Reasons why thorough research is vital for startups

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Interview at 19:19 mark

JEREMY MAGGS: An item now on small business and small and medium enterprises often underestimate the power of branding and this has got to rank as one of the deadliest mistakes in the world of developing a business. That’s a fairly blunt assessment from Raymond van Niekerk, he’s an adjunct professor with expertise in branding, marketing, business strategy, corporate citizenship and social responsibility. He’s at the University of Cape Town; he joins me now on Moneyweb@Midday. Professor, first of all, I am curious to know why you have raised this particular issue.

RAYMOND VAN NIEKERK: Jeremy, I’ve had exposure to and contact with lots of startups and usually people have some kind of an idea that they think something will work and, of course, having the idea is the easy part, getting it to work is the really hard part. Quite often they skimp on simple things like choosing the right name. It’s all about the idea, and they forget that longer term, you’re going to have consequence of what you do today.

If you do a few things wrong in the beginning, like choosing the wrong name, not branding it properly, not understanding your target audience, who you’re competing with, various things like that, you’re going to have major problems.

Often the people are inexperienced, so they don’t know what’s important yet. Other than that, they’ve got a good idea, and they think it’s going to work. As you know, more often than not, these things don’t work.

JEREMY MAGGS: So you go in with a degree of naive optimism and that’s probably a recipe for failure. So what are the building blocks here? How do you start getting that side of the equation right?

RAYMOND VAN NIEKERK: I think with the availability of information online, which is generally free, and here and there you have to pay for things. What you should do is just prepare yourself a bit more and understand, if you’re not a marketer because it’s not always marketers starting business. In fact, it’s very rarely that it’s the marketers who are starting businesses. A normal person just with normal ideas must research as much as you can, and you can find out about brand issues and distributions issues and sales issues and financial issues.

You can find almost anything on YouTube or on Google. So prepare yourself a bit more and then ask around, I think everybody’s got some kind of a network.

Somebody who’s got a cousin or a friend who does something that may be relevant and speak to people and take advice. Obviously, you have to act as a filter yourself because not everybody’s advice is going to be good advice. So you need to be prepared to some degree so that you can see through what is plainly obvious and maybe wrong or what is a little nugget, but it’s research. Do research.

For example, I was talking to a friend the other day, and she’s busy starting a business in the medical caring, therapy field and so forth, and they’ve got quite a long way down their business plan, but I asked them who exactly their target audience was, and they weren’t sure. So things like that will completely destroy whatever you’re trying to do because you’re going for everybody, you’re going for nobody.

Things like are you going direct to market? Are you going through intermediaries? How does that decision-making process work? All these things.

It’s just research, research, research.

Now, if you’ve been fortunate enough to have some education in the field of starting a new business, because there are courses like that or maybe branding courses and so forth, that’s going to stand you in good stead. But more often than not, people don’t have that. So go online and look for stuff.

JEREMY MAGGS: So it’s identifying the target market or in less corporate speak, knowing who your customer is. How does a small business start that process, then? What should they be doing?

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RAYMOND VAN NIEKERK: Well, typically they start off with a product mindset because they have something that they think is a good idea and it’s usually a product or a service. So they haven’t actually thought of what benefit it creates for somebody and that’s somebody they need to identify.

Obviously, there’s a lot of marketing speak and target marketing and such like, but the reality is, as you said, simplify it and just say, what does this do for who and why should they take it above something else that somebody has?

Not only do you need to then also be aware of who your direct competitors are, who are selling a similar type of idea or product or service, but you also need to know what are (the alternatives available). Let’s say, for example, you’re creating an investment product, well, you might think you’re only against the investment companies, but you’re not, there’s investment in whisky, there’s investment in art, there’s investment in property, there’s all sorts of things. That’s all competition for the same rand.

So just have clarity about what it is you can offer and really and truly what the benefit is because people don’t buy products, they buy utility, something that a product does. Now, that utility could be a physical thing, a tangible thing, or it could be an intangible thing, a sense of well-being. Lots of people are getting into the mental health kind of world and various options for that. So that’s not a tangible thing necessarily. It might have a tangible outcome, but it’s an intangible. So what is the benefit?

If you can’t clearly elucidate what your thing can do for somebody to make their life better, to make them feel better, then you’re going to have a problem.

JEREMY MAGGS: Just a quick one in conclusion then, it’s all very well to take those starting steps, but also critical that business has an eye on remaining relevant over time.

RAYMOND VAN NIEKERK: Yeah, so you’ve got to think (about) not just the first month or year of survival because, in all likelihood, it’s going to take three or four or five years just to get through the survival phase. There are some people who get successful right away, but that’s very rare. So what you’ve got to be thinking is, if I get it right now, what does that lead to? What sort of extensions can I have for my products? How is this thing going to look in five years’ time?

You’ve got to fast forward because you need to have something you’re driving for, not just I’m selling my product, but it’s who are you selling it to? Where, why, how big is it going to get?

For example, with names, are you just going to be selling in South Africa or is your service relevant outside of South Africa in other parts of Africa because now you’re starting to talk about making sure that the phonetics of your name are right so that people who are not first language English speakers or Zulu or Afrikaans or whatever the case may be, that they can pronounce your name. What is coming down the track if you’re successful because you’ve got to target and aim for that.

JEREMY MAGGS: I’m going to leave it there, but thank you very much for the good advice, Raymond van Niekerk from the University of Cape Town. Appreciate it.

Roy Walsh

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