Not Just For Technology Companies
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What is Commercialization?
Commercialization refers to the process of bringing new products and services to market. It involves planning the entire front-end of your business. This process includes branding, productization, packaging, marketing, sales, distribution, service, and support functions as a whole program of related activities.
A commercialization plan and program rollout is often facilitated by a business incubator or an accelerator. These companies specialize in helping start-ups and early-stage companies sort out how to bring their offering to market or scale their business. They are part of the business start-up ecosystem, along with government programs, sales and marketing consultants, coaches, law firms, angel investors, banks, and institutional investors.
The Trouble with the Start-up Ecosystem
The structure of the start-up ecosystem has bugged me for a long time. Why? Because it focuses almost exclusively on technology and product companies.
The vast majority of start-ups are not based on products or new technologies. Many new businesses are local and service-based. As a result, they tend not to qualify for any help from the start-up community.
Why the Lack of Support?
The reason for the focus on technology is obvious. It boils down to market potential, scalability of the business model and access to financing.
New technology businesses have the potential to grow faster and larger than most other types of businesses. The goal is growth, which generates cash flow, brings in more jobs, pays more taxes and generates returns for investors.
How Tech Start-ups Get Supported
To attract angels and institutional investors, companies need to have all their ducks in a row.
New technology start-ups know they need a great deal of money to develop and commercialize their products. They need to lock down their intellectual property. They need solid business plans, an a-list management team, product development, commercialization, finance plans and a liquidity mechanism for investors.
How is the Average New Business Different?
Unfortunately, the average new business lacks most of what investors are looking for. They generally lack a large identifiable market. Their value proposition is not unique, compelling, or scalable. They often lack a defined profit model, a business plan, a financing plan, and a sales, marketing, and commercialization plan. They also lack an experienced management team and don’t have a liquidity event or an exit strategy in mind.
Many new and small businesses are self-financed. They rely on shareholder loans, lines of credit, bank loans and credit cards to start up and grow.
As a result, small business owners tend to get ignored by the government, investors, business incubators and the majority of service providers within the start-up ecosystem.
The average new business owner is largely on their own to figure everything out and finance their business on cash flow.
What’s Available to Worthy Start-ups?
In a word, investment. Before a company can secure investment, they are expected to get their act together. They need a plan that shows investors how the management team intends to drive the business forward to profitability and sustainable growth.
The plan needs to acknowledge risks and show how risks and challenges are to be managed. This plan and the proposed management team is just the beginning. If the company secures an initial investment, the money generally comes with conditions, along with the wisdom, experience, and network contacts of the investors. The investors often help form a board of directors, create reporting structures and professional governance to help guide the company forward.
The board will generally connect management to accountants, lawyers, government programs, new business incubators, potential employees, sales and marketing consultants and other investors. The goal is to prepare the company for growth and profitability as quickly as possible.
What’s Available for the Average Business Owner?
That all depends on their budget, their tolerance for debt, and their willingness to ask for and receive help. Given the scarcity of funds, many business owners attempt to handle everything on their own, whether they know how or not. Alternatively, they engage some help. Unfortunately, in the absence of a plan, the support they engage tends to be ineffective.
It’s not that the people they engage are not qualified; it’s more about a lack of context or a plan for how their activities will add value. These random efforts seldom pay off.
What’s the Alternative?
Start-ups need to prepare as if they were receiving help from an incubator. They need to develop a commercialization plan. Start by asking some fundamental questions.
- What’s the business about?
- Who will the business serve?
- Who’s the competition?
- How will the business compete and make sales?
- What’s the offer hierarchy/lifetime value framework?
- What’s the financing plan?
- What’s the distribution, sales, and marketing plan?
- What’s the operating / staffing plan?
- How will the business drive earnings growth?
- What’s the liquidity event/exit strategy?
Everything needs to get defined and written down in a manner that directs and drives the business forward.
Where to Start?
The starting point is simply getting all the business assumptions written down and rationalized in a format that can be understood and shared with others. The process of writing everything down helps highlight gaps, internal misalignment, and conflicting ideas. Challenging questions may come up and will need answers.
The process of creating clarity and commitment to a commercialization plan is where the value gets created.
What Happens Next?
After working through this critical thinking, the plan is upgraded into a format accountants, bankers and investors expect to see. Working through the ideation and refinement process takes time.
It’s not a race to get a plan together for the bank. What’s important is to clarify why investing so much time and money in the business is worth it. Be clear how the business will generate a return worthy of the investment and the risks taken.
Streamlining the Commercialization Process
Unless the business is a technology start-up, it’s unlikely to fit into the formal innovation and investment ecosystem. If the business is being bankrolled by the owner, hiring a herd of experts to help with planning is unlikely.
In response, the two paths I see most often are:
- Winging it, with no plan and a bunch of random activities
- Engaging a coach to provide direction and support along the commercialization journey
Engaging a marketing or a commercialization coach is often the only affordable option for small business owners.
How Does Commercialization Coaching Save Money?
Money is saved by staying focused and taking the right actions in the right order. Much of the work is done internally or by the owner, under the guidance and direction of a coach.
Engaging a business coach is largely about tapping into their experience, their network, their process, and templates, while getting direction and feedback. It’s different from hiring consultants to do all the work. It takes longer to work with a coach, but that’s what makes it affordable for small business owners.
When a business owner is actively engaged in the work, they learn more and develop a greater sense of ownership, control, and commitment to their commercialization plan.
The Call to Action
If you’re a start-up or own an early-stage company, look into whether your local start-up ecosystem has programs you can participate in. If it does, take advantage of them.
Search Google for start-up programs and incubators in your city. Look for people focused on commercialization and systems development rather than the individual components. You want to avoid random acts of marketing at all costs.
However, if the programs are scarce or non-existent, consider engaging a marketing coach, a commercialization coach or a Fraction CMO to guide you.
Ultimately, what you want is someone working with you to streamline your commercialization and business development journey. The goal is to carve out a straight-line path to follow and to have someone keeping you on track as you develop your business.
You want to avoid all the waste associated with not having a plan. You also want to avoid getting sucked into the operational vortex of your business. You want someone to pull you out of the day-to-day, so you’ll take the time to look at the big picture and make strategic investment decisions.
If you’re curious about coaching or the commercialization process, take a look at our free resources and our book, Mastering Marketing Leading a Journey of Becoming. It’ll walk you through a 20-step marketing and commercialization process. You’ll find yourself evaluating how you’re handling each step now, as well as visualizing the system as a whole.