How can a mere book help you meet this challenge?

The research underlying this book (see the Appendix) suggests that the serious entrepreneur who wants to beat the long odds – who wants to work harder and smarter to beat their competition – should pause in their haste to embark on a lean start-up or write that great business plan. Yes, I’m referring to you. Before setting out or putting pen to paper, you should step back and give your opportunity a road test. Examine the seven crucial domains of attractive opportunities that this book illuminates. Find, if you can, the fatal flaw lurking in what looks like an attractive opportunity. Your prospective investors will be looking for it, so you’d better have looked first.

Why bother?

But why shouldn’t a would-be entrepreneur simply skip the seven domains road test this book advocates and proceed directly to preparing a business plan, or better yet, just starting the business? There are three key reasons.

• First, this book enables entrepreneurs to avoid impending disaster. For most entrepreneurs, that’s the likely outcome – sad to say – according to the business failure data. Preparing a customer-driven feasibility study based on the seven domains – a concise memo addressed to oneself, really – affords you a chance to opt out early in the process, before investing the time and energy in preparing a complete business plan or heading down what may be a dead-end road.
• Second, for opportunities that do look promising, the feasibility study builds a foundation for and jump-starts the start-up process. It provides a clear, customer-focused vision of why the proposed venture makes sense – from market, industry and team perspectives, viewed independently and collectively.
• Third, most business plans are not worth the paper on which they are printed. Put simply, as today’s lean start-up movement is demonstrating, business plans and business planning are vastly over-rated.

By ensuring that all aspects of the opportunity are examined, the new business road test reduces the entrepreneur’s risk of entering a venture that simply has no chance. What entrepreneur wants to be the next contributor to the sorry statistics of business failures? Surely not you. And it enhances the chances of starting a successful business that attracts both customers and capital.

From a societal perspective, doing the seven domains homework – before writing and pitching business plans or getting the leanest of start-ups underway – can reduce the waste of precious entrepreneurial resources now devoted to the pursuit of fundamentally flawed opportunities. Entrepreneurs are the drivers of the global economy. Their firms create the new jobs and offer role models for others to follow. Let’s be certain that today’s entrepreneurs – including you – are working on ventures that have at least a fighting chance of success!

Who should read this book?

Principally, this book is for serious, opportunity-focused entrepreneurs and those who support them.

• People who are dying to get out of the big, stifling, inflexible businesses where they work today to strike out on their own. People who have identified one or more opportunities that might just be the ticket out, but who need a way to test them. People who want to run their own business and benefit from the significant upside potential that could bring them economic freedom.
• Entrepreneurs already running a start-up who are finding the challenges more daunting than they had imagined. Perhaps they are wondering whether their chosen path is a good one.
• Engineers and inventors with ideas or technologies that can spawn something more than just a new product.
• The growing legion of advisers, consultants and others, all working to create better entrepreneurial ecosystems where they live and work.

There are three other groups, too, that can benefit from The New Business Road Test.

• General managers, new product managers and business development professionals in businesses now mired in stagnant performance or – worse – in an unforgiving economy. They know their companies must find attractive new markets and develop successful new products in order to grow. Business as usual won’t cut it. But how, they wonder, can their company be made more entrepreneurial?
• Investors – whether family or friends or business angels or even newcomers to venture capital – who want to sharpen their skills and bring more than their money to the entrepreneurial table. Independent, clear-sighted advice from investors is more valuable to entrepreneurs than the money they bring.
• University faculties and their students studying how to assess opportunities or write a business plan. For faculty and students, there’s even a website to provide wide-ranging support: www.newbusinessroadtest.com.

What will be the result of reading this book?

Entrepreneurs or managers having an opportunity in mind – whether it’s still in the planning stages or already navigating the turbulent waters that early- stage ventures must sail – will reach one of three conclusions after finishing this book and putting their opportunity through the new business road test.

• Perhaps the most common outcome will be that the fatal flaw(s) will be uncovered. ‘Whew! I’m glad I didn’t bother pursuing that idea’ is the likely sigh of relief. The disaster that would have ensued is now avoided, and all the time and energy that would have been invested in a fatally flawed idea can be invested more productively in a better one. Those already in a new venture who reach this conclusion can plot a way to change the direction of the business – or sell it – before disaster strikes.
• Another common outcome will be that flaws that are identified can be fixed. Opportunities are malleable, and the entrepreneur is often able to reshape an opportunity to improve its attractiveness by:
  • targeting a different market;
  • offering a different product or service than the one originally planned;
  • playing at a different level in the value chain – as a distributor rather than a manufacturer, for example;
  • adding skills or relationships to the entrepreneurial team that were missing in the original conception.

  Opportunities can evolve, and the thought process outlined in this book hastens and strengthens that evolution. The sooner the evolution – a pivot in today’s lean start-up lingo – occurs, the better.

