This is a guest feature from ConnectFurniture co-founders Silvio Salom and Joe Bruzzaniti, who have launched over 20 start-up companies between them. Their business ventures have ranged from Adacel Technologies Limited, a global aerospace systems provider, to Learning Seat, an eTraining platform for large organisations.
This dynamic business duo have put their heads together to write about their own experiences starting up a business – what to avoid and what to pursue – which is essential reading for any budding business mogul.
The right idea
One of the most challenging parts of entrepreneurship is knowing when to turn an idea into a business. For ConnectFurniture, two things brought the idea to life. We’d both recently experienced trying to choose furniture the old way – by going from store to store. It was hard work and didn’t provide the best result.
This understanding planted the seed for our idea, and from here we realised there was a need in the market for a search engine enabling furniture buyers to search for furniture products and providers and find their exact match.
On the other side, we also saw the opportunity for furniture providers to showcase their products and their business on a common portal. We were confident this would enable them to maximise their exposure, and to better reach and connect to new customers nationally.
We analysed the concepts for about six months before we developed it into a business model.
The right partner
If you are in a business partnership, it is important that you are working with someone you trust and understand. A partnership cannot be based purely upon the fact that you both have enough capital to help a project survive. This will not help you when you are constantly butting heads over the company’s direction or even the control of minor projects.
Before locking yourself into a partnership, whether through a traditional partnership structure or an incorporated company, you should know your partner’s background, capabilities and value system as much as you possibly can. Make sure there are no surprises because you’ll have to work very closely together through a range of circumstances. Make sure you have similar vision for the company from the outset. It’s also important to determine a succession plan from the word go, should one person want to opt out at any stage.
Do the research
While having a ‘gut feel’ about an idea is important, it’s not enough on its own to justify jumping into a market.
It’s essential to undertake research to determine if your project is more likely to float or sink to a watery grave.
Areas to research include:
- Who are your customers? And how many of them are there?
- What is the dollar value of the market and how much will customers pay?
- How many competitors are there in the space?
- Will it be possible for your business to legitimately differentiate from the pack?
- If there are no competitors, why not? (You may find that others have tried and failed).
- Which other stakeholders will you need support from to give your project legs?
- What risks do you face going into the project?
Before the creation of ConnectFurniture, we did six months of research to find out who our potential customers were, where they already go to look for furniture and if they legitimately had use for a website such as ours.
We discovered there were two million potential furniture shoppers in Australia, over half of whom were frustrated with current furniture internet searches.
And we’ve continued to learn about the market and refine our assumptions over the past 18 months while we’ve been building the site, and leading up to our launch on 1 May. We’ll continue to learn and evolve the business.
Investment and cash flow
It’s important to have a detailed business plan. This should show how you plan to go about building your business, and include risks and risk management. It should also include financial projections showing expected revenue and costs, and provide a very good idea of what sort of investment is required before the business breaks even.
It’s also very important to be aware of cash flow. There have been projects in the past where we have almost run out of cash because we were focussing on accounting profits rather than cash flow. It’s important to watch both!
The start-up journey is as long as the available cash and the willingness for investors to put more in. This is balanced with your monthly burn-rate, customer take up and then the associated revenue.
Most successful start ups should expect to be making a profit by the second or third year. Don’t despair if this is not the case! We have also been involved in start ups that didn’t begin to turn around a profit for several years. If it’s a business with a heavy research and development component (as is the case with a lot of technology companies), the break-even point will typically be much longer than other businesses.
The right concept:
Everyone who has ever been involved in a start-up will agree – the finished product will always be slightly different from what you anticipated.
As you develop your idea and put your business plan into action, you will begin to learn more about the customer, more about your market and competitors, and often realise that the approach needs to be adjusted.
The ConnectFurniture business model was changed a number of times before launch to ensure that the site we were establishing was exactly right for both retailers and consumers.
The right marketing:
There is a delicate balance between advertising, public relations, online and direct marketing – and you will need to do more than simply throw money at it to get it right.
Our challenge with ConnectFurniture was trying to build awareness in two-stages. In the beginning, we needed to get the concept out to Australian retailers to let them understand what we were doing, and why it would benefit them to be on board.
The challenge we are now working on is educating the consumer about our site so they become regular users.
Of course, it is essential that you communicate effectively with your stakeholders through the appropriate channels for the particular business in question. In the case of ConnectFurniture, this involves a mix of direct marketing, online and print advertising, and PR.
Have a launch event and invite everyone! Investors, staff, potential customers, media friends and family. Regardless of the business, it’s important to celebrate milestones. And launching a new business is a pretty major milestone. Holding a fun event will be a great reward following all the hard work you’ve put in to get to this point – and it signifies the start of something big.
The most satisfying part of launching a successful start up is seeing the take up. It is rewarding to know that customers truly value what you have created.
It’s also gratifying to observe the shared ownership between staff and partners – the concept quickly grows beyond the founders.
By Joe Bruzzaniti and Silvio Salom, co-founders of ConnectFurniture.
Silvio Salom and Joseph Bruzzaniti have extensive experience in creating global businesses, particularly in the technology sector. Silvio Salom is one of Australia’s most successful technology entrepreneurs generating more than Au$1 billion in export sales over the last decade. He has served on a number of Boards, including as an ITC Advisory Board member for the CSIRO, Adacel technologies, Lochard Limited, IT&T Skills Hub, as well as being a director of Melbourne University Private, and Vice Chairman of Airport Industries Australia.
Joseph Bruzzaniti has been heavily involved in the internet industry for more than 10 years. He was a founder of Learning Seat, Australia’s leading online learning and compliance internet-based system. When he sold Learning Seat to News Limited in 2008 he joined forces with Silvio Salom to focus on ConnectFurniture
Connectfurniture.com.au is Australia’s first online single source furniture portal that aggregates furniture options. It offers consumers the ultimate online pre-purchase destination where they can search for furniture by use, design, style, colour and price. The site is content rich, showcasing trends as well as individual product. ConnectFurniture will deliver significant benefits to retailers, commercial furniture suppliers, manufacturers and consumers. For more information on the ConnectFurniture story, head to www.connectfurniture.com.au