Just last week, my hometown of Detroit officially filed for bankruptcy. Although I no longer live in Detroit, I spent a majority of my life there and will always feel an emotional attachment. Although Detroit’s problems are deep-seeded and this bankruptcy was decades in the making, I am optimistic that Detroit’s best years lie ahead of it. As I was reflecting on this development, I realized I was viewing Detroit in a way that entrepreneurs should view their ventures: with optimism. When new ventures encounter seemingly insurmountable roadblocks, it is important to be sober in reviewing them as a reason to throw in the towel or, more likely, a bump in the road.
If your business ideas were simple, then it would have already been done. What separates the dreamers from the doers is action. We have all had an amazing idea for a movie, the funniest Super Bowl commercial or the million-dollar business, but most of us fail to act. When we do act, our labors are rarely rewarded with immediate fruit. This is especially true with the most disruptive ideas.
My favorite example is the story of Frederic Tudor, known as the “Ice King” in Boston, who founded the Tudor Ice Company through the purchase of his first ship in 1806. His brilliant epiphany was to cut ice out of the ponds outside of Boston during the winter – including Henry David Thoreau’s famous Walden Pond – and ship that ice to hotter climates, like India or the Caribbean. Although he lost up to 70 percent of his cargo en route, this was not his biggest problem. The biggest challenge was convincing buyers in these places why they needed the ice. Mr. Tudor unwittingly became responsible for the growth of ice cream’s popularity, which he took to the various ports to demonstrate potential uses for the strange cold blocks. In those days, milk was drunk warm and cold beverages were nearly non-existent. Getting his business to a point of profitability took decades and, during that time, Mr. Tudor became somewhat of a running joke in Boston for taking a ubiquitous resource and selling it abroad. No one was laughing when he made a fortune, except him of course.
We cannot imagine a world where we drink warm milk on a hot summer day or where ice cream does not exist. Frederic Tudor completely altered customer tastes and essentially created the refrigeration industry (until refrigerators were invented and the ice industry disappeared). His path was fraught with setback and points of despair, but he persisted. The same can be said for people like Steve Jobs, Thomas Edison or Henry Ford. Persistence is important, but the line between determination and stubbornness is a tough one. When those moments of peril come, review the assets that you have working for you and create a scorecard. Here are some broad categories to consider:
Market: Is it right?
A lemonade stand is a horrible business to open at a ski resort in Montana but great for a beach in Hawaii. Are you serving the right market, and does your market have a genuine pain point that your product cures? Skiers might be thirsty, but maybe you need to switch to hot chocolate.
Communication: How do you accomplish it?
Emerson once wrote, “If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.” The problem is that if no one knows you’re there then they cannot beat that well-worn path to your business. What is your communication strategy? How do you talk to customers? Do you cold-call? Make sure you have a social media presence and are on email. For phone communication, I recommend using something that will provide a reliable way to connect with potential customers, such as the Syn248 business phone system from AT&T that can outfit your office to be a well-oiled communication and marketing machine. Whatever you do, make sure you have a communication strategy.
Product: Does it make sense?
The beauty is in simplicity. The easier it is for your customer to respond to what it is you are selling and intuitively understand its purpose and why they need it, the better position you are in. If not, don’t worry. You just have a little extra work in explaining to your customers in a simple way why they need you. But if what you’re doing requires an enormous user manual or you shrug and say to yourself, “They just don’t get it,” then you might want to force yourself to relook at your business.
Finances: Is the ship sinking?
Most startups are not profitable in the beginning, but you should have a clear roadmap drawn of the path you plan to take to financial stability. Include milestones to allow you to see whether you are meeting your goals. Step back and ask, “Am I still going in the right direction, or do I need to pivot?”
Bottom line: do not just throw in the towel when confronted with enormous setback. Conduct a clear-headed analysis and march on. Resist the temptation to fall in with the masses that see problems as challenges rather than opportunities. After all, that mindset is what made you into an entrepreneur in the first place.