Validate Your Vision

Transcription

1 Validate Your Vision Building a business, any business, from an idea, concept, invention, product or service requires 3 critical components: 1. Money 2. Marketing 3. Management The 3 Ms Money Because everything that must be done will cost money. Without it the likelihood of failure is very high. Marketing Marketing is everything you do to get and keep a customer. The product itself, what color, smell, texture it has, how heavy it is, how much to sell it for, how and where to manufacture it, how to package it (tubes, bottles, packets, jars, buckets, drums, truckloads), where and how to sell it (direct, on the internet, through distributors or other channels), what color the packages are, what kind of advertising, who is the buyer, who is the user, who makes the decision, should you be on TV, radio, in newspapers, infomercials, give away free samples on the street or in the mall and a thousand other questions. Management Who is going to make those decisions for your new company, implement the plans, insure performance, pay the bills, hire the workforce, choose the marketing, sales and advertising team, measure performance, determine the compensation, borrow the money, find investors, negotiate the deal(s). What is your skill set? Does it cover these or will you need to find and hire your own management team. If you don t have enough money yourself and your assets won t qualify for getting it from a bank, then you ll have to learn how to sell. You ll need to learn how to sell your MARKETING skills and your MANAGEMENT expertise. Entrepreneurs and wishful business owners must come to grips with this reality. Which of these will you be selling in your pitch to the investors? Entrepreneurial Endeavors - VYV Part #1 Entrepreneurs, by their very nature, are attracted to new visions, ideas and new ways of doing business. By constantly thinking in terms of business improvement, entrepreneurs are capable of producing large numbers of innovative ideas. Unfortunately for most, a great many of these ideas are not worthy of additional focus, and, in fact, are often the source of distraction. You must constantly ask the question is this a good idea or not. Once you decide to pursue an opportunity, it is incumbent on you to perform detailed research and test your vision in the marketplace. This information should include: DShackelford@exselleration-llc.com direct Page 1

2 Industry analysis; Competitive analysis; Pricing analysis; Manufacturing costs; Customer profile. This research provides the basis for the business plan. Ideally, entrepreneurs will choose to pursue opportunities that lie within the scope of their life experiences. These are opportunities the entrepreneur is able to assess best. Regardless of the opportunity involved, entrepreneurs who are unwilling to take risk will not form a business venture. While this may seem obvious, it nevertheless prevents many entrepreneurs from realizing their dreams. Beginning a new company is, by any definition, a risky proposition. The entrepreneur should be prepared to spend a great deal of time, money, and effort. Without a total commitment and faith... the enterprise is likely to fail. Entrepreneurial Endeavors VYV Part #2 The Validation Process "Be sure you re right and then go ahead" American pioneer Davey Crockett A divine vision that fills a need coupled with the necessary capital and a burning desire to make your dream a reality is the key to fulfilling your life s purpose. If you develop a good plan for promoting your vision and present it aggressively enough, you will succeed at being an entrepreneur and getting the capital you need. Let's see how you can integrate these principles into the capital acquisition process and Entrepreneuring. Your vision, your dream, your inspired gift, is the primary building block for your entrepreneurship and your quest for capital and other resources. Your commitment to your vision must be strong because those who seek to discourage you will test it continually. Between you and your pot of gold at the end of the rainbow lies a path full of obstacles that will test your conviction and measure your strength of purpose. Challenges are opportunities if you are prepared and approach them with the right attitude. The first step is to validate your vision. It will enable you to be right about your vision. It is your opportunity to test your theories and the marketability and potential profitability of your product or service. It is your chance to test the water before you get in over your head. The vision validation phase gives you a chance to ask and answer all the tough questions, consider the possibilities and options, and make the go or no go decisions before you put your own resources and those of others at risk. The vision validation questions and checklists are your reality check. You will be rewarded tenfold for every ounce of time and energy you invest in this validation process. You will be able to address most questions that your investors will ask, before they are asked. By utilizing the vision checklist that follows and being totally honest with your responses, you will be able to evaluate your vision and decide whether it is just another idea or a dream that demands your consuming commitment a bad idea or a good idea. Because there is often no turning back, it is a good idea to learn the truth before you get started, particularly when others are involved. Keep in mind that the questions you ask yourself will be asked many times over by potential investors and your most fervent opponents. Consequently, you would be well served to develop extensive written answers to each and every question concerning your venture. In my opinion "validating your vision" is the most important part of the capital acquisition process it s also the part that is most neglected by entrepreneurs. It s important to answer these questions in writing. Take the time to complete your vision validation questionnaire because all of the following information will be useful when developing your documents and sales material. Pray about the answers and seek the council of others. VYV Part #2a The Validation Process DShackelford@exselleration-llc.com direct Page 2

