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Wednesday, March 7. 2007The Most Common Mistakes Entrepreneurs Make and Why Markets Tolerate No ShortcutsThe Most Common Mistakes Entrepreneurs Make and Why Markets Tolerate No Shortcuts The question I receive more often than any other is: "What is the mistake you most frequently observe inventors or entrepreneurs making?" The answer is an easy one. Most unsuccessful entrepreneurs try to get to market by taking shortcuts. We live in a commercial maelstrom. The marketplace is constantly churning, changing, adapting. Successful marketers are constantly adjusting, anticipating, re-inventing. Opportunity for product launches entering this market has never been greater, but there is zero tolerance in this highly cluttered environment for half done, distorted product or service offerings. The commercial markets will simply spit out these otherwise, potentially powerful possibilities. How do we define a shortcut and why does each definition disqualify the product from successfully positioning itself in the contemporary marketplace? Here is a list of some of the most basic shortcuts we see entrepreneurs attempt to circumvent.
Typically the cost of filing and utilizing a patent attorney is the principal deterrent. Many entrepreneurs attempt to fill in the blanks on a template available from bookstores or the inter-net and self-file. We have never, never seen this avenue succeed. There is a reason that patent lawyers practice no other type of law. This is the classic specialty practice. Investors, partners or licensees want to know that the idea they are reviewing has protection.
Professional quality, shelf ready prototypes are an absolute requirement when seeking to place, sell or license a product opportunity. The 3-dimension CAD art is also crucial in patent submissions and creating the cost of manufacturing the product. Occasionally the inventor has the skills and equipment needed to successfully create this absolutely crucial design element. However, we usually see amateur attempts to avoid the cost, time and research necessary to properly render the features and benefits of the product or service. This is an opportunity killer.
Inventors are passionate about their creations, and passion is important. However, they often do not properly research the size of their target market, competition and create a sales model that is supportable and believable. What is a sales model? A sales model is a quantified, qualified, well-researched formula to extrapolate the realistic sales potential for an opportunity. Knowing the dead net cost of goods is absolutely essential in establishing a believable sales model. What is the demographic for the product? What is the competitive overview? How does the new product differ in features and benefits from competition? During year one, two, three, how many store openings will realistically be obtained? What will be the annualized turnover per door? Will there be international sales, kicking in when? A fictional sales model is tantamount to opportunity murder.
It is amazing that learning the absolute cost of goods (COG) receives such short shrift. This number is to a product as blood is to life. If COG is too high, a product has little chance to compete. A low COG, with uncompromising product quality, is essential for success. Each element of a product or service needs to be included in a supporting Bill of Materials with costs extended to fractions of pennies. These are then totaled. Then add costs of freight, customs and duties (if offshore production involved) to obtain a dead net COG. Dreaming, wishing and hoping that COG is accurate is a dead giveaway that the inventor has taken deal-killing shortcuts.
These are famous last words. No modern home is built without an architectural drawing. A cell phone is designed around highly technical engineering models and art. Retail stores are painstakingly designed and planned. And yet, entrepreneurs, all too often, either will not recognize, or will not commit to writing a customized business plan. Again, an inter-net template is a waste of time. We receive hundreds of Business Plan submissions annually. We are still waiting for the first exciting, comprehensive plan that would be a candidate for funding, license or sale that came off an inter-net download template. This route screams shortcut and lack of serious commitment. These are only a few of the most common shortcuts we see entrepreneurs regularly take. Most disappointingly, the shortcuts taken will kill otherwise excellent start-up opportunities. There are thousands of new opportunities chasing a limited amount of new enterprise funding dollars. Matching invention and success will not be achieved, no matter how revolutionary the new item, without presenting a fully researched and vetted package for market consideration. No Shortcuts Allowed! Continue reading "The Most Common Mistakes Entrepreneurs Make and Why Markets Tolerate No Shortcuts" The Anatomy of a Product: From Idea to RealityThe Anatomy of a Product: From Idea to Reality What does it take to turn an idea into a product? How can I realize financial gain from my idea? Where do I start? These and many other questions swirl around would-be inventors and entrepreneurs as they seek to bring new products and services to market. The process can seem daunting for anyone making a first attempt and confronting the typical hurdles and roadblocks the marketplace utilizes to cull the field. I look at hundreds of products each year and have done so for almost 30 years. The ideas that succeed invariably consist of the same basic elements. One, an entrepreneur with passion, a realistic view of the opportunity they have created and a flexible attitude to the inevitable critique and changes the original concept will undergo. The world is full of dreamers. Successful entrepreneurs work non-stop in pursuit of their well-designed goals. Two, a new product or service concept that fills an identifiable