in the first product version? Who are the ideal “early adopters” for your new startup product? And how do you manage not to disappoint or anger your target group even though your product is not yet perfect?
With a good understanding of the market, one to two days is enough to turn a visionary product into a sellable MVP. This applies to both analog and digital products, services and business models.
5. everyone dreams of a viral product: In reality, you need sales
The idea that a product has to go viral dates back to the time of the dot-com bubble. At that time, a lot of money was invested in ideas that ultimately never found a market. This was followed by the trend of trying to find a product “sells itself” – if possible, without major distribution risks.
In reality, the truth lies somewhere in between. Of course, most products require distribution. How will the customer find out about your offer? What message should you publicize? How do you design a functioning sales process? Which multipliers will help you?
In about five days, we can design a sales concept, develop a convincing sales story, build messages, and test sales channels and other approaches. With real feedback, you can set your course for continuous sales.
Financing for Startup Consulting
Money shortage is a serious problem most startups face. Fortunately, good advice doesn’t have to be expensive when funding is available:
- BAFA’s “Entrepreneurial Know-How” funding program provides 50% – 80% of 4,000 EUR in consulting fees. This program is valid until the end of 2020 but may be extended. Just a few days of startup consulting can already lead to valuable concepts, implementation plans and initial achievements. For example, sales strategy, marketing concepts, financing planning, product definition or business model development.
- 5,000 EUR in coaching services, which also include most consulting topics, are financed by the EXIST start-up scholarship. In addition to additional material and personnel resources up to a maximum of EUR 138,000.
- Free pre-start-up consulting is available, for example, in Berlin and Brandenburg.
- The Chamber of Industry and Commerce in Bavaria (IHK Bayern) provides startups – prior to founding – with 70% of 8,000 EUR in coaching fees.
- Numerous other funding opportunities available through IHKs, economic development agencies and other regional institutions allow almost every startup to take advantage of professional consulting without paying full rates, and sometimes even completely free of charge.
Consulting for Successful Startups
Startups need to be fast. Experienced consulting can lead to market success twice as fast!
TOM SPIKE supports industrial companies and start-ups and thus brings the best of both worlds together. Our approach combines our experience from consulting projects in industry, startup consulting and experience with our own startups with comprehensive methodological competence and leadership strength. As an innovation consultancy, our goal is to create world firsts and lead you to market success. Because innovation means market success. Everything else is secondary. Startup consulting typically takes the form of a workshop. These occur mostly offline. Depending on your needs and topic, online workshops can be provided. We have already successfully consulted and supported these and other startups: