Lean start-up: Is it time for your small business to pivot?

By Samantha Garner | September 8, 2018

small business feedback

Launching a new business has always been a hit-or-miss proposition. According to the decades-old formula, you write a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as you can. And somewhere in this sequence of events, you’ll probably suffer a fatal setback. The odds are not with you, because about 70% of all start-ups fail.

Meet Lean Start-up

In the last decade however, a new approach to managing start-up has emerged, and it can make the process of starting a company less risky. It’s called “Lean Start-up” and it favours experimentation over elaborate planning, iterative design over traditional development, and customer feedback over intuition.

First, you’ll need to create a minimum viable product, or MVP – this is a basic version of your product that early customers can give feedback on. From there, you develop based on measurement and learning. When this process is done correctly, it will be clear whether or not the company is moving in the right direction. If not, it’s a sign that it is time to pivot – make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.

What is a pivot, and how can it help your business?

Making the decision to pivot is one of the hardest aspects of the Lean Start-up method, because founders and entrepreneurs are emotionally tied to their products, and energy and money have been invested. A pivot isn’t necessarily a failure – it means that you will change one of your hypotheses about your product or service. There are different variations on the pivot:

  • Zoom-in pivot. A single feature in the product now becomes the entire product.
  • Zoom-out pivot. The opposite of above. A whole product becomes a single feature in something much larger.
  • Customer segment pivot. The product was right, but the original customer segment wasn’t; this changes the customer segment, but the product stays the same.
  • Customer need pivot. Through validated learning it becomes clear that a more important problem needs to be solved for the customer than the original.
  • Platform pivot. Often platforms start out as an application, but due to success it grows to become a platform ecosystem.
  • Business architecture pivot. 
  • Value capture pivot. Changing how value is captured fundamentally changes everything else in the business (marketing strategy, cost structure, product, etc).
  • Engine of growth pivot. Start-ups typically follow one of viral, sticky, or paid growth models, according to the founder of the Lean Start-Up movement, Eric Ries. Changing from one to the other might be necessary to fuel faster growth.
  • Channel pivot. The internet has created more channel options for start-ups, and complex sales or advertising channels are far less dominant. A start-up has many more options from the get-go.
  • Technology pivot. A new technology can offer substantial benefits in cost, efficiency, or performance, and let you keep everything else the same.

Want to learn more about Lean Start-up and other handy methodologies to build and measure business success? Check out our industry-leading small business training video program.

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Is entrepreneurship really for you? Here’s how to find out

By Samantha Garner | September 1, 2018

am i an entrepreneur

Entrepreneurship is a great dream for many Canadians. But the reality is, many Canadians are not ready for it – and that’s okay! It may be that you might be ready for it later on, after life circumstances change or you take small business training to learn the skills you don’t have yet.

How can you find out if you’re ready to be an entrepreneur? Download GoForth’s free Self-Assessment for Entrepreneurs to see if now is a good time to start your small business journey. We can’t predict if you’ll be a success, but taking an honest look at your situation right now will help you figure out your odds.

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GoForth’s 30-question location suitability checklist

By Samantha Garner | August 25, 2018

small business location checklist

Recently, we shared the seven components of a great business location. Once you’ve narrowed down your location search, ask yourself these 30  important questions to further assess its suitability:

  1. Do the zoning requirements allow for my business type?
  2. What is the condition of the building – are any repairs or renovations required?
  3. Does the location’s layout fit my requirements?
  4. Is the location the appropriate size for my business? (Consider storage, office, workroom, manufacturing equipment sizes, etc.)
  5. Is the location suitable for my daily commute?
  6. Do I have access to all required utilities?
  7. Do the surrounding businesses bring favourable traffic to the location?
  8. When conducting community research, does my target market have access to this location? Is the location suitable for a substantial portion of my target market?
  9. Do the leasing, renting, or buying terms fit my requirements?
  10. How much will it cost, and how long will it take, to get my internet and phone up and running?
  11. Are my signs and outdoor advertisements visible to traffic?
  12. Is the labour force in the area suitable for my staff requirements? Are wage scales similar to or lower than other location options?
  13. What is the local Chamber of Commerce activity like?
  14. Does the location meet my accessibility requirements?
  15. Is parking available and affordable for customers and staff?
  16. Is public transportation available?
  17. Is the location consistent with the image I’ve communicated through branding and marketing?
  18. What lifestyle factors, schools, and community activities are present?
  19. Am I close enough to suppliers and manufacturers?
  20. Can deliveries be made to this location?
  21. Are the costs of transporting goods and shipping to and from this location similar to or lower than other location options?
  22. Are competitors located nearby?
  23. If competitors are nearby, am I confident in my ability to compete?
  24. Is the crime rate in the area tolerable for my business, and are security services available?
  25. What times of the day and week will provide the most traffic at this location? Am I able to operate in the evening and is there adequate exterior lighting to attract evening customers?
  26. What will my insurance cost at this type of location?
  27. Later on, will this location be able to accommodate growth of my business?
  28. How do rental costs and lease agreement terms compare to other location options? Break this down to cost per square foot and compare to your revenue per square foot.
  29. How long is the lease and does this fit with my requirements?
  30. Does the current lighting meet my needs? Are there window displays available? Are shelving units or wall displays provided or am I allowed to install them?
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Ask yourself these vital questions about your industry

By Samantha Garner | August 18, 2018

 

 

Every small business owner is part of a wider industry, and is affected by that industry to some degree. To help you determine the health of your industry, undertake research to gain answers to the following six industry health questions:

  • Is the industry growing?
  • Where are the opportunities in the industry?
  • Who are the key players in the industry?
  • Are there young, successful businesses in the industry?
  • What are the typical financial results for businesses in this industry?
  • How is new technology being used in the industry?

As a starting point, we recommend searching for secondary data sources using your NAICS code. Also known as the North American Industry Classification System, NAICS is used to classify companies, to collect, analyze and publish statistics, and to provide collective industry definitions across Canada, the United States, and Mexico.

Finding your NAICS code

To find which NAICS code matches your company’s industry, visit Statistics Canada’s website to figure out which sector, subsector, industry group and industry your business falls under. Here, you can either browse through industries or search for example activities that these businesses perform.

 

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How much does it cost to open a franchise?

By Samantha Garner | August 11, 2018

small business restaurant franchise

Franchisors often charge a franchise fee to be paid at the start of the agreement (either in full or as a percentage) as a deposit. You may have to sign a deposit agreement. The deposit may or may not be returned to you if you decide not to go through with 
the franchise.

For example, in Alberta, this deposit can be up to 20% of the initial franchise fee. However, once you’ve made the agreement, the initial franchise fee can vary from $5,000 to $75,000 — possibly more.

In Canada, the average initial franchise fee 
is $23,000, and covers costs like support, training, franchisee recruitment, grand opening, franchise development and site identification. Generally, this fee is higher the more recognized and established your franchisor company is.

Franchise royalties

Royalties are often due on a weekly or monthly basis to give the franchisor a portion of your sales. These can vary from 0–20% of gross sales, depending on the level of support and services you get from the franchisor. Some franchises don’t charge a royalty fee, but in these cases the cost is often built in through rebates or mark-ups on products or services.

Additional franchise costs

You may have to pay other costs, like advertising fees. Some franchisees have to contribute to an advertising fund for the franchise system as 
a whole. This means that fees from all locations can be pooled into a much larger budget.

You’ll also need an equity investment, which helps keep your franchise location going until you’re profitable. On average, this investment amounts to around $160,000 in Canada.

Other costs that you may run into could include research 
and development funds, leasehold improvements, furniture, fixtures, equipment, supplies and costs of employee training. Insurance costs are often included within the franchise agreement, but be sure you’re adequately insured before you open your doors.

How much do I need to pay to open a franchise?

In Canada, estimated overall costs to open a franchise can range anywhere from $50,000 or less for service franchises to as much as $500,000 or more for more sophisticated franchises. For more information, visit the Canadian Franchise Association‘s website.

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