market niche. The niche can be a completely new product category (think Windows, XM Radio, E-Bay) or a small piece of a vast, mature market segment (Sam Adams Beer, Coach, George Foreman Grille). The Unique Selling Proposition is the element that enables the product to be positioned as an advance, offering different, improved features and benefits. The world doesn’t need another mousetrap, unless, you can prove a method to catch more mice. Three, before running off to a Patent Attorney, display or discuss the opportunity with family, friend’s, co-workers you trust. Would they buy if available? How much would they pay? What don’t they like about the widget? Any improvements they might suggest? This is a form of micro-test market. Also, search the inter-net, United States Patent and Trademark Office, visit stores and diligently study the competition. If you feel confident that the market is not offering anything like your concept then you potentially have a significant commercial opportunity and should seek copyright, patent and trademark advice. There are many ways to proceed. You can attempt to self-market your idea. There are numerous reputable consulting firms that can offer comprehensive services. Many colleges and state and local governments offer small business incubators and can be an excellent resource. A caution, though. The late night infomercial selling patent services that will make you rich is always a fraud. Ask for references and products currently on the market as proof that you are dealing with professionals, not charlatans. The hardest question for many inventors to confront: How to harvest financial benefits from their invention? Licensing, self-marketing the product, funding, partnership, strategic alliance or outright sale of the opportunity are among the options to be considered. Typically, the inventors background, experience, interest and financial realities make the choice more obvious. It is usually good to have professional guidance when weighing appropriate strategies for harvesting income from a project. A working model or a production quality prototype of the piece will be essential in researching manufacturing, costing production and for presentations. Do not cut corners here. Be as professional and thorough as possible in displaying the unique performance benefits and features of the product. You only get one chance to make a strong first impression. A customized Business Plan or Offering Document will be crucial in successfully presenting the product for consideration. Decision-makers typically see many, many products each year. You need to stand out and that requires an exciting plan. Do not buy a Business Plan template off of the inter-net and fill in the blanks. It will not be read. Make the document as exciting as your product. The steps reviewed above typically result in a thinning of the new product herd. In order to successfully place a service or product in this very aggressive, cluttered marketplace no shortcuts are tolerated. Inventors, entrepreneurs and small businesses are an amazing breed and a valued national asset. The wealth created and generated by this group of idea pioneers is the American economic difference maker. There has never been a greater time or place to launch that needed new product, and the rewards have never been greater.
Tuesday, February 13. 2007A Baseball Player as an Entrepreneurial Role ModelA Baseball Player as an Entrepreneurial Role Model Watching the Chicago White Sox win the World Series for the first time since 1917, I was struck again how wondrous this beautiful sport still can be. The purest American game, baseball teaches so many of the values we appreciate in all areas of life. Hard work, doing the little things, hustle, overcoming adversity and never quitting are lessons we learn playing Little League baseball. My firm specializes in small business development and boot strapping entrepreneurs. The virtues we see in every baseball game are directly applicable to success or failure for inventors and companies. The Chicago White Sox, and one player in particular, are wonderful endorsements for the baseball/success ethos. Scott Podsednik is the poster boy for every virtue essential to positive entrepreneurial achievement. It Took Nine Long Years Scott Podsednik was born and raised in tiny West, TX. West is a hamlet, founded, and still principally inhabited by Czech immigrants. No great sports traditions here. As a 150-pound outfielder, Mr. Podsednik was drafted and played minor league baseball for nine, very long, frustrating years. Every year in spring training, Mr. Podsednik would be returned to the minor league camp, traded from team to team and generally stuck with the label “not a prospect”. Several times he considered giving up and seeking another calling. Nevertheless, he knew, believed in his heart, that given a chance he would be a success at the Major League level. Three years ago an injury opened a spot on the Milwaukee Brewers. The team took a chance on Scott Podsednik, believing he would be a back-up player until the injured star returned. This was the chance he dreamed about since Little League in West, TX. He never looked back. Rookie Record Breaker As a 29-year old rookie, Scott Podsednik hit over .300, scored over 100 runs and stole over 50 bases. He played the game with drive, hustle, smarts and courage. Mr. Podsedniks value has rapidly escalated and during the off-season he was traded to the White Sox for power hitting Carlos Lee. The White Sox had not won the World Series in 88 years. Hitting in the key leadoff spot, stealing bases and playing sparkling outfield defense, Scott Podsednik is the emotional leader of the new champions. A Model for Entrepreneurs as Well Scott Podsednik heard the dreaded word “NO” for years. Every business start-up, inventor or entrepreneur faces the same hurdle at various points in time. Mr. Podsednik did not like hearing the cursed word, but it did not deter him from seeking and