There are a number of ways to evaluate your chance of success, including whether you are an entrepreneur with the “right stuff” or if your business has the “right stuff.”

The following evaluation should be made before making any new start-up business decisions:

A)      Market assessment

B)      Securing realistic funding sources

C)      Forecasting sales, expenses and cash flows

D)      Potential profitability

E)      Regulatory, legal issues

F)      Personal costs

Arguably, the most important issue revolves around determining who or what your market niche is. You need to quickly address a market review that indicates who are your clients, where are they located, how will you reach them and what are the costs associated with this process.

Secondly, start-up businesses require varying amounts of cash. Figure out how much it will cost to get your business open on its first day and then determine how much working capital will be needed to keep it running for a period of time - typically 90 to 120 days. Be prepared to personally provide a great deal of this early money from your own finances, and then work to secure traditional funding (banks) or from possible angel investors.

When you have completed your market assessment, it is vital that you work with an accountant or local economic development agency to develop projections which will include sales, expenses and burn rates. This information is not only vital when determining potential profitability, but will also help guide you in your effort to secure the proper amount of financing, and also timing as well.

Most businesses have either regulatory or legal issues that have to be dealt with at some point,  such as OSHA, the FDA, health departments, city, state and federal laws, etc. The sooner you identify them, the better prepared you will be.

Last but not least, very few entrepreneurs take into consideration the personal “life” costs associated with starting their own business. How does this impact your family, your personal financial situation, your “day” job, personal and legal risks?

Although there are many more issues you should work through before making a decision, this exercise will certainly help you decide if you have the “right stuff!”

Daniel P Slifko

From our first humble days with only one employee, through a very quick ramp up to a fully staffed office, and ending in third quarter 2009, Rocket Venture’s clients have received almost $28M in investment, grants, sales, licensing agreements, and joint development efforts.  That’s not just a couple of “lucky” entrepreneurs – that number represents the success of twenty-six different early-stage companies!  That doesn’t count any money from the State of Ohio, either, such as grants from the Alternative Energy Program.  We only measure how much “New” money comes into these Ohio businesses.  It also doesn’t include other deals in the works, which we expect will dramatically increase that total.

Why is this important and what should it mean to you?  Well, if you are an entrepreneur with a technology idea, it means that we have a proven track record of success and you should talk to us to see if we can help you.  If you are looking to relocate a business, it means that Northwest Ohio is on the upswing and will continue to be a great place to be based.  If you are a tax-payer, it means that we have taken $5.5M of a Third Frontier bond issuance and leveraged a 5.1 return.

Even though these are great numbers, some of the impact on Northwest Ohio is a little tougher to see.  We are accustomed to hearing about “new jobs” and large existing companies moving here from out of the area.  We don’t often hear about or think about how companies get started and what needs to happen before an entrepreneur can even hire the first person.  But that is what Ohio’s Third Frontier Entrepreneurial Signature Program is designed to do – help position companies for that initial step and continued growth.  We are taking the lessons from the start of the glass industry in Toledo, the auto industry in Michigan, and more recently personal computer industry in Seattle in order to apply them here today.  We are creating industries from small groups of related technologies.  Those industries will take hold, grow, expand, and grow some more.  It will take some time to see the full effects of our efforts today, but the point is that these numbers indicate we are on the right track. 

Craig Ortega
Program Manager

Tags: Add new tag, Economic Development, Money, ODOD, Ohio, Starting a business, Strategy, Technology, Third Frontier Posted in Current Ventures, News, Ohio, Technology | Comments Off

Most technology start-ups are focused on technology; this is natural. However, successful technology start-ups also focus on finding and keeping customers – the lifeblood of any business. To find and keep customers, companies must design and develop a sound marketing strategy and a sales execution plan.

At Rocket Ventures we see hundreds of entrepreneurs and start-up companies each year. Most of these entrepreneurs possess the required passion, persistence and conviction to launch a new business. However, the successful entrepreneurs have these essential traits and they know how to market and sell their products or services.

The first and perhaps the most important predictor of success start with the marketing strategy. Performing a rigorous market assessment is a critical first step in understanding the potential for business success. Having the knowledge of the industry and the specific market demographics, dynamics, trends, competition and customers provides a realistic view of the opportunity. Then, developing a segmentation plan further refines your focus by identifying those un-served or under-served market opportunities. Next, successful entrepreneurs target the ideal customer groups within that segment – and become so intimately knowledgeable of the targeted customer that they know more about their problems than their customers do, and can provide the right solutions to solve their problems. Finally, once targeted, success comes from positioning your product or service with the most competitive set of deliverables that both provide value and differentiate your company and its products from all other competitive offerings.

Now that you have developed a well-defined and effective market strategy, the next important element to success is designing and developing an effective and consistent sales execution plan. There is no company success without the sale - generating top line revenue. We see many start-ups fail because they don’t pay attention to sales! Most new technology start-ups bring exciting new products and services to complex customer organizations. These new products and services typically represent change to the status-quo. And this change may often be viewed as a real threat. So, the need for a well developed and consistent sales plan and process is essential to selling successfully and achieving company scalability.

In complex organizations, many buying influences are involved in the purchase of new technologies – particularly for those new products or services representing significant change from the current offerings. These buying influences have roles to play in the buying decision process. So, the need to first identify who these buying influences are, and then understand their role or motivation in the process is critical. In effect, every complex sale has 4 buying influences. First and most importantly is the economic buying influence. This is the key person who controls the budget and expenditures. This person requires a return on investment for the organization. It is essential to reach this person – who usually is at a higher level within the organization. Next, every complex sale must include the user buying influence - the person or persons who have to use or supervise the use of your new products. Making sure your product or service is understood and satisfies the user buying influence is also critical. Additionally, in every complex sale, there is also the technical buying influence – the person (s) whose role is to screen out products or services that don’t meet specific requirements, pricing guidelines or standards (including such functions as purchasing, quality control, legal). These are the “gatekeepers” and they must be satisfied as well. Finally, in every complex sale, the successful companies identify a coach – that person within the organization who has influence with other buying influencers, and wants you to win. They help you navigate through the complex organization by guiding you with your strategy, pricing, and networking with the right buying influences. Again, in a complex sale, all 4 buying influences must be reached and then convinced of the value of your product or service.

In summary, having great products or services, and possessing the passion, persistence and conviction are all important elements of success. Real, sustained and scalable success, however, comes from leveraging these great products and personal strengths with a well designed market strategy and effective sales execution plan.

Greg Knudson
Director, Rocket Ventures
knudson@rgp.org