Many people start businesses in industries they have only seen from the outside. They have an idea, perhaps a business plan and some funding, but little first-hand knowledge of how the work is actually done, what frustrates the people involved or what customers really value. They learn the hard way, through expensive mistakes.
Founders who build lasting businesses usually do the opposite. Before and during the early days, they immerse themselves in the industry: they do every job, talk to every kind of stakeholder and design their offer around what they learn. The founder of one of the world’s largest budget hotel networks is a well-documented example. Before and after opening his first property, he worked as receptionist, cleaner, room service attendant and manager, and spent months meeting hotel owners, staff and guests.
This article explains why subject-matter expertise matters, how to build it quickly, how to map and learn from stakeholders, how to design an offer that solves problems for all of them, and how to keep adapting as customer behaviour changes.
Subject-matter expertise is a founder’s foundation
Whatever business you enter, deep knowledge of the subject matter is one of your most important strengths. It shapes every decision: what to offer, how to price, whom to hire, what to promise customers and where costs can be cut.
Examples:
- A diagnostic clinic: spend two or three months working in or closely observing one, to understand how tests are ordered, processed and reported, and where patients and doctors become frustrated.
- A hotel: learn housekeeping, food service, reception and front-office work.
- A machine shop: work on the floor, quote jobs, deal with material suppliers and talk to the engineers and buyers who order parts.
- A trades business: work on jobs alongside experienced tradespeople before managing them.
Ways to build expertise
- Internships and short-term roles in the industry, in any capacity. No role is too small to learn from.
- Market research: industry reports, association publications, trade shows and online research.
- Conversations with people who work in the industry at every level.
- Doing the work yourself in the early days of your own business.
Digital marketing is part of the expertise
The same founder learned digital marketing before starting his business, working at events and studying how to reach the most people at the lowest cost through search engines, social media and websites. He learned to watch three numbers:
- Click-through rate: how many people who see an advertisement click on it.
- Conversion rate: how many of those visitors become customers.
- Repeat purchase rate: how many customers come back.
For almost any business today, understanding how customers find and choose suppliers online is part of subject-matter expertise. The article on five ways to improve conversion covers the second of those numbers in more detail.
Do every job yourself, at least once
When the founder opened his first property, he was general manager, cleaner, receptionist and food server. People told him that bringing the property up to standard would require a large investment. Instead, he went to a local wholesale market and bought curtains, cleaning supplies and basic furnishings for a very modest sum, cleaned the rooms himself and set up the reception counter.
Doing every job taught him three things:
- Unit economics: exactly what each room cost to prepare and run, and what it earned.
- What to promise customers: which promises were realistic and which would create disappointment.
- How to convince investors: a detailed understanding of costs and profits that gave investors confidence.
No job is beneath you
Founders sometimes think front-line work is either too difficult or too lowly for them. Both views are mistaken. The work is rarely as hard as it looks once you start, and you will often find it interesting. No work is beneath anyone, and everything teaches you something.
Learning from a difficult moment
On one occasion, a shortage of staff meant the founder served room service himself. A guest became angry about a delay, and he experienced first-hand what front-line staff face every day. The experience led to a training module he called the “art of patience”: staff were taught to stay calm, acknowledge the guest’s frustration (“I understand your experience wasn’t good because of the delay”) and were empowered to offer small gestures to make things right.
Founders who have done the work design better training, set more realistic standards and earn more respect from their teams.
Map your stakeholders
Every business sits within an ecosystem of stakeholders whose needs it must meet. Before designing your offer, identify them.
| Business | Key stakeholders |
|---|---|
| Grocery store | Distributors, the landlord, nearby store staff, customers in the catchment area |
| Restaurant | Chefs, restaurant owners and managers, suppliers, diners |
| Budget hotel network | Hotel owners, hotel staff, guests |
| Machine shop | Customers’ engineers and buyers, material suppliers, machine vendors, skilled staff |
| Building services contractor | Builders, building owners, facility managers, tenants, suppliers, subcontractors |
Interview stakeholders for 90 days
The hotel founder spent about 90 days meeting a different hotel owner almost every day, and talking to staff in every department: front office, housekeeping, kitchen, back of house and security. He asked simple questions:
- To receptionists: “What types of customers come to this area?” One might reply that ten types of corporate customers and three types of leisure travellers came regularly.
- To hotel owners: “What causes you problems?” Owners said they did not get enough business, lacked clarity about their performance and could not see in one place how much revenue was coming in.
- To guests: guests complained about high prices, poor cleanliness, unreliable Wi-Fi and nobody available to fix problems in their rooms.
How to run stakeholder interviews
- Aim for volume: talk to many people across each stakeholder group, not just a few.
- Ask about problems, not your idea: “What frustrates you about…?” reveals more than “Would you use…?”
- Talk to front-line staff: they often know more about customers than owners or managers do.
- Record what you hear and look for patterns across conversations.
- Ask about money: what problems cost them, what they currently pay and what they would pay for a better solution.
The article on market research on a small business budget offers more techniques.