attaining his goals. It is the same for every successful entrepreneur. “NO” has to be handled as a temporary roadblock, not a final, death knell for opportunity. Success is very seldom linear. Setbacks, stumbles, mistakes happen, will happen and must be handled as challenges, not disasters. Thomas Edison performed over 1000 experiments before perfecting the electric light bulb. That is a lot of “NO”! He never thought of stopping his pursuit of success, and no successful entrepreneur ever let NO stop the drive to succeed. The Chicago White Sox are champions because they did the little things better than any team in baseball. A team with virtually no stars vanquished other squads with more All-Stars and much higher payrolls. This is a template that every inventor can use as a positive example. Creativity, effort, diligence and determination can overcome almost any obstacle. Scott Podsednik and the Sox are real world models we can all admire and emulate. Entrepreneurial Role Model 10 Essential Traits for the Successful EntrepreneurWhat Makes an Entrepreneur Different By: Geoff Ficke Studies indicate that entrepreneurs are born, not made. As a serial entrepreneur myself, having worked with dozens of successful entrepreneurs, I can confirm that this is a truism. No two are exactly alike, but they are different from those who fail, or worse, never try. I am often asked what makes an entrepreneur. In answering, I use the quote made by Supreme Court Justice Harlan when asked how he defined pornography. “I know it when I see it”. Entrepreneurs have a demeanor that separates them from the herd. They are different. Ready to take risks, fearless, passionate, problem solvers, positive and focused: entrepreneurs are the power that runs the engine of any capitalist economy. I have assembled 10 traits that all successful entrepreneurs seem to acquire during their life’s experience. Some are stronger in one area or another, but the basics are covered here and represent qualities and beliefs that are remarkably consistent in successful entrepreneurs. 10 Essential Traits for the Successful Entrepreneur #1 Passion in Their Project Opportunity Passion overcomes many deficiencies in experience and/or education. True passion cannot be faked, and is contagious! #2 Courage in the Face of Doubt Every entrepreneur experiences bouts of worry and self-doubt. The ability to overcome, push ahead and achieve your goals requires courage. #3 The Ability to Handle Rejection Success as an entrepreneur requires a thick skin. You will receive Criticism, and hear the word NO much more often than YES. #4 The Ability to Remain Open to Change Hardened attitudes and dispositions will cut off the ability to innovate, improve and add creativity to an invention or new idea. #5 The Glass is always Much More Than Half Full Successful entrepreneurs know they have obstacles to overcome. They just get on with it. Negatives are like gnats, to be flicked away. #6 Small Ideas Become Big Ideas Coca-Cola was not created with a goal of being a mass-market beverage. A pharmacist created the formula for his soda fountain as a tonic. #7 Only You Can Shape Your Life You control all aspects of your life. When you look in the mirror do you see a man or a mouse? The answer is a reflection totally of you. #8 Regret Only What You Have not Done To die and have wishes or nightmares about lost opportunities, or never having gotten into the game, is some kind of sin. What a waste! #9 Get Rich Slow Dreamers want to get rich quick and rarely do. Hard work, enterprise, innovation, and focus makes the hare the winner over the flashier rabbit. #10 Listen to Learn While you are talking you can’t be learning. Ask questions, probe, inquire! Listening is crucial to overcoming objections and success.
The Ten Commandments for EntrepreneursBy: Geoff Ficke I am often asked by aspiring entrepreneurs for tips that are essential to being successful in launching a new commercial venture. Below I have assembled the big 10, something like the 10 Commandments, only for entrepreneurial success. The items covered below are not negotiable in the process of taking projects. Trying to short-circuit the list is a death knell for any start-up. The Ten Commandments for Entrepreneurs #1 Never Take Shortcuts! The market is unforgiving. You only get one shot at making a GREAT First Impression! Do everything in a first class way. #2 Never Offer an Opportunity for Consideration Without All of the Facts! Until you have fully researched the market, pricing, demographics, etc. never attempt to take your project to decision-makers.
The ability to pre-sell, minimize cash needs and prove the viability of your project can be handled by bootstrapping yourself. You keep the equity! #4 Know Your Cost of Goods to the Penny! The lowest possible cost of goods, with the highest possible quality features, is essential in creating realistic sales models. #5 Your Opportunity Must have a Definable Unique Selling Proposition! The Unique Selling Proposition defines your products niche in the marketplace. This establishes the level of risk you face. #6 Innovate, Innovate, Innovate! The market rewards products with creative, innovative new features and benefits. Think weird and outside the box. #7 Address Opportunities From Your Life’s Experience! Most successful ideas germinate from your job, hobby, lifestyle or educational experience. Keep looking around yourself! # 8 Help Is Available for the Inexperienced! There are many places an inexperienced inventor or entrepreneur can get guidance. Do not let fear of sales or marketing kill your great idea. # 9 Customize Exciting Business Plans Do not waste your time mailing poorly written fill in the blank, inter-net business plan templates. They will not be read. #10 Never, Never Give Up! The ability to understand, not like, but understand, the word NO is crucial to becoming a successful entrepreneur. You will hear a lot more NO than Yes.
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