Starting a Business & Being Smart With Your Money
September 14, 2009
Starting a successful business is not an easy task. There’s a lot of time and/or money that goes into getting your idea organized and off the ground. As people get farther into implementing their business they usually realize that they’ll need more money to make their idea a reality.
Last night I saw a show for the first time called Shark Tank where entrepreneurs pitch thier ideas to a group of wealthy investors, the “Sharks”, and ask for a specific amount of money in return for a stake in their company. I think they’ve been on the air funding entrepreneurs for a while, but I don’t watch that much TV so this was the first time I heard about it.
I watched as several budding business owners made the case for their product and why it would be a good investment for the “Sharks”. One lady had spent 3 years and her entire life savings developing her company only to have every investor deny her any money.
Each of the “Sharks” had legitimate concerns about the feasibility of implementing her idea and competing against the businesses already existing in the industry. One guy came out and told her that her idea was dead and she obviously took it very hard. After the lady left, the panel of investors discussed whether he was too hard on her, whether he should have gone about telling her the same thing in a more constructive way.
The guy replied with something along the lines of, she needs to know that her business isn’t going to succeed before she plows any more time and money into it so she can move onto something else.
Protecting Your Money
Think how much easier that situation would have been for the women if she would have had that conversation with a group of knowledgeable business people three years ago. Before putting her life savings and years of work into the product. Now she’s totally committed to making the idea work, she can’t entertain other alternatives, she’s backed into a corner.
I think it would be a good use of any entrepreneur’s money to get a panel of experienced people to look at their idea and give them feedback when they’re first getting started. The goal wouldn’t be to get a yes/no answer, yes you should pursue it or no you shouldn’t. Instead the goal would be to build a list of questions that needed to be answered
To compile a set of objections that shoud be addressed early on to determine the feasibility of success and the potential return on investment. Every entrepreneur will hear negative feedback about their idea and can’t let the negativity alone stop them from pursuing their dream. However they can make note of the issues people raise and research them early on to help prevent themselves from throwing everything they have down a money pit.
Business Research Example
I’ve enjoyed the following set of articles from Perry Marshall. He tells a story of his role on a board of directors where he raises legitimate objections about the economic feasibility of a major business deal and the pushback he gets from the leader of the business.
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