Entrepreneurs often know — based on intuition and experience — that they’re sitting on a great idea, whether it’s tangible (like a clothing line) or intangible (like a groundbreaking service). The challenge is how to turn their concept into a business model and put it in front of investors or consumers.
In their book How They Started: How 25 Good Ideas Became Great Companies, co-authors Carol Tice (pictured) and David Lester offer numerous case studies of how companies founded on “good ideas” achieved success. Their examples include the upscale fast-food chain Chipotle Mexican Grill and the hosiery and undergarment maker Spanx.
“Every founder of a great company was repeatedly told their idea was stupid or would never fly. Twitter is a huge example: The founders were constantly told it was the stupidest idea ever. But if your gut is telling you you’ve got something groundbreaking, you have to tune that out and persist,” Tice says.
The Intuit Small Business Blog recently talked with Tice about her book and about how enterprising entrepreneurs with great ideas can seize the moment.
ISBB: What inspired you to write this book?
Tice: I wish I could take credit for the inspiration, but this is the second book in a series. There was a previous How They Started edition. The publisher, Crimson Publishing, approached me about wanting to do a new edition with all U.S. companies. I helped select some of the companies we profiled, which include Pinkberry, Twitter, Groupon, Chipotle, Zynga, Zipcar, Spanx, and Electronic Arts.
Where can entrepreneurs seek helpful, quality feedback about whether an idea is “good” before they launch it?
The Small Business Administration’s programs are very underused. Get a SCORE mentor. Visit a women’s business center. There are a lot of free resources for expert advice that few entrepreneurs take advantage of and can run a business plan past before pulling the trigger. The book has a whole chapter on free and cheap help.
Many entrepreneurs say they have limited budgets for launching new ideas. How can they overcome financial obstacles?
Stop thinking of it as an obstacle, and think of it as a blessing. Think of all the dotcom companies that scored millions in venture capital and went bust. They never acquired the fiscal discipline required to keep a company afloat. Starting with a bootstrap budget, you will be forced to be creative and you’ll learn how to run your business lean — and that will help your company succeed. You’ll learn to collaborate, to negotiate. You’ll acquire some very useful entrepreneurial business skills.
Sara Blakely of Spanx launched her $1 billion company with a budget of $5,000. Loads of great companies were launched on a shoestring — on the owner’s savings or a credit card or a small family loan — and without financial backing. Hard times have traditionally spawned some of the greatest companies, such as Wal-Mart.
After interviewing so many successful company owners for your book, what is the #1 piece of advice you’d like to share with budding entrepreneurs?
If you think you have a great idea, never give up. When they first started, one of the Pinkberry founders went up and down the street with samples and literally couldn’t give them away. No one would take them from her! But she knew she had a fresh product that people would like, and she kept on going until tart frozen yogurt started to catch on.
Blakeley of Spanx entered an industry — women’s undergarments — run entirely by men. It was a closed club. No one could get a factory to make their garment if they didn’t already have substantial financial backing and industry connections. She went on a road trip and met plant owners. She found one who took the original product prototype home to his daughters. They begged their father to help Blakely, and she finally found her manufacturing partner.
Blakely did not tell anyone she knew about the business she was planning until it was launched. She didn’t care to hear their negative reactions. She just went with her gut — that her idea for footless pantyhose was innovative and that women would want this product.
What is it about the current economy, taking into consideration social and environmental conditions, that makes it a good time for small-business innovation?
There’s always opportunity in a down economy, especially if your product and service helps people save money or provides them with low-cost entertainment. Think of how movie attendance traditionally rises in a downturn. From a retail perspective, there is abundant empty retail space and landlords are hungry to make deals. It’s a great time to get into a prime location that you might never have gotten a shot at in good times.
Economic conditions aside, this is the internet age, when doing a low-cost, bootstrapped startup has never been easier. Think you have an idea? Set up a website for under $100, do a little free promotion — maybe a few Craigslist ads, or some in-person networking — and see if there’s interest.
What is the distinction, in your mind, between a “good” and a “great” company?
Great companies either bring something new that’s disruptive to the established order, or they simply execute better than any other company in their industry. With Wal-Mart, it’s their supply chain and operational discipline, and how they’ve squeezed out costs. With Spanx, it was lingerie that actually fit women. Groupon was the first to allow people to team up online to save money on products or services they liked. I’ve heard business greatness defined as introducing a concept that once people use it they can’t imagine how they lived without it. Think of Twitter, or social gaming like Zynga. That’s when you know your business has the potential to be huge.