Ask any successful entrepreneur how they came up with the idea for their business, and they’ll likely be able to pinpoint the exact moment or scenario. For my startup, Punch List, a project management app that helps contractors and homeowners better run remodels, the idea came from a particularly difficult experience renovating my home in Venice, CA in 2017. Although I did everything possible to ensure my renovation would be a success, poor communication between myself and my contractor, combined with payments made for goods and services I thought were rendered (but were not actually received), created a rift between us and caused major delays. As the project concluded with both the budget and the timeline more than double the initial estimate (ouch!), I knew there had to be a better way to work together to more efficiently streamline communication & payment.
Following that epiphany in 2017, I dedicated myself to building a modern tool for simple and efficient home remodeling that was both homeowner-friendly and contractor-optimized. While there is no single blueprint for success, the process of building Punch List imparted key learnings on how entrepreneurs can take advantage of available resources to help them turn an idea into a bonafide business. By no means exhaustive, the following four examples offer a great starting point for individuals – from the independent artist to the startup founder (and all those in between) – looking to move past the idea stage and bring their vision to life.
The tech startup
Founding a tech startup and raising capital from outside investors requires a tiered and structured approach. As a first step, it is always best to research the market to identify the need for your product, pinpoint your target customer, and understand what (or if any) competition is out there.
After completing thorough market research, the next step is to create a business plan. Investors, and eventually customers, are looking for a clear and concise pitch that identifies the need and demonstrates the solution that will be provided. Essentially, you need to convince potential investors that your solution is the best product or service to fulfill the identified need AND that there is a market segment that is ready and willing to purchase the product so you can repay their initial investment. The best way to test your pitch? Take it to your friends, network, and family and ask for as much constructive criticism as possible. Focus on people who will give you honest, thoughtful feedback. This is your chance to improve before it really counts!
When building the business plan for Punch List, I did three things out of the gate:
- I built a brief, yet thorough, 10-slide deck to visually tell Punch List’s story and best communicate my product plans for the app. In that deck, I recounted my unfortunate founding story and described how Punch List would have prevented the situation from happening, highlighting the value for both contractors & homeowners. I then covered how I planned to make money with the app, made the case for how much I needed to raise, and outlined what I planned to do with the funds.
- I then wrote a two-page document to add detail that was not possible to show in the slide deck. This not only encouraged me to keep the deck visually engaging, but it helped me be as specific as possible – the devil is in the details. And, investors love details!
- Finally, I condensed the two-page document even further and wrote an elevator pitch that could be given orally in two minutes or less. One of the most important attributes that an investor will look for is your ability to concisely articulate your business plan. If you can’t efficiently pitch your idea with excitement, then how can you ask investors to get excited about it themselves?
Next came the hard part: actually raising capital. Raising capital can be done from friends and family, from a bank or financial institution, or, most likely, approaching institutional investors such as venture capitalists. While this can seem daunting at first, remember that you’ve already put in the work to get to this point. Start with the people you feel most comfortable talking to first and then branch out to strangers. This strategy will help you practice your pitch, evolve your plan based on the feedback you receive, and prepare answers to questions you get along the way. Don’t be afraid to ask for warm introductions to potential investors – those will go a long way in connecting you to those best suited for your idea.
Before attempting to pitch actual venture capitalists (VCs), I started with my parents. While I wouldn’t say my mom and dad are the most technically savvy consumers, they gave me great feedback on the deck visuals, the words I selected to describe the product and target customers, and my delivery. In many ways, it was the perfect way to start. From there I progressed to friends in the technology industry, past contractors I worked with, and even the Venice contractor I hadn’t spoken to in 3 years. All that practice made perfect, and I was able to secure funding from real institutional investors!
The artist marketplace
Totally different from the process of founding a startup, turning a favorite pastime or creative skillset into a side hustle is a great way to make extra money doing something you genuinely enjoy. While seemingly as easy as the craft itself, converting your skillset into a profitable business requires establishing an efficient pricing structure, setting scalable goals, ensuring a consistent end product for the customer, and wearing multiple hats as a single-person shop. Marketplaces like Etsy offer creatives and tradespeople a streamlined platform for listing, marketing, and selling items, and charge fees based on a percentage of sales. These marketplaces are a great place to get your feet wet and test your initial product as they provide craftspeople with exposure to millions of potential customers for a low upfront investment.
For merchants with an established following that are looking to avoid fees set as a percentage of sales, e-commerce leaders such as Shopify or Weebly offer a variety of tools and services to start and grow businesses for flat monthly fees, allowing entrepreneurs to retain control over their profit margin.
Building a business around your own original artwork is highly personal and potentially emotionally (and financially) daunting. For those looking to get their feet wet, these marketplaces and e-commerce platforms offer a great way for individuals to determine if the entrepreneurial path is right for them.
The Service Marketplace
Over the past several years, we have witnessed the on-demand economy shift from quick and objective services (such as food delivery) to more complex services that require professional expertise (like smart home installation).
For contractors from consultants and creatives to professional service providers, marketplaces are a great tool to connect with businesses of all sizes for projects requiring highly specialized skill sets. Fiverr and Upwork are great tools for independent contractors to individually connect with businesses looking for help with smaller, shorter-term projects. Contract work empowers your independence, provides for the selection of both the business and day-to-day manager you report to, and offers the flexibility that traditional employment lacks. If you’re a professional looking to start a freelance business, a service marketplace may be the right choice for you.
The crowdfund
For those interested in raising funds to support the development of a specific product, crowdfunding has become an increasingly popular option to raise cash. However, according to Kickstarter, only 38.21% campaigns reached their funding goal as of November 2020. In order to build a successful crowdfunding campaign that customers will be excited about, entrepreneurs should employ the following tactics:
- Craft a thorough description of the product w/ corresponding budget & timelines
- Outline the fundraising levels with compelling customer incentives
- Build a robust pipeline of potential backers via existing customer lists and social media
- Allocate a significant amount of time for questions from potential backers
Unlike trying to raise money for a tech startup, crowdfunding is a volume play – you are trying to raise as much money from as many people as possible over a set period of time. This requires you to be less sharp with your verbal pitch (unless you’ve opted for this approach via your technology platform), and more attentive to every inquiry from scores of potential investors.
With a host of different crowdfunding platforms available, from big names like Kickstarter and Indiegogo to Seed&Spark, it’s important to do your research and determine the right fit for your campaign. And, as with any initiative, invest your time upfront researching successful crowdfunding campaigns – particularly those within your category.
The bottom line
There is no single blueprint for success. The good news, however, is that there is no better time than now to start a new business. From turning a side hustle into a new way to make money to raising funds from institutional investors (and/or Mom and Dad), to freelancing using one of the newest companies, to asking complete strangers to back you via a crowdfunding platform, you have numerous ways to achieve success. Ultimately, the biggest barrier to entrepreneurial success is never taking that first step. Don’t let fear of failure hold you back. Jump in and see where it takes you.
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Original source: Entrepreneur