3 A divine vision that fills a need, coupled with the necessary capital and a burning desire to make your dream a reality are the keys to fulfilling your life s purpose. If you develop a good plan for promoting your vision and present it aggressively enough, you will succeed at being an entrepreneur and getting the capital you need. Let's see how you can integrate these principles into the capital acquisition process and Entrepreneuring. Your vision, your dream, your inspired gift, is the primary building block for your entrepreneurship and your quest for capital and other resources. Your commitment to your vision must be strong because those who seek to discourage you will test it continually. Between you and your pot of gold at the end of the rainbow lies a path full of obstacles that will test your conviction and measure your strength of purpose. Challenges are opportunities if you are prepared and approach them with the right attitude. The first step is to validate your vision. It will enable you to be right about your vision. It is your opportunity to test your theories and the marketability and potential profitability of your product or service. It is your chance to test the water before you get in over your head. The vision validation phase gives you a chance to ask and answer all the tough questions, consider the possibilities and options, and make the go or no go decisions before you put your own resources and those of others at risk. The vision validation questions and checklists are your reality check. You will be rewarded tenfold for every ounce of time and energy you invest in this validation process. You will be able to address most questions that your investors will ask, before they are asked. By utilizing the vision checklist that follows and being totally honest with your responses, you will be able to evaluate your vision and decide whether it is just another idea or a dream that demands your consuming commitment a bad idea, or a good idea. Because there is often no turning back, it is a good idea to learn the truth before you get started, particularly when others are involved. Keep in mind that the questions you ask yourself will be asked many times over by potential investors and your, most fervent, opponents. Consequently, you would be well served to develop extensive written answers to each and every question concerning your venture. In my opinion "validating your vision" is the most important part of the capital acquisition process it s also the part that is most neglected by entrepreneurs. It s important to answer these questions in writing. Take the time to complete your vision validation questionnaire because all of the following information will be useful when developing your documents and sales material. Seek the council of others. VYV Part #3 We have been looking at reasons to validate your vision, now let s look at specifics. Does your idea fill a need? This is always my No. 1 question. The successful entrepreneur recognizes a need and has a vision for fulfilling it. Does your idea or product or service really fill a need? Are there other products or services that fill the same need? How does your vision compare with others? The potential for your vision or product in the marketplace or its ability to help others is directly proportional to your potential for success if you can fill that need. Is the need real? Do people really need left nostril nasal inhalers? Where did your vision come from? Was it based upon a real need that you perceived in the marketplace? Was it a divine inspiration or was it something that you just thought would be a good idea? Have others expressed a need for your product or concept? Is it one of those things that people say "somebody ought to do this"? Will customers buy it? This is where the rubber meets the road. Business plans and financial projections are built upon sales. A sale depends upon a consumer actually purchasing your product. If there is a need, and the product is priced right, it should sell. The question is...will it? Many of the issues in the vision validation process pertaining to salability and DShackelford@exselleration-llc.com direct Page 3

4 marketability may be obvious to you. If they're not obvious to others, it may be wise to rethink the validity of your vision. Unless you are a nonprofit surviving on donations you need to sell your product. Have you considered all the advantages or benefits? Make a list of all the advantages or benefits. Are there other products or services or organizations that provide the same benefits or advantages in a different way? Now list the disadvantages. VYV Part #4 Is this an original concept, a new combination or adaptation? Be honest. Is your vision brand-new or it is an adaptation or combination of other things you have seen. Is it really your idea? It doesn't have to be new or original to be successful, but the way you present it, both to customers and investors, is dependent upon the unique selling proposition you bring to the marketplace. This is a good place to list the sources or references you may have utilized in the development of your vision. What immediate short-range benefits can be anticipated? We live in a quick-fix society where everyone is looking for immediate gratification. Short-range benefits and returns are attractive to both consumers and investors. Everyone wants to see results now. You should make a list both from the consumer s perspective and the investor s perspective. This will help you target markets for consumers and your affinity investor groups. Are the projected returns adequate? There are a lot of good ideas that don't make money. You must have profit potential in order to attract capital. It is great to be a visionary of incandescent brilliance, but you will be unable to secure investors or survive in the marketplace without profits. This is where you ask yourself the question, "Is it worth it, or what percentage of the market do I have to achieve to stay in business and more importantly provide a return to investors?" Are the risk factors acceptable? This is the big one. Can you; are you, willing to take whatever risks are required to see your vision through to fruition or failure? I'm often asked these questions by wanna be entrepreneurs, How much will it cost me and how long will it take?" The answers are, "Everything and as long as it takes." If those are not your answers, get a job and forget about this entrepreneuring thing or find a project or vision that will excite you enough to make the total commitment required. The potential investors will ask much the same questions: How Much; How Long and; How Sure? How well you answer these will determine your fate as an entrepreneur. What are the expected long-range benefits? You have already answered the short-term benefit questions. The value of your concept, product, or vision is enhanced significantly if it provides long-term benefits and solutions as well. The more benefits you can enumerate, the more ammunition you will have for consumers and investors. VYV Part #5 We have been looking at reasons to validate your vision, last issue we looked at specific points and today we continue. Have you checked the idea for faults or limitations? DShackelford@exselleration-llc.com direct Page 4

