Every innovator and entrepreneur wants to leave their mark on the world, something they've created (possibly "the next big thing") or something that has truly made a difference.
As a serial entrepreneur and innovator/designer, I've always been curious about how things work and matched it with a drive to solve a problem. As a kinesiologist, my interest and focus has always been health and the human body. I'm drawn to the potential of health-related products and their potential to significantly impact one's quality of life. My goal has never really been to invent something, but rather to solve something. After all, it was Jamie Notter that said, "Innovation is change that unlocks new value."
Becoming the next Steve Jobs
On the journey to invention it's important to do your research. See what's out there; what's come before, what's been successful, unsuccessful and glean learnings where you can. Does your idea have some obvious practical application or solution? What is your differentiator? Is your product leading edge -- or potentially so leading edge that it's actually too far ahead of its time? Understand the mindset of your target customer -- are they ready for your innovation? Are you designing or building something that is unconventional or way out there? If you are, don't let the nay-sayers stop you, there are infinite examples of everyday items and conveniences that someone, somewhere, thought was a hair-brained idea.
As someone who's been on both sides of the entrepreneurial divide, I'm happy to share my best practices with other budding inventors.
The Anatomy of a Start-Up
1. Business Plan
Before you start buying URLs, building followers, registering trademarks or any of the dozen other tasks a start-up must undertake to get to market, you need to have a solid, strategic and financially viable business plan (especially if you're going to be approaching potential investors or lending institutions). They need to know that this is not a fly-by-night or fly-by-the-seat of your pants operation and they need to see a clear path to profitability. It's a lot of work to create a strategic plan along with tactical execution. Most people conveniently try to skip this part in the hopes that everything will fall into place. But the only thing that may happen is that your business might fall off the rails.
Having a solid business plans helps you chart the course and determine priorities, resources, allocation of time and expenditures and demonstrates that you've got the business acumen to build a solid business. Forbes has a wonderful checklist that you can review to help you put your business plan together, and there are numerous free templates online to work with. It's one of the most dreaded tasks to start, but one of the most beneficial in the end. Lastly, don't get caught up in semantics, it's a plan, not a practice, so just do your best and know you can recalibrate as you go.
2. The Investors
You've got your brilliant idea, you've peaked a few curious minds via social media, but now you need the big bucks to get this idea off the ground. A rule of thumb: be prepared to kick in more than just 'sweat' equity. Make an investment in your investors:
- Before you can ask anyone for capital you need to have your business plan in place. You need to know (and show) where you're going and how you're going to get there before you offer to take anyone else along for the ride. Whether it's the capital venturist, the bank, potential shareholders, friends or family, everybody needs to see the business plan. Not only is it a necessity for funding, its good personal discipline to have to craft it, and to be challenged on it.
- Investors want to know you're in it for at least as much they are monetarily. Bottom line, if you don't believe in it enough to risk your own money, then you better believe no one else will either.
- When preparing your 'elevator pitch' for potential capital, make it compelling enough to make your audience want to learn more.
- Present an opportunity that looks 'real', not amazing--because even though it is, anything that looks too good to be true, usually is; and that's not the image you want portrayed.
- Know your subject extremely well, but don't lay it all out. Rather, explain the most salient and important points while keeping the winning details at bay until question period.
- Get them engaged in the conversation, excited about the idea, heck, let them get emotional about your product or service--hug it out with them if you have to!
Private investors aren't your only options. Crowd source funding projects are an excellent way to get started with a good idea. This approach lets you test your entire marketing pitch to potential customers in your market sector. But is there a threat to bringing other people in on your "baby?" The golden rule is to retain controlling interest while providing your investors the confidence that you will and can, take care of their investment.
Some investors want to influence how you run your business even though they've only got a small slice of the pie. This can be both distracting and detrimental. As long as you're picky about where your money is coming from, you can attract investors who collectively add value to your vision and action plan. Regardless, it is always in your best interest to work with a competent corporate lawyer to be certain that your shareholder agreements are well thought out, properly written and protect your interests.
The time commitment involved in being an entrepreneur is enormous. You (and your family) need to be prepared for an absolute focus on your business for the first couple of years. This is a huge undertaking that impacts your social life, your family time and quite frankly, our treasured me-time. The reality is, that you need to be prepared to invest an insane amount of time to get your project off the ground. You need to plan for unexpected outcomes and consider the worse case scenario.
Take the time to seek reliable third party validation for your project as early as possible. Reach out to people you know to vet your ideas and collect feedback. You really need to be armed with good validation to get the attention and respect you deserve. Filter this through your assessment and make certain you have the potential to back the risk that you are embarking on. You need to believe in yourself and be passionate about your business plan. It will come in handy when you encounter resistance, criticism, and dissuasion.
Then there's the business world's biggest chicken-and-egg-dilemma -- when do you invest in marketing? It doesn't matter how brilliant your idea is, if no one knows about it, get ready to become acquainted with failure. The question is really about how you go about determining the best marketing investment.
Academically, many options present themselves. Realistically, it pays to consider some academic options along with a pinch of past experience, a dash of intuition and a lot of testing. As long as you are prepared to learn from experience and have the ability to refine or change direction, there's always room for improvement.
And yes, any publicity is good publicity.
My run on the Dragons' Den was and still is an excellent experience! Not only was it a great opportunity to prepare for the ultimate business pitch, it was also a chance to tell our story and build exposure for the brand (no matter how the Dragons responded to the pitch!).
