- What Makes an Entrepreneur?
- How Do You Make The Transition from Idea to Entrepreneur?
- Do You Have to Have Money to be an Entrepreneur?
- What are the Most Important Things When Starting a Business?
- How Do I Protect My Ideas?
- What About Trademarks?
- What Do I Need to Know to Take My Product to Market?
- What Are the Strengths and Weakness of an Entrepreneur?
- What is the One Thing That an Entrepreneur Shouldn't Overlook?
- What's the Best Way to Attract Venture Capital?
- What is the Difference Between Profit and Cash Flow?
- Should I invest in a start-up as an operating partner with a minority interest
- I'm_Ready_to_go_with_my_Start-up.__Is_this_a_good_time? (4/08)
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Passion. Passion for themselves and passion for their ideas. Competitiveness and persistance. An entrepreneur believes, knows, that their ideas are better than what's out there now, and they want to prove it. They want to win, regardless of the obstacles. In our opinion, an entrepreneur is like a mountain climber. Mountain climbers are in a personal competition with the mountain. The higher the mountain the greater the challenge, the greater the prestige for having climbed it, and the greater the personal high. This same mindset is at work with the entrepreneur, but the entrepreneur adds the additional elements of building the mountain and being the first to climb it.
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How Do You Make The Transition from Idea to Entrepreneur?
Basically, there are 2 ways. The first is to have an idea that will have significant acceptance in the marketplace and develop it. The second is to find a small, developing company that you believe in, probably under-funded, and purchase it. It's just a matter of where you start the journey, BUT regardless of where you start, you have to have that burning desire, that internal drive, to succeed.
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Do You Have to Have Money to be an Entrepreneur?
Yes, Yes, Yes! Either yours or someone else's. Money is the primary area of disconnect between ideas and success in the marketplace. Most start-up businesses fail because they're undercapitalized. You have to have good cash flow to keep the business operating. Remember, entrepreneurs are eternally, and frequently, unrealistically optimistic. The development of steady, positive cash will typically take longer than anticipated. Credit is contagious, and once you start borrowing you put all of your personal assets on the line!
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What are the Most Important Things When Starting a Business?
In our opinion, MONEY, a GOOD LAWYER, a GOOD ACCOUNTANT, and a GOOD MANAGEMENT TEAM. You can pretty well go anywhere with that combination. It would help if you had a quality product with economic value in the marketplace.
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Ideas can be protected by using the mail, a copyright, patent or the registration of a trade secret. We would suggest that when you get an idea for a product, write it out in as much detail as you can think of at the time, including how you plan to build it, and method of production (if possible). Make sure that you sign and date it. Make a copy for your files. Then, put the original in a self-addressed envelope. Write something on the back of the envelope so that you can identify the contents. Address and mail it to yourself. When you receive it DON'T OPEN IT! This is your proof of idea and its origination date. As you move forward you have to decide whether to copyright, patent or keep your ideas a trade secret. A good attorney can help you with that. However, if you want to do some preliminary research on your own the web site for the U.S. Patent and Trademark Office is www.uspto.gov. The U.S. Copyright Office is www.copyright.gov. Copies of the Uniform Trade Secrets Act can be obtained from the National Conference of Commissioners on Uniform State Laws at 676 North Dt. Clair St., Suite 1700, Chicago, IL 60611. Read it carefully.
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When you're building product acceptance trademarks are an excellent way to obtain product differentiation and recognition in the marketplace, but trademarks don't really protect your idea. On the other hand, as your product increases in popularity a trademark can highlight the uniqueness of your product, help protect you against competition, and take on a value of its own. We have always found trademarks to be a good idea and a good value, but it's your call. The web site for the U.S. Trademark Office is www.uspto.gov.
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What Do I Need to Know to Take My Product to Market?
Know your market, know your user, know how your product is used, know the purchasing process for your product, know who your competitors are, and as much detail about them and there products as possible. There may not be another product out there like yours but there's always competition for your Users dollars. Understand it. Know why your product idea isn't currently on the market. Determine an economically acceptable price range for your product. Determine if you can make and sell your product within that price range. A little research, and understanding can save you a lot of heartache down the road. One last thing! Make sure that this information is all down on paper, or in a computer file, so that you and your management team can review and refer to it.
