A couple on months ago I initiated a survey, aimed at learning my own market – the market of startups and hi-tech entrepreneurs and their approach to contracting expert help.
I would like to share the current results on the startup pattern survey. An updated summary will be published when I have more responses. If you didn’t fill it yet go to:
http://www.yourpinion.net/The_Startup_Experts_Pattern
Here is a summary of the initial results, in percentages:
Who participated?
66% entrepreneurs who answered are from the Internet and media industry.
10% Enterprise software
10% Life Sciences
3% wireless/mobile
41%- are in the idea stage/initial development/bootstrapping.
28% are looking for seed money.
14% are after a first round investment.
55% have a founding team only
14% of the companies have 10-25 employees.
10% have up to 5 employees.
72% of the participating entrepreneurs are males.
24% are females.
The rest didn’t fill in this detail.
52% are between 25-35 years old.
38% are 35-45
7% are 45-55.
Education –
41% have business experience and 34.5% have startup experience.
38% hold a BA, 31% hold an MBA and 13.8% are engineers.
Title:
35% describe themselves as entrepreneurs
21% as CEOs
17% as serial entrepreneurs
10% as VP Marketing or Business Development.
Only 3% – CTOs
Location – nearly 45% didn’t select a location.
21% are from the Sharon area
14% are located in Gush Dan
10% are not in Israel
3% are in the north of Israel
0% in from the south.
The pattern:
Only 65% have a business plan and/or executive summary.
55% have a also a marketing plan
24% have a communications scheme or branding strategy in addition
24% don’t have any of the above.
59% said they did their business plan/executive summary/marketing plan on their own.
27% used the help of a business consultant
24% used a lawyer
24% used a graphic artist or studio
21% used internal resources
14% used a marketing consultant
7% used a communications strategist
To the question which resources you assume you may use in the future for strategic plans:
55% said they can do it on their own
44% said they will use graphic artists or studios
41% said they will use a business consultant
38% said they will use a marketing consultant
31% said they will use a lawyer
28% said they will use an accountant
17% said they will try a branding consultant or firm
17% said they will need a copywriter
17% said they will manage strategic plans using internal resources
14% said they will use a communications strategist
10% said they will use an outsourced project manager.
What outsources will you use if you had no budget limitations?
65% – a strategic consultant
59% – SEO search engine optimization
55% – PR
55% – web marketing specialist
51% marketing consultant
52% – graphics studio
52% – branding firm
45% – copywriter
45% – research and information specialist
35% – Communication strategist
24% – naming expert
Opinion regarding hiring professional consultants or outsources:
38% – can’t afford it
17% – prefer to do it in house
17% – are concerned because of legal/patent/secrecy issues
7% didn’t find outsourced answer to their needs.
Preferred method of contracting help:
52% – agree on a project’s budget
14% – hire employees
10% – get full time partners
7% – agree on an monthly retainer fee
7% – agree on a reduced fee plus equity or options
3% – pay an hourly rate
Would love to see a regression pattern…
Hi Danny
Following our correspondence – the analysis of dependencies between data is a little problematic with the resources I have.
Looking at each and every survey filled I can tell you that I couldn’t find a connection between funding stage and the use of experts, nor could I prove a relation between age and the tendency to look for experts’ help.
I hope that with more surveys filled I might be able to establish some patterns of behaviour.
Amazing to see that almost half of the correspondents (45%) don’t have any strategic plan.
And one thing I don’t understand – 44% said they will use a design studio for their strategic plans in the future.
That’s an amazing number, but how could a design studio help with strategic plans?
Einat,
I listed a number of outsources that contribute to a complete business, marketing and branding strategies. I believe that the tendency to hire a graphic artist or studio to deal with the company’s graphic needs is a result of the entrepreneurs acknowledging that this type of skill they may not have and these tasks they cannot do on their own.
My impression is, that when various management skills are concerned, marketing, branding, naming etc., many entrepreneurs think that they “can get away with it”, they can do it all “well enough” on their own and do not have to look for an expert’s help.
If most entrepreneurs had a marketing related background – I could accept it. But when so many of the hi tech entrepreneurs actually growing from the technical background, it is, I believe, a problem.
Having said that, I still think it is admirable that such a high percentage – more than 30%, hold an MBA, which does provide the tools to go for the first few miles on your own.
Ok, now it makes sense.
But in this case, I wouldn’t put it in the outsourcing category, because it’s like electricity, programmers, or communications – things you have to pay for to get.
What your survey shows is that most entrepreneurs are not willing to pay for help.
It would also be interesting to correlate that with their HR strategy. Perhaps they don’t hire consultants because they prefer to employ a marketing manager, who will take care of all their marketing needs. It’s different than having the founder or the CEO take on responsibility for marketing in addition to everything else.
I wouldn’t go that far.
We are talking about startup companies. Budget allocation is tricky at the early stages. I have met startup entrepreneurs who will allocate most of their budget towards marketing and strategy and those who will allocate most towards programmers. I think the decision is a result of what people think they can do on their own and what they perceive as a “must hire”.
It is easy to assume that not everyone can design a logo (not everyone can work with graphic software). But when it comes to marketing, strategy, branding or naming, many people “feel” they can do it, even if they don’t have any official academic training in those subjects. Those topics are abstract enough for people to feel they can handle it and a professional expert is not a must.
For people who do have an MBA or even a BBA, this must seem even easier.
Ideally, of course, the CEO will take a look at the complete basket of resources: money AND time. Example: If a CEO will spend 3 weeks on naming, searching for domains etc., and the results will be at best “lucky”, think of the cost of his or her time and what better ways to spend this cost (or the time) there are: they could hire a naming expert, at about 20%-30% of the cost of the CEO’s time. The results will be better and quicker. The CEO could use this time and surplus to pursuit other issues such as funding, HR, business development or the technology – depending on their specialty.
[...] of my readers pointed out there are not enough cross references between the percentages I presented in my previous post. I get the cross references from reading each and every questionnaire filled. But the software [...]