- Research: find a new niche in a marketplace you know well
- Know your sector: stay on top of research, trends and regulatory changes
- Learn about your market: even with great industry knowledge, Alan and his business partners still had a lot to learn about defining their market, and seeking feedback
Understanding the sector, and seeing a gap
'We spotted a gap in the financial services sector that nobody seemed to have noticed, and a market that was growing.'
Alan Holmes and his business partners started maxmyrate.com.au to provide an online rate 'auction' service, starting with a comparison facility for term deposits. The platform includes a step by step wizard that searches across banks, credit unions and other service providers for the best interest rate for a customer's investment.
Initial research - including reports from industry regulators ASIC and APRA - revealed that there was a market, at least in theory.
'We had an idea that could offer a service to both the financial service providers and our target customer - the self-directed investor, including those with self-managed super funds (SMSF).'
Learning how to apply industry knowledge in a business context
The partners created a business plan and a funding model. A course in entrepreneurship at Melbourne Business School proved invaluable. 'If we hadn't done the course, we might not even have a business.'
Led by entrepreneurship expert David Austin, the course provided insights about how to judge if the business idea was viable and how to build and test a platform with a customer focus.
'From that moment on it really changed how we thought about our business.
'We were able to build a working prototype of our online service at a fraction of the cost of our original estimated budget, and we were able to prove we had a viable market by finding twenty real-life customers,' he explains.
The course is no longer running but you can read lectures and see pitch videos at the Prepared to Succeed blog, run by Jane Pfeifer.
Putting the customer first
Alan and his business partners had an idea about how their model would work, but they didn't have the full picture.
'Even though we had researched thoroughly, the prototype didn't exactly match what our customers wanted.' Feedback from real users was included in later versions, ensuring the service met customer needs.
A fiercely regulated environment
'We operate in a highly regulated environment,' says Alan. 'There were also global regulations affecting us that we weren't aware of at the start.' This type of business has clear obligations under the law, and keeping up to date with those will be an ongoing responsibility.
Their sector also made the decision about business structure straightforward. 'We formed a Pty Ltd company and we'll be required to have the appropriate licences.'
Juggling a startup with work and family
Alan and his business partners are transitioning into the business at a manageable pace, ramping up in a way that allows them to continue to earn a salary while they build the business on their own time.
'At the moment, it's challenging to find the time to actually work in the business,' Alan admits. He and the other partners have young families, and work full time.
In a year...
The journey from the first idea to today's maxmyrate.com.au platform has taken about a year. By this time next year, Alan hopes to have proven a viable business model, with at least 500 new customers, and a 70% return rate for existing customers. He'd also like to be along the path to expanding the platform to offer more products and advice.
'I'm excited that we're creating a service that provides real value to customers, and to be building something out of nothing.
'In terms of employment, we're likely to have a small core group of people with additional specialists, consultants and contractors when we need them rather than a more traditional staffing model.'
The partners at maxmyrate.com.au improved on their original product idea and went to market with a much better chance of success. They achieved this by extensive research and workshopping. They also completed a course especially designed for entrepreneurs bringing a new product into the market.