Is it really so easy to set up and run a successful business?

By: Simon Wicks

Date: 19 January 2010

I'm sitting in the lecture theatre of the Royal Institution, listening to the investor Doug Richard, founder of The School for Startups, tell an audience of potential social entrepreneurs the 20 questions that every successful business should ask themselves. The questions cover most aspects of business operation - market understanding, differentiation, industry knowledge, business model, pricing, operational dynamics, people.

The good thing about Doug Richard is that he keeps it simple. He tries to deal in the realities of running a small operation, is sceptical about big business and the claims of people touting big theories. Moreover, he's interested in doing things cheaply and effectively. It's good solid stuff and the questions are smart and get to the point.

So, in relation to your market, the three key questions are:

1) How many are there?

2) How can we reach them?

3) How many can we reach?

It's good, basic stuff that people well-versed in business might nod sagely and carry on - though it bears restatement often. However, the difference today is that this is an event specifically for social entrepreneurs. These are people who might not be "entrepreneurs" in the conventional sense; who perhaps are driven more by values or a charitable principle than by the desire to make profit. So the mechanisms of marketing and sales may be quite alien - and even frightening - to them.

But the truth is, as Doug points out, no matter how you dress it up, you can reduce marketing and sales to core principles. You need a product, you need a market for that product, you need a business model that suits your product and your market, and you need to price your product correctly. That's more or less it.

On the way, you get lots of gems. Pricing theory is misleading, says Doug: the way you price a product is to sell it to people. Efficiency counts for an awful lot: look at Tesco - few people say they like Tesco, but they shop there nevertheless. Don't listen to the opinions of friends and family about your product: they will give you a polite answer, not a truthful answer. "Every business needs three people: someone to sell, someone to deliver and someone to count." And so on, and so on.

Worthwhile? Absolutely. And I'm sitting here thinking "Wow, it's all so simple. If it's this easy, why haven't I started a business?" Ah, that's a much more difficult question to answer and I doubt even Doug would have a satisfying answer for that one.

Simon Wicks, BHP Information Solutions

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