Design an offer that solves everyone’s problems
The founder then designed a proposition addressing each group’s problems:
- For guests: clean rooms at a good, predictable price.
- For hotel owners: more bookings, a jump in revenue and technology that gave clarity about performance.
Pricing that guests and owners could accept
He set an attractive entry price, drawing on his earlier experience selling mobile phone plans, where a particular price point had proven popular. Only the first rooms sold at that entry price. Each subsequent room was priced slightly higher, a form of dynamic pricing. Guests still found a safe and affordable price, while owners earned more as occupancy rose.
A common platform
The key insight was to build a common platform that solved problems for all stakeholders at once. Guests received cleaner rooms at fair prices. Owners received more business and better visibility. The platform earned its income by creating value for both.
Applying the approach
Consider opening a grocery store. After interviewing stakeholders, you might find:
- Customers value home delivery and a choice of several brands for common items.
- Distributors want timely payment and help selling slower-moving products.
- Nearby store staff reveal which products sell out and which gather dust.
Your offer could be: the best delivery service and choice in the area for customers, combined with prompt payment and promotion of slower lines for distributors, who might in turn offer better terms. Then check whether the combination is commercially viable.
When founders skip research
The founder of a well-known home services platform has described how his first venture, launched without proper research into its stakeholders, failed and closed. His next venture, built on a deep understanding of service professionals and customers, succeeded. Learn from such mistakes rather than repeating them.
Keep adapting as behaviour changes
Learning does not stop after launch. Customers’ behaviour changes, and businesses must change with it. The hotel network adapted in three ways.
1. Following customers to new channels
Initially, the founder expected most bookings to come by phone and walk-ins, and the business had no app for its first two years. Seeing how quickly people were adopting ride-hailing and other mobile apps, he changed the business model and made the mobile app the primary booking channel.
2. Building teams for emerging segments
Small and medium businesses began asking for a sales contact who could arrange accommodation for their travelling employees. The business started with one or two sales agents, then built a dedicated team as demand grew, eventually serving thousands of business customers.
3. Hiring locally
For delivery and service businesses, hiring people from the local area matters: they know the streets, can reach customers quickly and spare customers the frustration of giving directions.
Spotting shifts in your own market
Watch for signs such as:
- Customers asking for things you do not offer.
- Changes in how customers find and contact you.
- New competitors serving customers differently.
- Shifts in search trends for your products and services.
A useful caution: building a business model from one or two customers’ comments is different from following a genuine trend. Look for consistent patterns across many customers before making large changes. The article on understanding customer behaviour and spotting trends explains practical methods.
A worked example
An engineer plans to open a small precision machining business in Newcastle. Before signing a lease or buying machines, she:
- works for three months as a machinist and estimator at an established job shop;
- interviews 25 engineers and buyers at local manufacturers, mining services companies and defence suppliers about their frustrations with machining suppliers;
- talks to material suppliers about payment terms and minimum orders, and to machine dealers about used equipment;
- visits two job shops in other cities to see how they quote and schedule work.
She learns that buyers’ biggest frustrations are slow quotes, missed delivery dates and poor communication when problems arise, not price. Material suppliers value reliable payment and predictable orders.
Her offer: quotes within 24 hours, firm delivery dates with proactive updates and a simple online job-status page. She negotiates better material terms by committing to a regular ordering schedule and fast payment. She buys a used CNC mill and lathe rather than new machines, and does the machining, quoting and deliveries herself for the first year.
Within eighteen months, she has 30 regular customers and two employees, and she understands every cost in the business.
Common mistakes
- Starting without industry experience and learning only from expensive mistakes.
- Talking only to customers, ignoring suppliers, staff and partners.
- Asking people whether they like your idea rather than about their problems.
- Spending heavily on fit-out before proving demand.
- Treating front-line work as beneath you.
- Failing to adapt when customer behaviour changes.
Frequently asked questions
How long should I spend learning before starting? It depends on the industry and your existing knowledge. Several months of hands-on experience and dozens of stakeholder conversations are a reasonable minimum for an unfamiliar industry.
What if I can’t get a job in the industry? Volunteer, shadow people, attend trade shows, join industry associations and interview as many people as possible. Many will share their knowledge generously.
Should I keep doing front-line work as the business grows? Not full-time, but periodically. Working a shift, answering customer calls or joining a delivery keeps you in touch with reality and shows your team you understand their work.
Summary
Subject-matter expertise is a founder’s foundation. Build it through internships, research, conversations and by doing every job yourself in the early days, including the unglamorous ones. Map all your stakeholders and interview them intensively, ideally for around 90 days, asking about problems rather than your idea. Design an offer that solves problems for all stakeholders through a common platform, and price it so that it works for each of them. After launch, keep learning: follow customers to new channels, build teams for emerging segments, hire locally where it matters and adapt to consistent trends rather than isolated comments.
Sources: small-business training notes on developing founder skills, product design through stakeholder research and identifying business trends, drawn from interviews with the founder of a budget hotel network, together with general start-up practice. Examples are illustrations.
