Tag: creating-ideas
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I saw the film The Social Network last night. Fact or fiction, the film tells the story of a few Harvard students who came up with an idea at about the same time. One of them turned the idea into Facebook and became a billionaire at the ripe old age of 23. Others did not, and cried foul.
As I watched, I couldn’t help thinking back to another Harvard kid with an idea: Me. In 1996, I launched a website called BranchOut with a friend from college. It was an online social network, initially exclusive to Ivy Leaguers, and later opened to others. Around the same time, several other startups launched similar sites. None of them became Facebook.
I’m all for getting advice about your startup idea and approach – before, during, and after you launch. But not all advice is created equal. Before you seek advice from a person, be sure to think about what they know, and don’t know. Here are a few types of experts you may want to consider getting advice from:
Functional experts. People with expertise in roles like sales, marketing, team building, product development, technology, law, manufacturing, etc. The more relevant their expertise the better. For example, if you are launching a training business that will sell to large corporations, get sales advice from someone who has sold similar types of services to similar types of companies. Advice from someone with expertise on selling consumer products to retailers may not be on target, and could even steer you in the wrong direction.
Are you cut out to be an entrepreneur? Entrepreneurs come in all shapes, colors, sizes, ages, etc. But in my experience, there are a few traits successful entrepreneurs tend to exhibit:
Tenacity. Many startups have limited resources and face constant streams of obstacles. The ones that succeed do more with less, and find ways around road blocks. You will most likely suffer many small failures along the road to success, and you’ll need to shake them off without being overcome by self-doubt. That also takes a lot of confidence.
Flexibility. Ok, this is the mind-bending part of entrepreneurship…. You have to walk a fine line between sticking to your guns, and knowing when to embrace change. When I look at the financial projections in a business plan, I only know one thing for certain: They are wrong. It’s tough enough to predict what will happen at a company with a twenty-year history. Predicting something like sales in the third year of an innovative venture that hasn’t even started to operate is next to impossible. So entrepreneurs need to be good at rolling with the punches.
The prospect of starting your first business can be pretty intimidating. Yes, you are a smart cookie, with passion and tenacity in spades, but this is a new challenge, and that’s always tricky. Here’s a basic roadmap to help you think about what to do, and when. UpStart can help at each point, with private coaching, and blog posts with tips and inspiration.
- Come up with an idea, and vet it. Make sure the idea is a good fit for your goals, interests, skills, and resources. Get preliminary feedback to make sure it solves an important problem for a specific group of customers, and that there’s a reasonable path to profitability.
- Get a partner, and structure a deal. Find out if partnering is right for you, learn how to identify the right partner, and iron out terms that ensure fairness and flexibility in good times and bad.
- Create a business plan. Don’t go too crazy, though. Plan just enough to answer the questions why, what, who and how. Create a simple presentation that makes it easy to get feedback. Run some basic numbers to understand how much money and time you’ll need, how and when you’ll turn a profit, and whether the return is worth the risk. Continue reading this post
For consumers, the deal is simple. Sign up for free, and get an email every day or so with a “groupon” – an offer for a deep discount on a local purchase, good only if some minimum number of people participate. Discounts cover a broad array of products and services, including restaurants, gyms, spas, supermarket shopping sprees, etc. Most customers are well-educated, single (49%) women (77%) under the age of 35 (68%).
For providers of goods and services, groupons generate significant one-time revenue, and the chance to attract potential repeat customers. As an example, a NYC day spa recently ran a groupon for hot stone massages. They reduced their retail price by 59%, from $120 to $49. In return, they sold 2,267 massages, generating over $110,000 in revenue (time to hire more masseuses!).
By some accounts, over 30 percent of adult Americans have unrealized dreams of starting their own companies. What’s holding these wannabe entrepreneurs back? Among other things, many of them just can’t find compelling ideas. Here are a few tips for discovering ideas that will get you off the fence and into the action:
1. Consider yourself. Before you look outward for ideas, look inward to determine what kinds of startups are a fit for you. Got limited access to capital? Look for ideas that are bootstrap friendly. Have credible experience in a particular industry? Find ideas in that field, and you’ll have a better chance of executing well, networking your way to industry contacts and customers, and convincing partners, employees, and investors that you’ve got the right stuff. Got skills in a functional area like sales or web design? Look for business concepts where those skills are critical, and you’ll be able to accomplish more with less help from outside. And whenever possible, look for ideas that are in-line with your long-term passions.
What types of ideas are best suited to bootstrapping? (We’ll get to “how to bootstrap” in a separate post). Here are a few things to look for:
1. Low startup costs. Look for ideas you can launch without writing big checks. For example, it tends to cost less to start a company that sells services than one that sells products. Want to sell a line of baby food? You’ll need to create product formulations that meet FDA standards, and design packaging that stands out on store shelves. Also, you may have to produce more than you want at first, to meet supplier minimums and be prepared for customer reorders. Want to start a consulting firm? You can probably get started with a simple website and business cards.
2. Low marketing costs. If possible, find companies that reach customers without the need for large marketing budgets. For example, one of my clients has a $3 million revenue business and has never spent a penny on marketing. She sells hospitality services that cost over $100,000 per year. The universe of potential clients is fairly small, so she networks her way in the door, gives a sales pitch in person, and (sometimes) walks away with a big fat contract.
Market size is important, because it provides a general idea of just how big an opportunity you’ve got. If you are going after a market where customers currently spend $10 million per year, it’s probably unrealistic to think that you’ll generate $5 million in revenue anytime soon – that would require a 50% market share, which is more than Coca-Cola has, and they’ve dominated their market for more than 50 years.
Still, sit through enough pitches, and you are bound to hear something like the following: “This is a $1.5 billion market. It’s huge! If we capture just one percent, we’ll have a $15 million business!!!” Trouble is, the $1.5 billion market size is pretty much irrelevant because it includes lots of segments that have nothing to do with their business. Also, one percent is arbitrary—that could be a little or a lot, depending on the competitive dynamics.
Some business ideas are truly revolutionary – radical departures from anything done previously. When revolutionary ideas lead to successful companies, founders and investors reap bountiful rewards. In 1999, two venture capital firms invested $25 million in a young, innovative startup with an odd name: Google. Their stake in Google is worth about $50 billion now.
But starting a company based on a revolutionary idea isn’t for everyone. It’s extremely risky because there are so many unknowns. Will customers buy the product (or service)? Will they pay enough for you to make a profit? How much will it cost to market and sell the product?
If I had hair, it would be on fire today. I’m only a few days into my startup, but there’s already so much to do, it’s nearly overwhelming (It’s also exhilarating, and I’m a closet stressmonger. Shhhh).
As an entrepreneur, with or without hair, you’ve got to wear a lot of hats. Today, I drafted the content for an online class, hired a graphic artist to design my book cover, pitched my business to a potential marketing partner, made some changes to my legal entity with my lawyer, and conducted a client coaching session.
But the toughest part about a day in the life as an entrepreneur is the tyranny of choice. There are 100+ things on my to-do list, and nobody to tell me what’s what. So, I’ve got to prioritize up the wazoo. That’s one of the untold secrets of entrepreneurial success: Figure out what to do now, and what NOT to do now (aka ever).
