in this column, I address how to bring a business idea to market.
However, there are many books out there about how to do that
so I did not want to re-invent the wheel.
decided to highlight 20 points that come immediately to mind
time and time again when I am evaluating nanotech business
plans for funding or consulting with startups on their business
strategies. These points are applicable to all types of businesses
as well. The most obvious points about bringing your ideas
to market are presented here only because there will be some
subtleties that have to be presented.
1. Have a business plan. And I donít mean just a written business
plan. There are many books out there on how to write a business
plan so that is not the difficult part. You should have a
real, well thought out business strategy and model and be
able to put the plan on paper with realistic assumptions and
projections. Having a good business plan will mitigate the
chance for failure. Someone elseís business plan format might
not be the appropriate template for you to illustrate your
business model. Be clear on your goals and objectives.
can use frameworks to help you structure your plan, such as
the famous Porter Five Forces. If you do this, try to use
a combination of frameworks to make sure you cover all your
bases. Be realistic about your strengths and weaknesses and
how you will address them. A lack of balance in your business
plan will raise a red flag to potential investors. Weíre looking
to see if you have a grip on reality.
are not committed to this plan because what you donít anticipate
in the market will sometimes force you to change your strategy
later. However, a well thought out plan will also be able
to anticipate some of those changes and will discuss how you
will be prepared to address them when they come. You should
have a good idea where you at least want to be and how to
get there and be able to articulate it in written form. It
is a living document.
What stage are you at in your business? Are you at concept
stage (idea mainly), product development (pre-and post- prototype),
or business development stage (manufacturing, marketing and
sales)? It needs to be clear that you know where you are now
so you can talk about where else you need to be.
Do you have intellectual property (IP) and does your IP need
to be filed and protected? Important questions to ask yourself
is will it be more expensive to patent it and protect it than
to just stay ahead of the game with regard to your competition
if they can easily duplicate your idea or reverse engineered
your product? Coca Cola doesnít patent their secret formula.
Patents expire. Seek legal advice for time, effort and costs
Are there any other legal or government regulations you must
meet? If your product is a Bio-Nano product like a medical
device or a drug, the FDA will have a say over whether it
will be approved and can make or break you as it has for many
a larger pharmaceutical firm. There are also health and safety
codes for certain types of products. Do you know what procedures
and fees are associated with these products?
In your market assessment section of your business plan, you
will assess your target market and existing competition in
terms of product and company. In my experience, this is the
weakest section in most business plans because it requires
the most work in terms of research. The problem is if your
market assessment is weak, the overall marketing strategy
will not work. Youíll find all business aspects, like life,
are interrelated although there are many who havenít figured
this out yet. It is a similar concept as Supply Chain.
You will also need to be able to estimate your expenses and
project revenues. For revenue projection, pricing your product
appropriately does not necessarily mean just tacking on some
margin to cover your costs. You should be able to demonstrate
your product pricing logic and why your targeted customers
will pay what you ask for.
If your product is a manufactured item, who, how, where, when,
for how much, will you make it? You should be able to estimate
this as part of your costs and expenses. Make sure you separate
it into fixed and variable costs and can provide a breakdown
of these items. The more detailed the better.
Be overly conservative on your revenue projections and overestimate
your expenses. Point out on what bases you have curbed or
overestimated your estimates.
With regard to your market assessment, who are your targeted
customers? If you already have customers, that is a big plus.
What do your customers want or what are their needs? Do you
understand your customer? Is this a niche product in terms
of commodity versus custom? Are you meeting their needs? It
also helps if you are a potential customer.
Do you have more than one targeted market? One trick ponies
donít have staying power once theyíve exhausted their only
option. Youíll need to know and discuss other markets you
can move and expand into with your product or services.
Can your product evolve? The question here is if another similar
product comes into the market, how will your company stay
ahead of the competition and maintain or further gain market
share? This is about being flexible and able to adapt to changes
in the market, strengths and weaknesses of your product, and
potential opportunities or competitive threats to your business.
Typical SWOT (Strengths, Weaknesses, Opportunities, Threats)
How will you market, sell and distribute your product? Will
you do this yourself or ally with another company to take
advantage of their distribution channels? How will this happen?
These are some of the questions you should answer and potential
investors, if you need them, will ask.
Who will be your CEO? The CEO entrepreneur has many functions
in terms of the company and is critical and responsible for
success. They are a combination of sales and marketing and
fund raiser. The more things the CEO can do, the better he
will be at leading the company. Are you resourceful? Are you
an idea guy? People will want to follow a good CEO and not
have to be forced to follow. A good CEO also knows what he
is not good at and will bring in people to help them fill
in those deficiencies. Keeping a tight reign on things as
a CEO is good for quality control but not good if itís for
ego issues. Are you someone who can see the big picture? These
are typical leadership qualities written about in many leadership
books and courses. There are natural born leaders but they
also say leaders can be taught. If you are the inventor but
are not the CEO type, be ready to pass the baton when needed.