5 I can guarantee that your potential investors and adversaries will be able to provide you with extensive lists regarding the faults and limitations of your idea. Be prepared for this, nothing and no one is perfect. However, if you are prepared to address these issues, you will be able to satisfy some of the reservations of investors who really like you and your idea. When life hands you a lemon rather than lemonade, ask for a bottle of tequila and a saltshaker. Always be prepared to turn things around. Are there problems the idea might create... what changes might be involved? The laws of physics tell us that for every action there is an equal and opposite reaction. What are the actions and reactions of your idea? For example, will the process of fertilizing farmland create beneficial byproducts or hazardous waste? A good attorney will tell you that it is not wise to ask any question that you don't know the answer to. This holds true with your concept or product. Look at what you are creating from every possible angle and remember that no matter how thorough you are, someone will see what you are doing a different way. Their perception could impair your progress or provide you with valuable input. Make sure you are ready for all questions before they are asked. How simple or complex will execution/implementation be? Have you ever heard anyone say, "It's really simple, all I have to do is...?" Are you still waiting for the results? One of Mr. Murphy's laws says, "Everything always takes longer than you thought". You can count on that. It is not a good idea to make anything sound too simple even if it may be simple for you. Be realistic, be thorough and always try to error on the conservative side. Late results and failed expectations never meet with as much appreciation as producing something on schedule. Don't trap yourself in an unrealistic time schedule. When you're making the rules, make them work for you. Take the time you need and get the capital you need to do it right. Can you work out variations? Can you compromise your vision or your plans? At some point during the development of your vision, or the implementation of your funding plan, your associates or investors may ask you if your concept, product, or service can be varied or changed. Additionally, financial advisors or investors may want you to alter your funding requirements or financial policies. The ultimate compromise or variation occurs when a major investor or venture capital source seeks to acquire control of your business. Be prepared for this and be ready with a response that you re willing to stick with. Can you offer alternatives? If you feel that you might have to compromise, you should be prepared to offer alternatives. However, even if you know the answers, you should take your time in responding to requests for alternatives. Quick decisions and immediate responses today can get you into trouble later on. Seek counseling from trusted advisors. Does it have sales appeal? This is really the No. 1 question. Because, if it doesn't have it you can forget it. If you cannot sell it, or even if your investors perceive that it cannot be sold, you're out of business. Remember, integrating sales concepts into the capital acquisition process, the salability of your product or idea, is of primary importance. VYV Part #6 Is the market ready for it? Sometimes it's hard to believe that any idea would come before its time. But the fact is, a television set won't work without electricity. Leonardo da Vinci had many ideas that were far ahead of the marketplace. It's always easier to fulfill a need than to create one. Creating a market for the best mousetrap in the world when people don't know DShackelford@exselleration-llc.com direct Page 5

6 anything about mousetraps is a long, hard, expensive process. In order for the laws of economics to work, there must be both supply and demand. Be realistic about the market for your product. Can customers afford it? In order to evaluate the affordability of your product, you must first identify who your customers are. This is another area where you will suffer greatly if you presume or assume anything. Take the time to do the research. The best product in the world cannot be sold profitably if your customers cannot afford it. What is the competition doing? A few years ago I was asked to do consulting for a small time-sharing computer company. They believed that they had an exclusive way of making pictures available to remote time-sharing users. You could actually wait 20 minutes to see a picture appear on your local monitor. What a great idea. Unfortunately, technology, the Internet, and America Online made it possible for others to do it bigger and better. Be realistic about your competitors. Don't be naive or ignorant. Can you be competitive? Once you know who or what the competition is, then you can determine whether you can be a player. The better your idea, the more competition you can expect. If you base your ability to be competitive on the status quo, you may be unable to be competitive when your competitors enter the market. Do not assume a huge profit margin in a market that you know will attract major competitors. What you considered resistance or difficulties? Many entrepreneurs are surprised by the fact that everyone may not love their product. Additionally, it is hard for them to believe they would encounter any resistance or difficulty in the marketing or manufacturing process. You will always encounter resistance and problems when it comes to selling new ideas. Be prepared by evaluating and considering the potential negatives. Does the need have to be created through advertising? If you must create a need for your vision, product, or service through advertising, you have a problem. Business propositions that require large amounts of advertising to create consumer demand are capital intensive. Start-up ventures requiring large capital infusions to create consumer demand are not usually attractive to investors. It's always better to solve a problem rather than to create one. Look for existing needs rather than creating new ones. How soon will your idea be put into operation? No matter what you guesstimate, you will usually under estimate the time and capital necessary to turn your vision into action. Always assume the worst-case scenario and multiply that by a factor of two or three. Other people and their schedules will always delay yours. It's OK to expect the best, but be prepared for the worst. DShackelford@exselleration-llc.com direct Page 6