For CoreChair, it was a huge success! We attracted an unprecedented number of chair sales from all across Canada. This outcome reinforced our belief that early on in the business cycle, we needed to reach out to significant numbers. The learning out of Dragons' Den has shaped our marketing strategy.
5. The Execution/Human Capital
One of the key concepts that Jim Collins, author of the book Good To Great, imparts to his readers is that a key business asset is human capital. To paraphrase, "Get the right people on the bus, in the right seats, and get the wrong people off the bus." You need to regularly ask yourself: Who do you have working with you and supporting your vision? One of the best practices I've found is to bring people in one by one, spend time with them and determine very quickly if they're the right fit for your operation. If they are, let them take ownership for their work but don't stray too far away. It's always a bit of a balancing act between micromanaging your team and not being intimately aware of the day-to-day operations.
Be sure to recognize the contributions of your team. In entrepreneurial endeavours that often require long work-weeks it's easy to overlook achievements, or disregard commitment and personal investment in our vision.
With the right team and business plan in place, you're off to the races. As you move along, expect strategy adjustments, course corrections and humbling moments of both success and disappointment.
In the words of Nelson Mandela: "It always seems impossible, until it's done."
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In the middle of this Monty Python sketch the woman asks, "What do I do?" The doctor answers, with a sneer, "You? Nothing! You're not qualified." Way too many people don't do business planning because they think it takes an MBA or CPA. The truth is that all fancy forecasting techniques depend on the assumption that past predicts future, and that there's nothing better than the educated guessing of the people who are going to live with the plan. It's not rocket science, it's planning what's supposed to happen, and when, and so on. You can do it. You live with it, so you plan it.
That lower price fallacy, that was true in your microeconomics class, when it was undifferentiated lumps of coal. The lower the price, the higher the volume. But the truth is that out here in the real world there's a lot more opportunity around for higher value, higher quality -- and matching that with a higher price. Price is the first message your market gets. Do you drive the cheapest car, eat at the cheapest restaurant, buy the cheapest clothes? Neither do most people. Offer value. Deliver value. (image: istockphoto.com)
Most people think of business plans as hard to do because they've swallowed the myth of the big formal business plan that feels about as inviting as a high school term paper or a Ph.D. Thesis. The truth is that a business plan is a supposed to be a collection of interrelated pieces or modules, like blocks, just big enough to run your business with, like the sales forecast, expense budget, strategic focus, milestones, and review schedule. You don't do what doesn't help you manage better. And you don't produce a big formal document unless you have some specific business need to produce the big document. (image: istockphoto.com)
Maybe in some cases there's something called first mover advantage, but, just to name a few well-known examples, Apple wasn't the first personal computer maker, Microsoft's MS-DOS wasn't the first personal computer operating system, and Google wasn't the first Internet search engine. The truth is a lot of first entrants get lost later when others come up with something better, or simply market there thing better. Just because something already exists doesn't mean you can't compete against it. And just because somebody's first doesn't mean they have special rights to the market. Second, third, and nth movers can do just fine.
Why do people assume that business plans are use-once-and-throw-away documents? Why do people think you create one only because you have to for somebody else, and that once a plan is created then it gets locked away somewhere and never seen again? No wonder business plans get a bad name. The truth is that it's a plan, to be managed, reviewed, revised, and kept live and flexible. In most cases, it never gets off the computer. In most cases, it's for you and your business, not some outside reader. So don't take time creating a document like a term paper. Do only as much as you're going to use. (Image: istockphoto.com)
It's too bad so many people think that a business plan is to be done by following a recipe, creating a standard document, with predictable components. The truth is that every business plan is unique because every business is unique, and the plan should fit the business situation. Form follows function. Not all plans need to become formal documents for banks or investors; most plans are just what's needed to run the business better. (image: shutterstock)
Yes, that sounds attractive too. Just find a "best practices" business plan and use that instead. But the truth is that buying a business plan, finding one to use that was done for somebody else, filling in the blanks, or paying somebody to write your plan -- all of that makes as much sense as paying somebody to do your exercise or take your classes. Sometimes a coach can help, if you have the budget, and you both realize that coaching means it's still your plan, that you will implement, and you will live with. But plans are made, not found. This is your business, and it's not about the document, but about what you're going to do. The best plan is the one you do yourself.
Some special-purpose business plans require a lot of expensive market research, but those are special cases. The truth is that a business plan is about what's going to happen, why, when, who's responsible, how much will it cost, and how much will it generate. If you know your market and you're comfortable with the decisions you make, then you won't do as much market research (or maybe not any). That doesn't mean you don't have a plan. It just means you don't have a lot of market research. The research is separate. (Image: istockphoto.com)
Yes, that's attractive, and trendy too. Just put some slides together instead. Investors don't read business plans, so why write one? But the truth is that: 1) investors read or have somebody read the plans of a business they're really interested in; and 2) you're doing the plan for yourself, to manage your business better, to control your own destiny, not just for investors. (Image: istockphoto.com) A pitch is to summarize the plan, not replace it. Investors can tell if there's a plan behind it or not. Do you have to read the screenplay to understand the movie? Does the movie have to have a screenplay? (image: istockphoto.com)
A business plan is not a ball and chain. How often do you hear somebody saying they're doing something because it's in the plan, instead of because it makes sense? The truth is that having the plan makes it easier to highlight changed assumptions and manage the plan, flexibly, with regular reviews and revisions, so that you can manage change in your business. Good planning increases flexibility because it makes revisions easier when relationships and interlocking elements are tied together in a plan. Change one and you're able to better see what else has to change. (Image: istockphoto.com)
Follow Patrick Harrison on Twitter: www.twitter.com/CoreChair