A global pandemic might not seem the best time to start up a new business. But according to the University of NSW in Sydney, numbers are up this year, and interest is strong for entrepreneurship.
Perhaps the incredible valuations for big tech companies like Apple and Amazon are inspiring entrepreneurs to dream of starting their own unicorn companies. Maybe it is because people have a lot of time on their hands during the lockdowns and are coming up with new ideas.
Either way, David Birt — who is the director of entrepreneurship at UNSW — says that the pandemic is making many people think about a career transition. This leads them to the idea of starting up their own business.
“We’ve seen an increase in demand from alumni in particular,” says Birt, while many others who are in mid-career are starting businesses instead of job hunting.
Birt has several tips for startups at this particular time: minimize costs, don’t assume consumer behavior, consider the non-obvious business, and find the right mentor.
All good advice because startups are never effortless. There is a reason why one of the first rules of startups is to not be afraid of failure, and that is because so many startups fail.
In the context of the pandemic, and the uncertainty it has created, there are a few things to keep in mind, and foremost among them is risk.
With the future so very uncertain, it might not be wise to overspend on the startup in its early phases, particularly if the idea is not honed.
The non-obvious opportunities
I met an entrepreneur last week, for example, who had created a new business disrupting the funeral industry in Australia.
Last year, his business doubled its revenue to AUD 1.6 million, and it would seem to be on the way up. But the current iteration is the fourth or fifth version of the business he attempted, and along the way, he has raised and spent AUD 1.2 million.
He has also accumulated nearly 50 different shareholders along the way and endured a bitter fight with another founding shareholder, which involved a hefty payout.
The lesson from his experience was to go back to that old chestnut, the minimal viable product (MVP), as long as the idea and concept were clear and well-formed.
In this case, he spent some years with several different software products and digital ideas before settling on one that people would actually pay money for.
“If I knew then what I know now, I’d have spent AUD 50,000 on an MVP of what we do now, and have saved myself so much time, effort and money,” he told me.
Now, more than ever, he said it was the best way to test an idea in the market without risking precious capital.
The downside of the MVP approach, of course, is that someone with more capital and connections will copy the idea and steal all the momentum. But that may be less of a risk during a pandemic.
Refining an old idea
I also came across another startup last week and talked with two MBA students who were taking their award-winning MBA project and trying to commercialize it.
It’s a version of the Airbnb model but with a twist: businesses rent out their space when they are not using it to others wanting to stage events. An author launching a book, for example, might rent space in a bookshop which lists on the platform.
The young entrepreneurs were bold enough to launch their product but are doing so with some caution.
They are confining it to a geographical area, taking a “pilot” approach, and in technology terms just using off the shelf products they can re-purpose. If it goes well, they can then design the full version, based on what they have learned, and that process can also inform the ultimate design.
It may not technically be a startup, but this was the approach Brisbane Airport took when they decided to create an online platform for retailers at the airport to sell online.
When the COVID-19 lockdown hit, retailers at Brisbane Airport saw foot traffic dwindle to barely 3% of normal volume.
The airport’s 85 retail tenants, selling everything from Ugg boots to kebabs to high-end perfume, went from selling to a market of 24 million passengers a year to almost zero.
Mike Doyle, the head of consumer marketing at Brisbane Airport, says the airport was about to close up the retail operation until — almost at the last minute — one of the senior executives had an idea.
“He had been overseas and had been self-isolating at home and buying stuff online and been impressed by how fast it arrived,” says Doyle.
“So, he called up the airport’s duty-free partner and asked about selling online, but they were 18 months to two years away from doing anything.”
Instead of giving up, Doyle met with his team and decided to create an MVP to sell products for the airport’s retailers online.
One of his colleagues had a “side hustle,” creating Shopify sites for her friends’ businesses. Using templates and “cherry-picking apps,” they had a site — marketplace.bne.com.au — ready to go 16 days and AUD 400 after the first conversations.
By the end of August, Doyle expects close to 20 — or one-quarter of the airport’s retailers — to be on the site, with sales approaching AUD 1 million.
“We understand that is not setting the world on fire, but it is better than closing down for tenants who literally would have had no sales at all over this period,” says Doyle.