How to overcome 5 most common roadblocks to launch a new business

Posted on September 15, 2021 by Julien Marzouk, One of Thousands of Leadership Coaches on Noomii.

In this article I propose ideas for overcoming the most common roadblocks to launch a new business by providing concrete examples from my decade-long practice of helping companies that seek growth. The point here is not to list tools and methodologies that can be relevant to address these challenges but rather to give real life examples of how they can be used to get unstuck and to thrive.

1. “The new market is already too crowded”

Does this argument sound familiar? A lot of companies are afraid to expand to a new geographic area, thinking that it is going to be a hard and expensive process they do not have the necessary resources for. To explore this first roadblock, we will go over the example of an East Coast packaging company that had considered entering the West Coast market for a number of years. They feared the market was going to be too small and too crowded and thus were hesitant.

The first step was to size the market. We began with a broader market which is already well researched (here, the US packaging market) and broke it down into several elements in order to approach the core target market. In this case, we were able to assess the Californian share of this broad market and then the high-end (luxury) segment in the state.

The market was actually quite sizable because it encompasses the high-end industries the company already addressed (luxury, cosmetics, apparel, accessories, etc.) as well as the tech industry which also uses elaborate packaging. The next step was to assess the competitive landscape. In this case the market was very crowded indeed but filled with numerous small players with no manufacturing capabilities. In this context, the East Coast packaging company had a comparative advantage because they had a factory in China and this allowed them to differentiate from other players.

Most people are happy to talk about what they do as long as you incentivize their time
The last step was to talk to the end users to make sure that there was a product/ market fit and to supplement the data gathered from pre-existing market reports. It’s actually quite a smooth process if you’re prepared for it. Most people are happy to talk about what they do as long as you incentivize their time (share information, contacts, etc.) and the interview is 100% non-selling. To get the most value from those interviews, you need to prepare a topic guide which is made up of 3 parts: market topics (qualitative and quantitative trends, market size data, key selling products/ brands, evolution, etc.) competition topics (mains players, positioning, trends, etc.) and client topics (key success factors in the market, products characteristics, feedback on main players, etc.). Ideally, you need to conduct around 15 qualified interviews specifically targeting the core market.

In the case of my client, their first customer in this area was in the Tech industry and it’s been 2 years now that they have a West Coast office with a small team which generates substantial revenues. The manager of the US activities travels there on a regular basis and draws synergies from this West Coast presence with current accounts that value their increased reach.

2. “I don’t know how to choose a new vertical to expand to”

You want to grow but don’t know how to identify the right segment to develop? This can lead to stalling… Here are two examples of companies that have found their new niches.

• Leverage open innovation

This French-based workflow solutions company was committed to expanding to the US, this market being key for their growth strategy. Their challenge was that their solution, as it stood, necessitated a lot of organizational changes to the communication teams they were targeting. Realistically, it was not the right way to start a conversation with big accounts. They were stuck.

The objective here was to come up with a lighter service offering to initiate a relationship with prospects. Once trust was established, they would be able to roll out their solution. The context was clear and next it was the time to turn the idea into reality. The step by step process we followed can be illustrated by this open innovation dialogue that took place over the course of a few weeks:

Q: Who is the target user?
A: The communication teams.
Q: Apart from facilitating collaboration within teams, what else can be done for them? What industry trends can we use?
A: Prevalence of fake news.
Q: For corporate communication teams, making their news reliable is key and this creates an opportunity! How does it translate into a new solution? What tech trends can be used right now?
A: Blockchain! There is there an opportunity to make the entire process trackable, accountable and transparent.
Q: Now, which communication teams specifically need this solution the most?
A: Financial services! The new vertical is complete…

Ultimately, as result of this dialogue, the following pitch to the new service offering was developed: “You have doubts about a news release? With this solution, companies certify their corporate information on the blockchain and invite to check its authenticity on their platform”. Since then, they’ve secured as clients some of the biggest names in banking and asset management groups and have hired a business development manager dedicated to this new service line.

• Structure internally and build a scout team

Another way of finding a new vertical is to start with creating the environment for an idea to organically appear. Here I worked with a marketing automation company that wanted to expand to a new vertical but didn’t know where to start. Together we began by making the objective clear internally and allocated resources for it by creating a dedicated taskforce (for a certain portion of their time) – a startup within a startup.

What this translated into practically was making an estimate of the time and resources needed to dedicate to this expansion plan and finding an internal champion to navigate politics and allocate resources. The new vertical was actually found by one of the sales reps that was part of the dedicated team. This sales rep happened to love sports and succeeded in motivating others on the team to look for ways to work with sports clubs. Once this direction was established, we started to talk to sports clubs and were able to quickly identify that their sales & ticketing departments were in fact poorly automated.

