I recently was introduced to an entrepreneur-wanna-be by a colleague who suggested I might be interested in this interesting guy’s ‘innovative idea’. I’m always interested as long as the idea is not half-baked and has some real merit to it.
Well my friend was accurate on one sense – the guy was interesting! The idea, however, was half-baked having entered the entrepreneur’s head in a troublesome dream perhaps influenced by noxious beverages.
The idea sounded like others I’ve heard, similar to existing businesses while being described as more innovative and reaching a demographic of the poor, disadvantaged and those otherwise not being able to reach the demographic of the mainstream products on the market. Yikes!
Unfortunately, the idea was simply that; an idea that had little substance. I told the young man that he needed to assemble a plan and be able to pitch a solid idea to me as if I was the sole banker in the world who would finance it. I asked him to get back to me when the idea was better formulated, after all, I’m not in the business of smashing dreams.
The young man walked away with vim and vigor and the thought that someone had listened and given him sound advice. He will be back!
It occurred to me that there are a lot of guys with big ideas out there who feel, for whatever reason, that they need to be an entrepreneur and all they need is the one big idea. My guy’s idea was borne of need and personal experience that is the basis for most start-ups.
I figure there are four sensible lessons a start-up founder should know:
- Have a Well Thought Out Plan
- Walk Before You Run
- Don’t Wait for the Perfect Timing
- You Need to Foster Excitement Over Your Brand
What does a well thought out plan look like to me? Unlike the movies it’s not written on a napkin in pencil or expressed in a bar over a few scotches.
The idea needs to be fully researched. What’s out there now, has it been done before, is there a need and do people really want my brilliant idea?
Once reality sets in and you are determined to move forward, you take your research and make a case for the implementation of the idea and a way to source the financing. After all, it’s your idea but you will have others finance it. Its called using OPM (Other People’s Money).
I’ve mentioned this in the past that I won’t work with a new client unless he/she has a business plan (of sorts) or is willing to create a semblance of one. It’s a great exercise if nothing else and if their idea passes the business plan test without pivoting to something else they actually may be onto something. Validating your idea is to everyone’s advantage and saves a lot of time and money.
Of course, validating an idea is a bit more complicated than just writing a business plan but it is the first step. Minimal Viable Product (MVP), beta testing and more is required before seeking funds to develop the idea.
Assuming your idea passes muster and there is no stopping you, you must walk before you can run. One would think this is common sense but as we know there is nothing common about good sense.
I agreed to meet one entrepreneur who wanted to open a retail business. After we set a meeting date she had gone out and leased several thousand feet of prime retail space prior to our meeting in anticipation that I was going to be the wunderkind who would make her business a success – seriously?
It takes small steps to grow a business and anything else if foolhardy. What do they say about running a marathon – it’s just one step after another?
In your planning you must consider the worst-case scenario and plan for it. Allow yourself a moderate strategic growth plan if you are that gung ho but find a rhythm that works for you. A plan without goals is suicide so put an effort into goal making and a plan that allows you to follow them. The goals should include ones for you, your team and the business.
Don’t wait for the perfect time to seek a deal. There’s a postscript to that, don’t try to do everything yourself. A case in point was a client who had an invention that would revolutionize the electrical contractor market and was a dynamite idea. His plan was so well thought out it made me applaud. There was a slight flaw to his ingenious idea.
As an inventor he wanted absolute control of his product and despite advice to the contrary wanted to build a plant and manufacture the item himself in Canada at many millions of dollars in cost.
His idea was perfectly positioned to be a money-maker for him as a royalty from a large manufacturer already well entrenched in the market that I thought would jump at the offer. Alas, he won out and ended up in financial obscurity wishing he had taken a different route.
I told you the postscript first. The ‘don’t wait for the perfect time’ is just that. There is no perfect time. Showing your product to other businesses (with some level of protection) is a great way to gauge public interest in your idea.
Reaching out to potential licensing partners can save you not only grief in the end but can guide you in the manner that you proceed with the business.
You need to foster excitement over your brand/product. In today’s market many seek initial financing through crowdfunding. While I have issues with the premise it does work well for some products especially innovative technology products.
Good for you if your product generates so much buzz you exceed your goal in crowdfunding. You are a hero for as long as it takes the money to get into the bank unless you keep up the excitement. Excitement is a fickle mistress easily taken away from you.
Keep the excitement flowing with news about your business and product, spend the money on marketing and build relationships while you’re at it. Make those people who put money into your crowdfunding brand ambassadors. Find influencers who will jump on board and promote you ‘til the cows come home and you might have a business that will grow.
A start-up is not for the faint of heart and has ruined a many life. However, planning, asking friends and following advice may take you from an idea to a successful venture.
Gary is CEO of Bizzo Management Group Inc. in Vancouver. He has mentored over 1000 business leaders, investors and entrepreneurs. London-based Richtopia placed Bizzo on the Top 100 Global Influencers in the World for 2018.