• A third possible outcome – the happiest, but most rare – will be that your seven domains analysis finds no fatal flaw. No matter how hard you look. Better yet:
  • your homework identifies a real problem that someone – your prospective customer – has, and you offer a solution that’s better, faster or cheaper than current solutions;
  • your proposition stands a chance to establish sustainable competitive advantage with a business model that works in economic terms;
  • the market is large enough to make the effort worthwhile;
  • the industry is sufficiently attractive;
  • your entrepreneurial team has what it takes to succeed.

  The best news about this kind of outcome is that, in jump-starting the start-up process, the seven domains homework provides the evidence-based research foundation for a persuasive and compelling pitch.

Why John Mullins? What does a business school professor know about starting an entrepreneurial business?

This book brings together, from a single author, the hands-on, done-it-before experience of a three-time entrepreneur with the research expertise found among faculties at only a handful of the world’s leading business schools. Put simply, I’ve practised what I preach and have the entrepreneurial badges and scars to prove it. I’ve learned the way most entrepreneurs learn, from both failure and success.

I served as vice-president in the early high-growth days at a then young company with great casual clothing stores called Gap; I founded Pasta Via International and took it public before market and technological changes took our company down; I pioneered chimney-type charcoal starters for American barbecue enthusiasts. I’ve served on the boards of fast-growing entrepreneurial companies in the USA, the UK, Europe and Asia. From all these experiences and from the extensive research effort that underlies this book, I’ve drawn insights that deliver powerful lessons from which every entrepreneur – and many investors, for that matter – can learn.

As a professor at London Business School, where my entrepreneurship colleagues and I – most of us successful entrepreneurs in our own right – develop world-class entrepreneurs and train and provide talent for the venture capital industry, I’m well positioned to have written what I hope you will find is an accessible and eye-opening book. Once you have read it, I believe you’ll agree with me that ignoring even one of the seven domains can be a road map to entrepreneurial disaster. Entrepreneurs who start their venture without putting their idea to the new business road test do so at their peril!

But the insights that drive the book’s lessons aren’t just my own. Far from it. They are the result of a series of interviews with venture capital investors and experienced entrepreneurs, alongside the extensive and detailed case study research into the fabulous entrepreneurial stories that comprise the heart of the book. You’ll find their pearls of wisdom throughout.

Why a fourth edition?

The first, second, and third editions of The New Business Road Test were rousing successes, not only in the English-speaking markets where the book was first introduced, but also in translations into several other languages. ‘But are the case studies still current?’ I wondered, as the book neared 10 years in print.

I’ve also observed and been a part of what one might call the lean start-up movement, a global phenomenon that is changing the way people think about and start new ventures. Many entrepreneurs are probably asking ‘How do this book and its opportunity assessment tools and ideas fit into today’s lean start-up landscape?’ This new edition provides the answers.

But that’s not all. Of course, this new and fully updated edition brings each and every case study up to date, adding an important and timely ‘what happened’ to each of the stories. I’ve strengthened and made more explicit the attention given to the identification of key risks in each of the seven domains and to their prominence in a customer-driven feasibility study. In Chapter 5, greater weight has now been given to the economic sustainability of one’s new venture, alongside the sustainability of its competitive advantage. This greater weight reflects recent attention given in the entrepreneurship literature to how best to think about and develop business models that can actually work – before setting forth on an entrepreneurial journey. To reflect this balance, the lower right-hand corner of the seven domains framework has been relabelled as competitive and economic sustainability.

Perhaps most noteworthy in this fourth edition, though, is the addition of a new chapter, Chapter 12: Who needs investors? In this new chapter, you’ll read about several inspiring entrepreneurs who are getting their initial capital from a novel source – actually not so novel, when you think about it – their customers! This new chapter draws on my latest research and outlines five different ways to develop a customer-funded business model for your new venture. And, no, we’re not talking about crowdsourcing or Kickstarter here.

Finally, to take advantage of the power of technology, I’ve linked this fourth edition to a brand new The New Business Road Test app for your smartphone or tablet. In today’s digitally driven world, many readers – perhaps you – will be reading this book on an iPhone, a Kindle, a Samsung Galaxy, or some other mobile device not even invented as I write in early 2013. As you are out in the marketplace searching for or assessing an opportunity that you hope will be good enough to become your next start-up, the app will make it easy to assemble evidence for your road test wherever you are. The app is keyed to the book – and the book to it – on a chapter-by-chapter basis.

This edition is presented in two parts. Part 1 (Chapters 1–10) contains everything you’ll need to know to road test your new business idea while Part 2 (Chapters 11–17) provides you with the practical toolkit to carry out your road test.

In 20 seconds or less

This book helps serious entrepreneurs and business professionals avoid impending disaster. It shows them what to do before they embark on a lean start-up, to enhance their chance of winning both customers and capital and actually achieving their entrepreneurial dreams. And it reveals the seven key issues that astute investors examine before they invest. Intrigued? Read on.

JWM

May 2013

There is an app provided by the author to accompany this book. Pearson Education Limited is not responsible for the app or its contents and does not guarantee any outcomes resulting from the use of the app.