The process they went through to identify and address this new vertical was extremely valuable for their journey. It allowed them to restructure internally and to build the tools, processes and capabilities necessary to later expand to other verticals, geographical areas and land bigger accounts.
We then designed a new marketing funnel for this new prospect category, which implied creating new content, use cases, articles describing specifically how to automate email sequences and templates for ticketing departments, and how it permitted to streamline the relationships with customers. Today, this company is very successful and sports clubs are actually one of their top 3 verticals. More importantly, the process they went through to identify and address this new vertical was extremely valuable for their journey. It allowed them to restructure internally and to build the tools, processes and capabilities necessary to later expand to other verticals, geographical areas and land bigger accounts.

3. “Smaller sized clients will not have the budget for my product”

Having big clients with no budget restraints is enviable but it’s not always possible and more importantly it’s not always the right fit for your offering. In this example, an adtech company had been approaching large media groups in New York for some time but was not getting the results they were hoping for. They wanted to know what was not working to make the necessary changes. They thus started to approach companies 30 miles away from NYC, in the tristate area. These companies were smaller in size, which meant that it was necessary to adjust the sales and marketing materials.

Firstly, they had to create new customized sequences and templates to automate the approach. A template email for these sequences can be broken down into 3 pieces: it starts with a common problem in the space; then it references a current customer in this space (getting customers’ quotes is essential) and it ends with links to collaterals describing the approach to solve the problem (2-pagers, use cases, sales deck, etc.).

It is only because they analyzed the data of their approach that they were able to realize that they were getting more traction with the smaller sized media groups.
Once they had the right marketing automation in place, they were able to start measuring and tracking the results of their approach: open rates, reply rates, account engagement, number of opportunities, new pipeline generated, revenue closed, renewal rates, etc. It is only because they analyzed the data of their approach that they were able to realize that they were getting more traction with the smaller sized media groups. This didn’t happen overnight and the first sales took some time but they were able to compare the stats of this approach to the NYC approach and consequently decide to invest more time in these new prospects.

These smaller-sized media companies in the tristate area became their biggest market for a while. More importantly, similarly to the marketing automation company in the previous example, they were able to replicate this approach with similar sized companies in other less crowded markets.

4. “I don’t believe independent retailers are a good fit”

There are a lot of misconceptions about independent retailers, especially from medium size businesses addressing high-end segments. To elaborate on this topic, this is a luxury tableware company I ended up working with that had a lot of challenges, including a 3-years growth stall, a decreasing presence in department stores and declining online revenues that no longer compensated the gap created by offline activities. The company didn’t know what to do.

When we brought up the possibility of reinforcing their presence at regional independent stores, they didn’t believe it was going to be valuable, assuming that this distribution channel was going to be too small and too difficult to develop. Independent specialty retailers actually represent a significant chunk of business in the US, especially for high-end/ luxury products. It does require a region by region approach but the outcome of putting in the work to properly address them can be extremely rewarding.
Their commission-based compensation model make them a good fit for companies which don’t have the resources to build a large internal business development team.

When the potential of this approach became clear to the company, their concerns shifted to the anticipated difficulties associated with prospecting these retailers. Every account required regular visits, care and attention – how was a medium sized company going to manage such a network, given their limited internal commercial resources? Similarly to a lot of traditional brick and mortar smb ecosystems in the US, there were already solutions on the market. In this case, there are independent sales veterans who specialize in specific territories and industries. These agents are on the road 200 days a year to easily access these small specialty retailers. Their commission-based compensation model (usually 10% of generated revenues) make them a good fit for companies which don’t have the resources to build a large internal business development team.

Now, tackling this distribution channel implied some adjustments and this company had to rethink and reduce its product offering in the US but the efforts paid off. Today, they have more than 10 independent agents with exclusive regional contracts covering the North East, the South East, the South and the West Coast independent retailers. This distribution channel accounts for nearly 30% of their US revenues.

5. “Prescribers will not generate significant business in my field”

As Salesforce CEO Marc Benioff said a few months ago, “every B2B and B2C company is now becoming a B2B2C company”. The implications of Covid 19 on the economy will only accelerate this trend. In this next case, I worked with a European food supplement business that for the past 30 years had been selling their products successfully and exclusively through retail outlets. Once they expanded their activities to the US, they realized that they could not maintain the same approach in this new market/geography. Retail channels were way too crowded in this category and it was too difficult to differentiate based solely on digital marketing. They needed to get creative and that is when we started to explore the partner/ prescriber model.

Every B2B and B2C company is now becoming a B2B2C company.

Since the product was reliable, we were able to have substantive conversations with medical professionals. The question was, which partners could become the most relevant prescribers: doctors, certified nurses, dieticians or others? We soon learned that patients trusted nutritionist the most with respect to digestive health. The real challenge then became bringing the nutritionists onboard and including them fully in the go-to-market strategy of the company.

The answer we found here was to go all in. The idea to have a multichannel approach and to balance risks was certainly appealing but it didn’t permit us to send a strong message to the nutritionists which would make them feel as a key partner in the future. Instead we proposed to put the nutritionists at the center of strategy and create a dedicated space on the e-commerce website to allow them to book products for their patients. Through this partnership model each patient was able to log into his nutritionist’s dedicated account and purchase the right product right away without having to look through thousands of references first. This solution also provided a way to leverage trust put into nutritionists by patients and allowed the company to build a long-term relationship with nutritionists.