At the Lifestyle Business Convention in London, co-founder and CEO of Wealth Dragons, John Lee gave a talk on “How to start a business and become an entrepreneur”. One of his topics was Why do 50 percent of all businesses fail in the first year?. The most important aspect for him was that these businesses all have the wrong business model.
How to pick the right business model?
According to John Lee, a potentially successful new business should be disruptive and adaptive.
– When you start a new business, it’s got to disrupt the market. When you look at Airbnb, it is disrupting the hotel market, Lee said.
– It’s also not the smartest nor the intelligent species that survives. It’s the most adaptive.
As an example he gave the deal which the then DVD-by-mail rental company Netflix tried to make with Blockbuster with the purpose of starting to stream videos online. Blockbuster rejected the deal since “no one will stream videos on their computer”. Netflix ended up revolutionizing the industry.
Lee also pointed out that the scalability of the business is very important. Your business model has to be scalable in order to create growth and value to the customer.
Advice to new entrepreneurs:
- Base your business model on your personality
Lee talked about the importance of the business model regarding your personality type as an entrepreneur. For example, if you are not social, you shouldn’t base your business model on service that requires you to be involved in meeting people. If you don’t enjoy uncertainty, don’t choose a market that is notoriously volatile. Lee also adviced all company founders not to hire someone who is like them. You should hire someone who thinks differently than you and challeneges you everyday.
Never be afraid to ask: has it been proven, who is your competition, who is your audience and what are the margins? Lee emphasized the importance of networking: if you are the smartest person in your network, you are going to fail. His advice was not to reinvent the wheel, but find someone who’s got the right model already and ask for their help and mentoring.
- Stand on the shoulders of giants
One of the most important advice Lee gave is for everyone to find a mentor. He described how early in his career, he made an effort to find established entrepreneurs in order to pick their brain. But you shouldn’t limit yourself to only people who work in the same industry or market. Find any successful person and ask them these questions:
- What do they do daily?
- What are their thought processes?
- What do they eat?
- What do they read?
- What mistakes did they make?
- How do they overcome challenges?
- How did they get started?
- What did they learn?
- What ways did they find to accelerate the process?
- What AHA moments did they have?
- What keeps them going?
Text: Leena Salo