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What Are the Strengths and Weakness' of an Entrepreneur?
The strength and weakness of an entrepreneur is the same thing. It's their mindset. Entrepreneurs are incredibly creative, optimistic and persistent. IT WON'T WORK! is not acceptable to them, but sometimes IT JUST WON'T WORK! An entrepreneur's persistence to go down a certain road will frequently blind them to better, more productive avenues. That's why a good management team is so important, and one of the major reasons for this web site. We don't know as much as you do about your business, product, or market, but we may be able to help you sort things out by asking the right questions.
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What is the One Thing That an Entrepreneur Shouldn't Overlook?
Quality Control! Product quality and product consistency are, in our minds, the two easiest things to overlook in the heat of the moment and the press of dollars. Quality costs money, but product quality and product consistency will build trust in your consumer. Controlling the quality and consistency of your product may seem to be an unnecessary expense but it will save you from immeasurable and costly problems in the future.
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What's the Best Way to Attract Venture Capital?
That's a subject for, at least, one book, but the answer is FACE TO FACE CONTACT!. You have to get their attention, and initially you're not going to get much more than a minute so be prepared with an understanding of your market, where and why your product is needed, and brevity. An angel or VC doesn't have the same ego-involvement, excitement or sense of urgency about your product as you do. They're considering a lot of other deals so they want to know if what your presenting makes sense, why it would excite its potential users, how long it would take for them to get their money out with an 8x-10x return, and how it stacks up to the myriad of other deals that they're considering. Remember, an angel or VC is simply an investor. They've chosen to invest in start-ups or developing businesses rather than go the conventional investment rout because they feel that with the right deals the payback will be greater than the risk. You have to convince them of that, and you won't have much time to get their attention so be prepared and be brief.
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What is the Difference Between Profit and Cash Flow?
Profit is a book figure that shows the difference between the revenue of the business for a given period of time, and the cost of acquiring that revenue during the same period of time. Cash flow is a calculation showing the difference between the amount of cash that was, or will have to be, paid out in the course of a week, month or quarter and the actual amount of cash received during that same period of time. If more revenue is received during that period of time the cash number is positive increasing the cash holdings of the business. If more cash was paid out during the same period of time the cash number will be negative decreasing the cash holdings of the business. Cash flow is critical for start-up businesses because they normally have long periods of negative cash (flow) without substantial cash holdings which means that the business will either have to borrow the cash or obtain the cash from investors. it's cash flow that determines how much money the business is going to need, not profit. For a Start-up to be successful the CEO and the CFO have to have a good understanding of cash flow and the cash needs of the business.
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Should I Invest in a Start-up as an Operating Partner with Minority Ownership?
That's a question that only you can answer, but you should consult an attorney about minority ownership rights before doing, or agreeing, to anything. What we can tell you is that we've all been there, and it's always been a disaster, particularly if you're investing with a friend or family member. When money is involved "trust" is a non-functioning word. There are bound to be arguments over management style and decisions made, or taken, that leave their mark. Your ideas may or may not carry any weight, and although you've invested, as a minority shareholder, you have no influence over the decisions made by the primary shareholder. If you're an operating partner you're going to be drawing a salary, but you can always be fired. That would leave you as an investor without say and without recourse. You can probably go to the Board to protest, but in our experience when something like that takes place the Board will, most likely, be stacked against you. If you've invested with a friend you can ultimately say "good bye" to that friendship. If it's family, holidays might not be as pleasant as they once were. Our suggestion is to stop romancing the present. Think of the future and what can happen, because if it can happen it probably will.
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I'm Ready to go with my Start-up. Is this a good time?
In our opinion NO! Not unless your product can spin straw into gold. Regardless of what the Fed is doing, the entire world is in a state of economic uncertainty. That means that your potential customers are not going to be receptive to anything new. Everything is in a wait and see state. Budgets are being slashed. People are being laid off, and businesses are trying to weather a storm that might possibly get worse before it gets better. The economists are saying that the downturn is going to last another 12 to 18 months, but no one knows. It's our opinion that you should do all of your legwork and research now. Get yourself poised for the economic upturn, and when it's here BLAST OUT!
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