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specialists in enhancement and management of human performance |
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In speaking with investors, they all seem to suggest that the best businesses to back are those that do an excellent job of forming a bulletproof company that brings a great product to market, first. This emphasizes that you must be impeccably prepared for everything, have excellent people, pick a product that will be a huge hit, and bring it to market in a big way, before anyone else has time to start a competing venture. About 70 - 90% of startups will eventually fail, according to Garage.com's Geoff Baum, an angel investor resource for Internet startups. Our research suggests that this refers only to those firms that secure investors. This is due to a variety of reasons, but you'll find most failed to address one or all of the above criteria. They didn't prepare well, have good human capital, select a product that would fulfill a pent-up demand, get to market far enough ahead of any competition, or in some other way insure their target market would only do business with them. Whether you want a small, local business, or you dream of being the next big technology firm, investors and consumers will ultimately decide if your business is a winner. Our job is to help our clients insure that outcome. To that end, I put forth some sobering facts and tough questions. If you can respond quickly to these, with unimpeachable certainty, you're well prepared for the results you desire.
Do you have successful experience in the industry you want to start a business? Have you worked in a managerial capacity? Have you had business training? Do you possess the technical skills required, and resources for those you don't? Do you have a basic knowledge of sound management practices, finance, record keeping, marketing, and the processes to deliver your product or service? Have you attended to the legal issues, and designed all your business processes for growth? As when investing in stocks, it pays to know all about what you're committing yourself to, and lock-in every conceivable advantage. Many people have invested in Internet companies without knowing much about the technology or market, the track record of the management team, etc. Some smart people saw that when the public's demand for purchases over the Net increased, the products had to get delivered, and consumers that use the Net want instant delivery: smart investors put their money into UPS and FedEx! These mature, and decidedly low-tech firms would see more volume, increasing their profits. You want to choose your business venture with the same prescience, and move quickly. Do you have clear and detailed goals? Are you able to stay highly focused on them? As an entrepreneur, you must both internalize and visualize long term goals, yet be focused enough to reach them with short term objectives. Are your goals deeply meaningful for you, keeping you awake with new ideas? Having such goals, consuming your attention, is what will keep you engaged despite setbacks, generating creative solutions and attracting others to support you. Can YOU reach your goal? They must also be realistic. 500 years ago, DaVinci invented the helicopter, but he knew he didn't have the materials to make his concept a reality. Many would-be entrepreneurs are blinded by their dream, but fail to thoroughly evaluate its true potential, or their ability to achieve it.
How do you KNOW your business model will work? Have you succeeded with this same model several times before, or did you study other companies that use that model? Did firms that use that model fail, and if so, why? Professional investors pay attention to an entrepreneur's failures as an indication of their maturity, not just the achievements. Part of what led me to form a consulting company was watching my employers blunder and fail, and from recognizing my own weaknesses. If you lack basic skills, information or other needed resources, are you willing to delay your plans until you've acquired them? I meet many people who either leap before it's prudent, or are at the opposite extreme: they spend their lives preparing, cautiously avoiding risk. "Homework" is a valuable preparation, but at some point, you must know you've done enough, and it's time to take a test and graduate.
Many businesses steer headlong into problems because they believe the commonly held wisdom. They fail to challenge assumptions and don't think from new paradigms. Airplanes take off against the wind, and Silicon Valley exists because people were willing to buck the status quo. As you can see from this extensive series, there are many details that need your careful and expeditious attention. Business schools, such as University of California at Berkeley's Haas School, have created a curriculum to teach entrepreneurism. It's not enough to be prepared with an MBA from one of the world's leading B-schools, these grads are scrupulously studying how to succeed. Are you preparing yourself as diligently? The next installment in this series will address more marketing and people issues. (Go to Part 4 of this article.) (Go back to Part 1 of this article.) (Go back to Part 2 of this article.)
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"The best way to predict your future is to invent it." --
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