"Birthing a business is like a gunslinger who's just got to find out ..." - Crismus Bonus
T his is a sequel to my past column on "born entrepreneurs." Three of my readers have asked, "OK, I took your little test and I think I'm a born entrepreneur. Where do I go from here?"
Well, don't get in a hurry. Lots of thought must be given to the products and/or services you will be selling. Now, if you just want to open a mom-and-pop store, or if you've been thinking about a particular product or service for a long time, that makes it easier.
What about money? You'll need enough to launch and remain in business without profits for at least one year. Will you be borrowing money? If yes, how much and from what source? Banks insist on collateral. Friends and relatives are sometimes a good bet. Selling equity is possible but is it smart to have company ownership in outside hands? You may need that equity for future key employees or partners.
Have you made a business plan? No? Good! Business plans are a waste of time for the first two years unless you're borrowing from a venture capitalist. Venture capitalists insist on well-done business plans not so much that they believe them, but for window dressing for their own investors. Private investors (friends and relatives) probably won't understand your business plan but if it looks professional, it helps.
The one plan you must carefully craft right from the beginning of your thinking about going into business is: "Your sales plan!" Your products and/or services are vitally important in terms of quality and uniqueness but no matter how good, they will not sell themselves. Sales strategy and implementation is the most important business function.
Will you have patent protection? If so, this will allow a higher selling price. Exclusivity is worth money. Where, and to whom are you going to sell your products and/or services? Who are your competitors? How is their quality? What is their pricing structure? Assuming your company will not be a store with walk-in trade, and you manufacture or distribute products that will be sold to other companies, are you going to be your own outside salesperson? If not, are you going to hire an outside salesperson or will you use commissioned sales representatives?
Will you need a partner or partners? When I organized my hi-tech companies several years ago I began with four partners because it took all five of us to perform the necessary functions to produce one great product.
Why didn't I retain all company ownership myself and just hire employees to perform all other functions? Because hired guns do not go the extra mile. Only owners will put in 12-14 hour days, seven days per week for the first 18 months to build a solid foundation. That's what it takes for an eminently successful enterprise and that's what we did.
But beware. Adding a partner or partners to your new start-up can be tricky. However, there is one way to assure partnership compatibility. By compatibility I not only mean getting along socially with each other, I am talking about partners who have the skills that you lack, and vice versa. Dovetailing, not conflicting, skills are a must for all business partnerships. In our case we needed five distinctly different skills, one of which I performed myself, plus being CEO and sales manager.
Now, how can we assure compatibility? The only proven way is to have each partner aptitude and vocabulary tested by the Human Engineering Laboratory to determine each partner's innate skills. Despite past work experience, each partner has aptitudes of which he or she is unaware. These newly discovered aptitudes will show who can successfully wear more than one hat during those early lean years.
Moreover, vocabulary compatibility between partners is vital. Low vocabulary partners do not get along well in business as they lose their tempers when they run out of words. Vocabulary is knowledge and over 84 years of testing, the Lab discovered that corporate CEOs usually outscore university presidents. The Lab also has an excellent vocabulary builder available.
• Bob Thomas is a retired high-tech industrialist who later served on the Carson City School Board, the state welfare board, the airport authority and as a state assemblyman. His website is worldclassentrepreneur.com.