There are other positions you can take or even create that
will still give you a say in the company if you cannot be
Getting back to management issues, who is going to manage
the different aspects of your business? Unfortunately most
investors are impressed by people who have good pedigrees
and impressive backgrounds. However that is not the best way
to pick your management team if you want to succeed although
it may be a good way to raise money the way things are done
these days. Many management people can hide their weaknesses
and ineffectiveness in a large corporation. Iíve turned down
business plans because of having interviewed management teams
and found them to be inappropriate. In a startup environment,
any deficiencies will be exposed early on because there is
little room for error versus in a large corporation. A startup
is often on the edge of do or die and there is no room for
to assemble a team of people where each are capable of handling
more than one area (e.g. operations, finance, marketing, sales,
etc.). Good management people are able to do this. Does your
management team play well together? How can you make this
happen? Good people often have egos that need to be managed
properly. You donít want too many prima donnas unless itís
for a reason. Be diligent when you interview people for these
Do you need help, such as business consulting, legal, sales,
etc.? Youíre probably saying that youíre a startup company
and you canít afford to hire people. Well, be resourceful.
Check out your nearest university for discount or free help
from students. Many business school students can trade services
for a project grade. Interns and students donít cost as much.
If you canít explain your business plan to the average person
to the point where they can explain it easily to someone else,
go back to the drawing board. You should be able to explain
the concepts in plain language. Jargon will confuse and put
off investors who are not as savvy. If the average person
wants to invest in it, then youíre on the right track.
Be able to adequately answer all questions. You need to be
able to know your business inside out and anticipate all questions
and have an answer for all potential questions. Otherwise,
you havenít thought it through. Even if the answer is ďI donít
knowĒ but you have thought about it and can present a proposal
for remedying it which demonstrates that you are aware of
your gaps and have a plan to fill them. Practice your pitch
on everyone and get to the point where you can answer everybodyís
questions easily. You will be hearing some of the same questions
over and over again. If the same question keeps coming up,
it is an indication that you havenít addressed it appropriately
in your pitch.
Put yourself or designate someone capable to play investorsí
advocate as a check for everything. If you can have several
people as investorsí advocate, even better. The more perspectives
Fund it as far as you can by yourself and with private money
youíve raised before going for VC funding. Weíre talking friends
and family and other angel investors. Research sources for
grants and loans. Have you checked out the Small Business
Administration backed banks for ideas for loans? Do you truly
believe in your business idea that you are willing to risk
your personal assets? Many startup companies max out their
personal credit. I am not saying you should but this is common.
course, this could put you in a compromising position if things
donít work out. 65% to 70% of new business will fail within
the first five to eight years of operations. A good business
plan will help you reduce this risk although it wonít remove
it. However, this is about risk and if you are risk adverse,
you need to think about selling your idea in a different way.
As an aside, itís easier to startup your company if youíve
got another source of income.
If you seek VC money, be prepared to give up much equity in
exchange for their risk. This is another reason to try to
find other ways to fund your business plan. Do not pursue
venture capital money with the way venture capital industry
is currently structured unless absolutely necessary and you
have exhausted all other avenues. When you do go, do not wait
until you have no leverage.
are many VC firms out there. Not all VC firms are created
equal. A good venture capital firm can help you in many other
ways besides financing. They may be able to help with lining
up customers or with your marketing strategy. Like any other
relationship or marriage, make sure everyone is on the same
page and has the same objectives. Just because a VC firm wants
to invest in you doesnít mean it validates your business model
and itís smooth sailing from then on. Donít live in a fantasy
world. So do your homework. Actions speak louder than words.
Otherwise, divorce later is much more painful than giving
up the money now. Shop around. It also doesnít help if you
look too desperate for money. That old saying that banks only
lend to people who donít need the money is pretty accurate.
There are most certainly more points but these are the most
frequent ones that come to mind. Even as simple as they sound,
you might find that youíll need assistance making it happen.
You can not do it alone and there are so many other things
that you have to make sure you do for your business to succeed
however you choose to obtain this help. If it was so easy,
every business startup given these tenets will succeed. The
simplest concepts in life are often the most difficult to
making sure you can answer all these questions and/or address
these points, remember your goal and objective of your business,
which is to make money doing something you believe in.
tuned for my next article.
Chin can be contacted at firstname.lastname@example.org
if you have any comments or questions.