Blog: Would Be Entrepreneur ─ Part 3
When I lived in Southern California, I saw over 100 presentations a year from entrepreneurs. At the same time, now that I’m in Waco, Texas, I’ve seen 16 formal presentations from entrepreneurs. I also have been involved with reviewing business plans, applications and due diligence for several other companies involved in SCORE, Baylor Angel Network, Startup Waco and the Venture Network Competition. In my experience, entrepreneurs need to realize the odds of succeeding in raising money is probably at best 1 in a 100.
Now I really enjoy working with very early on entrepreneurs, and what I like to call Would Be Entrepreneurs. The biggest problem I encounter with many of the entrepreneurs they are better off trying to find a niche market rather than broad market, with their limited experience and getting potential funding. The most difficult topic at the start of the relationship, is to define whether or not their dream is an opportunity for business. Business being enough success so there will be a reasonable return on their investment in time and ultimate funding. With investors the entrepreneur gets back a reasonable return on their investment in time and money. One way to satisfy the very early entrepreneur is to get them to identify a very small niche that actually starts out with the family and friends to see if it works
It’s important to identify a market where people, beyond their family and friends will pay for their product. The second best task is to identify their business model, using a campus business as the base.
The first thing these type of entrepreneurs have is passion, which is needed because most have very little no funds. We first work on who the customers might be in the market, that has a need, but at same time that limited experience in marketing makes it very difficult to cover that need quickly. Some have gotten a good response from exciting potential customers, but again a new experience because they didn’t ask the potential customers if they would pay with a product.
Just to give you an idea of those I’m working with now include these type objectives:
- Installation of providing solar power to homes, at a price for less than the general market
- Presenting and selling various hot sauces to the market
- Expanding a small activity in making specialty soaps
- A mechanical device that will improve the efficiency and speed of ceiling fans
- A service to provide animated logos to companies
- A couple wanting to buy the company that the husband works for
Since many have a target to have enough income to spend full-time on their dream, the technique I use with these type of companies early on is to first ask for revenue level to these people believe that could support their lifestyle and be willing at that point to make it a full-time job. Once we work backwards, we can end up with an understanding of how many units or products are needed, the type of team that are needed, the facility and the particular staffing requirements.
This then gives a better chance to build the working model and set some realistic goals to get to level to be able to spend full-time on their dream. In most cases these are in markets that exist so, look for a niche. This does not say some of them will call beyond the level were talking about how will take that plan in time.