On a recent trip to Italy, I was elected navigator for our group of intrepid international explorers. The plan was to drive from Pisa to Florence, discovering a bit of Tuscany along the way. The trip was not exactly summiting Mount Everest.
But as our Fiat went looping through endless roundabouts and not infrequently taking the wrong exit, I gained a new appreciation for the freedom offered by a single word heard numerous times along the way, “recalculating.”
Initially frustrated by my inability to accurately adjust the guidance in the device in my hand (which packs enough processing power to put a man on the moon, let alone navigate the Italian countryside), I realized that these unplanned detours were enriching our experience and wasn’t that why we wanted to drive in the first place?
Related: Navigating New Market Terrain
So somewhere in the hilly roads between Lucca and Capannori, it hit me that there was a lot of overlap between my newly acquired holiday job as Fiat navigator and my role in managing a startup: Both began with a seemingly straightforward plan mapped out in advance and both required constant adaptation along the way.
This is especially true in the early stages of taking a nascent business from whiteboard to reality. It's something I’ve often described as the process of “willing an idea into existence,” where having the flexibility to take detours from the outset is critical because it allows the entrepreneur to explore and learn from markets outside his (or her) comfort zone.
Of all the early decisions an entrepreneur will make, none is more important than choosing the initial market in which to establish a new venture. Yet frequently entrepreneurs fail to think critically about this first step and rush to stick with their domestic market. But as with many things, the easy choice may not be the most suitable.
To do this means carefully examining the business in question and defining those key market characteristics that when combined, will offer the best possible chance of success.
Here are a few variables to explore that I’ve found to be critical:
1. Customer satisfaction. Regardless of the product or service, a need for it must exist in the market in order for the new business owner to be successful. The higher the level of dissatisfaction among the target customers, the more likely people are to take the risk associated with a change.
Launching into an overwhelmingly negative market gives an entrepreneur the opportunity to lower customer acquisition costs and position the new venture as the new face in town.
A recent example of this fresh approach is the London company offering the online investment platform Nutmeg, appealing to customers looking for a simple way to manage their investments and those unhappy with traditional wealth-management options.
2. Regulatory climate. The legal and regulatory environment in which the entrepreneur will operate can dramatically affect strategic decision making. Talk to local experts about things like intellectual property, the different legal entities available for companies, employment law and any licenses needed to launch the new business. People often take for granted that the same laws apply from country to country, but this is not always the case, and sometimes knowing the differences can save an entrepreneur a great deal of time and money.
I know this firsthand from my experience in planning the launch of FLIP, a digital retail bank, for which the regulatory environment will be particularly critical.
3. Incentives. National and even local markets are often trying to attract new businesses through official organizations. There can be a number of incentives available, ranging from from tax rebates for research and development to subsidized business facilities.
Explore local government websites and reach out to the chambers of commerce to learn what might be offered. An entrepreneur might be surprised by how much funding is available, depending on the business model, for an operation set up outside major metropolitan areas.
In the last few years Ireland has attracted tech companies through IDA Ireland, which is tasked with helping interested companies connect with local resources.
Meet other entrepreneurs in the market being considered by attending events like the Global Leadership Summit where it's possible to network and keep abreast of the latest trends.
A focus on these elements alone will not guarantee an entrepreneur's success but it can remove roadblocks. Just remember that the path to being successful is sometimes more complicated than anyone might imagine and the unplanned detours and repeated “recalculating” may not always be enriching and useful.
But the entrepreneur's job is navigating this startup journey and making necessary adjustments along the way. Say, isn’t that why the decision to drive arose in the first place?