Every business starts with an idea. A vision for the future, usually built around a better way of doing things with a product you’ve created at the centre. The experts will tell you that the greatest opportunities involve solving problems that cause the greatest pain. If you can identify a clear problem for a group of people and solve it then surely they would pay for a solution?
What we learned
- Customers: the people who use your service pay for it. This is the best type of money. It comes with very few strings attached; you simply exchange a good or service for money and everyone is happy.
- Investors: people/ organisations give you money in exchange for an equity stake in your venture. They invest on the belief that the future value of the business will be enough to pay their investment back and then some. For early stage startups, it is still very difficult to get a bank loan (especially if you’re a 20 something and doesn’t own a house). This funding comes with strings attached, there is an expectation that you’ll pay it back and then some.
- Government: is certainly the hardest money to get and it comes with the most strings. If anyone’s looked at the forms for the Government grants in Australia, you’ll know just how complex it can be. The R&D rebate tax rebate offers is a no-brainer for any Australian Tech startup, but still requires the assistance of a savvy accountant. Aside from that, the options are pretty few and far between.
Use now and pay later is a strategy fraught with danger
“Sustainable businesses are built by sustainable people”
‘How many people will you be able to help if you run out of money?’
What’s changed for us
Validating the business model
- Upfront commitment: we have been playing with this approach a little already. Essentially you present a price point to customers and test if they will pay before you go ahead and build the product. This will allow us to validate if a market exists before we need to commit to building.
- A pilot with preconditions: another option is to run a free pilot program with some set prearranged conditions. This would be an option that we would explore with our University partners, who would like to see some results before they pay. Essential we would agree on some terms at the start to measure our performance. If we meet those goals then they would agree to pay for the service, if not then it’s tough for us!
Clarity on our product
- QLC: is a platform that connects students and startups for projects based work;
- Paper Planes Projects: is a course that offers students the chance to work on real-life business projects throughout.
Both these services have gained some promising initial traction. Usually, I have tried to steer our ideas away from existing competition, in fear of entering an already crowded market. However, Ben was quick to remind us that when it’s a new product/ service, competition isn’t necessarily a bad thing. It means that the early entrants have done a lot of the hard work for us in educating the market, which leaves the door open for us to move quickly and improve on what they’re offering.