Scaling business growth is one of the key components that separates the winners from the losers in the startup world. Nothing is more hampering on business growth than an inability to garner more customers, more quickly. It’s make it or break it when it comes to having the customer acquisition, especially when resources are constrained and the business is in its nascent stages. It is such stages, where the company is using bubble-gum and duct-tape to bootstrap their way out of expensive startup capital that some of the most brilliant ideas are born. In fact–according to Malcolm Gladwell— it’s in this gutter of no man’s land that true innovation is truly born. The cliched mantra holds true: necessity is the mother of invention.
But going through a bootstrap process is never fun. In fact, it takes a great deal of hard work and, in most cases, many sleepless nights. Such was the case with Honda when they first tried to enter the United States market. When they arrived about four decades ago now, large Harley Davidson motorcycles dominated the U.S. market. At first, Honda attempted to go head-to-head with these bikes, hoping to eek out some semblance of market share, but unfortunately, nothing was working. Constrained by language, culture, some trade regulation and brand un-awareness Honda almost ended-up having to return to Japan with their hopes of entrance into the U.S. market a complete disaster.
As luck would have it, the owners and their families were using much smaller (and cuter) moped-like motorcycles for their own personal commuting purposes. And as they commuted they were constantly asked by random bystanders, “how can I get one of those.” The natural-born entrepreneurs in them asked, “why are we not selling these?” So they requested a few sent from their Japanese manufacturing facility. When they sold out almost immediately, they sent for more. It wasn’t long before Honda was providing smaller, stylish motorcycles to large segments of the U.S. population–those that didn’t even fit into the original demographic they had intended.
Call it luck that the Japanese managers of Honda’s original U.S. subsidiary were able to tap into a completely new demographic at a critical juncture in the company’s history in the U.S. The timing couldn’t have been better. The rest is included in history. Honda has gone on to become one of the world’s most recognizable brands. But what if things had “okay” and not terrible at the outset? Would the managers have recognized different opportunities had they not been feeling the hurt of a lacking sales? If they weren’t small and entrepreneurial, would they have had the wherewithal to make a very pivoted business decision at such a critical time?
Certainly a good dose of luck was couched in Honda’s ultimate success at penetrating the U.S. market, but their ability to stay nimble and their constrained resources may have proven the very thing that allowed them to see opportunities (and go wholeheartedly after them) when others may have balked. In fact, the resource constraints likely proved the very thing that helped to propel the company forward into untapped and unknown demand for a different type of product, had the managers not been ready to make shifts in their business plan. I doubt a much larger, better financed company would have likely been so solidified in a specific course of action that they would have completely missed the very large opportunity tapped by the team at Honda.
The entrepreneurs and companies of today face opportunities like none before them. They also face hurdles unlike those in previous generations. Not all companies succeed. Some fail miserably. In those that were conceived and grew out of little to no financing, there is often an interesting story very similar to the team at Honda. It usually includes some type of constraining on the resources of the company, a manager willing to pivot and sometimes a great deal of luck. When combined a winning and sustainable business often emerges.
Nate Nead is the Managing Director of StartCapital.com and ReverseMergers.com. He and his team help in the financing of world-changing startup companies through private placement, reverse mergers and direct public offerings. He resides in Seattle, Washington.