One of the biggest challenges for aspiring entrepreneurs seems to be getting off the starting line. I have many friends with big ideas and big dreams, who are constantly seeking affirmation and advice, but never get around to making that first step of building a product or incorporating a business.
No matter what the potential, dreams never executed ultimately vaporize into thin air.
All you have to do is watch Shark Tank on TV, or be an angel investor like me, to realize that ideas not yet materialized into at least a pilot business are not worth much. The standard answer you will hear when asking for funding is "come back when you have some traction."
Thus I implore each of you with a great idea and need help getting started, to take the following steps:
1. Create a business entity to show commitment.
These days, you can create an LLC or a C-corporation online, in some states for less than $100. This process will motivate you to come up with a name, a formal definition, and a way to isolate business expenses from personal.
Without a defined business entity, all your work looks like a hobby to investors.
Your company name also has to be consistent with an available website domain name, and social media names on Twitter, Facebook, and other relevant sites. Thus setting up all of these is a key starting point for separating new venture reality from dreams.
2. Build a prototype for visual impact and viability.
When you can only wave your arms in describing your dream solution, everyone sees something different.
With a three dimensional prototype, you can get accurate feedback from customers on the real demand, and relevant investors will agree that you are well past the idea stage.
In addition, a prototype is a big step toward proving that the solution is viable, and you learn the effort and costs involved. A prototype will convince me that you are ready and able to write and negotiate contracts for manufacturing, support, and marketing.
3. Register intellectual property to protect your idea.
An idea that cannot be patented or protected is very likely to be replicated by established competitors who have more money and resources than you can dream.
Filing a provisional patent or a trademark is very inexpensive, and will protect your idea, as well as suggest to me you have a business.
Even though you may be convinced that your idea is innovative, completing the patent process shows you can demonstrate to others that your idea is more than a dream.
Intellectual property initiates a defensible competitive advantage, and a barrier to entry.
4. Outline an investor pitch and written business plan.
Based on my experience, a business plan always adds value to you in making the idea real - most people can't assimilate all the details in their head, and need the process of organizing it on paper to make it consistent and complete. An investor pitch will do the same for your financials.
Too many aspiring entrepreneurs still believe the urban myth that you can sketch your idea on a napkin, and investors will throw money at you. In my experience, it doesn't work that way, unless you just sold your last business for $800 million.
5. Assemble an implementation team and advisors.
Ideas and dreams often come from one person, but creating a business requires a team of people, and leadership from the top. Idea people often need a co-founder with business and leadership skills to assemble a credible implementation team, and provide the discipline to create the business.
If you are a new to a business arena, it's always worth your time to enlist as advisors two or three executives who have traveled that road before. They give you credibility with investors, as well as mentoring that can help you avoid the many unknown pitfalls ahead.
It's true that starting a business from your dream is fraught with risk, but the ultimate risk is doing nothing at all. My goal is seeing more of your dreams come true, but I know that can never happen if you don't get started on the right foot.
The opportunities today for entrepreneurs are greater than ever, and the cost of entry has never been lower. The time to get started is now.