Q & A with Stefan Preston, former Bendon CEO, who runs the consultancy, Ingenio with his wife Leslie. This active investment company's subsidiaries include Bachcare, lingerie brand Rose & Thorne Design, yoga lifestyle brand, we'ar and high end NZ design firm, Essenze. Preston's interest is in consumer-oriented businesses operating with a high level of design.
How do you know you have what it takes to be a successful entrepreneur?
It seems to me that most small business entrepreneurs start with deep knowledge or insight in their particular industry but are not necessarily deeply skilled at business itself. So the first thing to do is an honest inventory of your own skills. When you enter into unknown territory it pays to have a strong sense of self-awareness, curiosity and coachability.
No matter what, there is going to be a lot you don't know and even worse a lot that you don't know you don't know. As something like 90 per cent of newly registered businesses fail - you cannot enter into the adventure lightly.
It can often help to partner up with someone who has complementary skills. For example in our businesses we tend to play the role of business designer while the partner plays the role of industry expert.
Where do you go from having your idea?
Remember your idea is just an idea. It does not achieve the distinction of innovative business until it is a commercial success - ie makes a sustainable profit. I would be prepared to invest a year at least in this process - part time for you but you have to allow for the lead times on various activities that will lead you to the point that you and your prospective community are confident in success.
I find that most small business entrepreneurs don't apply a deliberate process to the design of their companies. For example if you worked in retail clothing you might immediately gravitate to opening a retail clothing store. It's familiar and safe - it's what you know. But mostly it puts you in a position of competing for sales with the disadvantage of low capitalisation and resources.
A start up is weak operationally - so it's much easier to use true disruptive innovation to introduce something new and unique. The new and unique can be in the product or service, the way its delivered, the way its paid for or anything else that matters to the consumer.
How do you avoid risk in a new business?
Leave the actual launch until you have eliminated all the risks you possibly can while you have no overhead. For example, with Rose & Thorne, we user-tested prototypes and had our retail customer wearing our product happily before we committed to our big orders and signed a lease on real estate.
As the entrepreneur you take on one of the most challenging roles possible. It requires more skills both hard and soft than you will ever have. So work hard, be curious and push like crazy. You and everyone around you will have the most fun ever.
My favourite saying is "far better to dare mighty things, to win glorious triumphs even though checkered by failure, than live in the grey twilight that knows not victory or defeat" - Theodore Roosevelt.
Once you do this you will be rendered unemployable so make sure you succeed!
Why do certain businesses fail?
- Limited skills of founding team
- Inability of founding team to seek out and listen to good advice
- Product or service is not good enough and different enough to target customers
- Inefficient business design
- Poor timing of expenditure with respect to revenue growth
- Lack of capital
- Poor execution