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Stand and deliver

“People think that the biggest hurdle is getting investors. It isn’t. It is getting customers.”

This is the reckoning. Where the rubber hits the road. The acid test. You can have the cleverest, slickest product the world has ever seen, but if you can’t get it to market and make sales consistently, your creditors will turn to Chapter 11 and administer the Last Rites before you have time to steal the coffee machine.

Incredible as it may seem, it is possible to lose sight of this, especially if you manage to get some money behind you before you have begun shifting the product.

Jonathan Kirkpatrick from AUT’s incubator BIC explains. “People think that the biggest hurdle is getting investors. It isn’t. It is getting customers. I would rather see a poor company with half a dozen decent customers, than a company with plenty of capital and no customers. If you have customers, you can grow a business.”

Grenville Main from design agency DNA recommends high-quality market research, but when it comes to finding out how your idea is really being received, there’s no substitute for sales.

“In consumer research, if you ask people theoretical questions you will get theoretical answers,” he says. “If you ask them real questions—would you buy this yoghurt for this much?—you will get some real answers. This can highlight the need to move on from the story you used to convince yourself and the investors, to one that convinces customers. Because if customers don’t like it, you’re screwed.”

Obviously you don’t want to go off half-cocked. But this is not a one-shot deal and you don’t necessarily have to have everything perfect before getting it out there. And you should always remember that the competition are snapping at your heels, so it’s a good idea to get moving as fast as you can.

Main says: “How many businesses have failed because they are not quite good enough, compared with how many have succeeded by being just about good enough and then getting real good real fast with some customer feedback?”

Kirkpatrick agrees. As long as you can keep the panic behind the scenes, it’s not fatal for there to be an initial element of improvisation.

“There is a certain amount of smoke and mirrors in the early stages of a business. You have to say, ‘Yes, I can do that,’ and then work out how to do it later,” he says. “Always under-promise and over-deliver. If you think you can get it done in a week, tell them it will take two. Then try to deliver early.”

Derek Hansen, co-founder of The Hyperfactory, offers a word of caution. “It is great to get your first order,” he says. “But they have to be happy, and pay.”

I would rather see a poor company with half a dozen decent customers than a company with plenty of capital and no customers. With customers you can grow

—Jonathan Kirkpatrick

You can find yourself a victim of your own success. Children’s clothing company Pumpkin Patch now employs more than 3,000 people, has more than 200 stores in four countries and wholesale operations in 14 more. But founder Sally Synott clearly remembers spending sleepless nights trying to fill a sudden avalanche of orders, and then writing personal letters to customers whose goods just couldn’t be shipped in the normal time.

The development of your sales and supply infrastructure can reveal some important challenges. If you are going up against the big boys who have been around forever, you will soon discover that they control the distribution networks and will try to prevent you getting a foot in the door.

Complex partnering and licensing deals can form a legally binding web of connections that is hard to break into. Or it can be a simple problem of struggling for shelf space. Only Coca-Cola drinks are allowed in all those subsidised red-and-white fridges in the dairies, and the people from Coke come round and check.

You need to be at your most flexible once sales start rolling, so you can react quickly to the feedback you get. This is the point where if something is not working it will cost you a lot of money fast, and if there is an opportunity you need to jump on it. The irony is the larger your supply and sales machine gets, the harder it will be to change its course significantly, and the more reluctant you will be to take one back step for the prospect of two forward.

“When they have proved themselves by getting into the market and competing,” says Main, “people don’t tend to want to lose what they’ve got. And the more infrastructure you need for production, the harder it is likely to be to make changes anyway. If you have a t-shirt shop, you can print something different; if you’re making microprocessors and they suddenly become imcompatible with the latest machines, it could be trickier.”

This is not to suggest you start small. Your aim is to reach the scale that will get you and your investors the return you are banking on as fast as possible. To do this you have to get into the habit of checking every link and component in your supply chain regularly.

And you need to make sure the price is right. It’s a lot harder for a salesman to push prices uphill than down. If you discount too heavily early on to get sales, you may jeaopardise your whole long-term income stream. And if you get it really wrong—say, your raw materials suddenly get more expensive—you may even lose money every time somebody buys something.

Consistency is the key. If your customer is going to trust you to get it right the only time it is important to them, you need to have a repuation for getting it right every time. This is particularly true of business-to-business sales. Business people aren’t buying your goods for fun, they’re buying them to make them money. Your product needs to be solving one of their business’s top three problems, without causing any new ones.

Gaining this sort of reputation takes time, and has more to do with good old-fashioned business management than it does with wild-eyed innovation and experimentation. It’s about getting the basics right.