Start-Ups: Going from Concept to Business Venture
Entrepreneurship lies at the heart of the capitalist system. At its core, it is about generating new ideas, starting businesses, taking risks and adding value.
The vast majority of attempts to translate an initial idea into a business venture fail, yet some of those, which succeed, have fundamentally transformed the way we live.
An entrepreneur is someone who starts a business. It is typically someone who sees an opportunity where others don’t and who dares apply that idea in the real world. Some of the key the traits usually associated with entrepreneurship are innovation, risk taking, a preference for action (rather than theory) and value creation.
On the down side, passion for a given new idea can cloud one’s judgment especially when inexperienced. It can lead to unrealistic expectations, over-optimistic assumptions and an incorrect assessment of both the value added potential of the idea and the likely reaction of existing or potential competitors.
Business plans are aimed not so much at producing a definitive roadmap for the venture but as a way of structuring the conversation around key assumptions.
In my view, here are the key questions to address:
Is there a real market need?
Is there a unique competitive advantage? Is it defensible?
Is there a logical and convincing business model?
Are the market and financial projections robust?
What is the caliber of the management team? Their experience? Their track record?
Have we agreed a logical valuation, a fair deal structure and a governance model that is transparent and workable?
Finally, is there an exit strategy?