Developing High-Growth Business: Start-Up Phase (free Business e-Coach)

Business development stage:

START-UP

Start-up's success components : your invention (1%) + your business skills (99%)

Start-Up

- no product revenues and little expense history; team is incomplete; there is business plan, and the beginnings of product development

Organization: Informal

Management: Entrepreneurial

Technology: Concept

pp.

Problem

(Why worry)

Solution

(What to do)

Action

(How to do)

2.1

Growth Risk:

New business formation: move into a competitive business world requires specific type of knowledge, expertise, resources and personal business skills

Identification of the type of the new company (see slide show)
Selection of the type of entity and ownership
Starting the new company in an enabling environment such as business incubator (see slide show)

Do venture planning to assess the feasibility of your venture and compare various business models
Make a Strength - Weaknesses - Opportunities - Threats (SWOT) analysis
Take outside professional advice and services
Study and comply with employment and regulatory requirements
Register your trademark - the legal protection for your company, brand, and your domain name
Explore opportunities for starting up your business in an enabling environment such as a technology business incubator or S&T park
Start developing strategic alliances (see slide show)

2.2

Technology & Production Risk

Protection of your IPR - t urning your inventions into profit-making assets
Development of the intellectual property management (IPM) system (see slide show)
Development of your personal and business skills

Protect your IPR, develop IP strategies and take necessary disciplinary steps for your IPR protection
Search for patent information to identify alternative technologies and avoid possible infringement problems
Map your territory
Identify bottlenecks and pitfalls
Prepare schedule, define and describe milestones
Prepare functional and design product specifications
Learn from success stories of other entrepreneurs

2.3

Marketability & Competing Risk

Overoptimistic estimates of market penetration and shares
Product design can not be tailored to the needs of real users until thorough market research has been done
Low market acceptance
Customer's resistance to change
Making classic marketing mistakes first-time entrepreneurs usually make

Understanding the market needs, discontinuities, and opportunities
Clear and realistic picture of the "package" - functional product specifications
Preparation of the marketing and selling strategy
Getting above the competitors

Know your customer
Conduct market research, but don't rely on traditional market research only - it can tell you what exists, not what should be or could be
Identify your positioning strategy
Develop a prototype and test market your product or service; identify the price at what you could sell it
Define the shape of the product to develop and its features needed to deliver benefits
Finalize your market niche, develop marketing strategy, and prepare a marketing plan
Conduct market oriented R&D
Market your venture to prospective partners, investors and clients

2.4

Good understanding of the venture financing process (see slide show)
Selection of the types of financing required for different types of activities
Identification of possible sources of seed capital: bootstrapping, business angels (see slide show), venture capital funds, development funds
Good understanding of the investment opportunity selection criteria of different types of investors (see slide show)

Study the start-up capital formation process and the guidelines for getting funding in today's market
Explore alternatives to VC financing and try to personally finance and bootstrap your firm as long as possible, until the need for external growth finance becomes evident and unavoidable.
Select type of finance you require and develop your fund raising strategy
Search for angel investors and other sources of seed capital and study their investment evaluation criteria and procedures
Prepare a milestone chart and cash flow forecast
Build up a management team
Study how investors read a business plan and their start-up business valuation principles
Study typical terms of stock issued to venture capitalists, and how to structure the deal; develop option for investors for realizing their financial returns and possible exit strategies (see slide show)
Prepare a start-up business plan
Prepare project presentation for investors
Present your project to investors
Negotiate the agreement wits investors; take a professional help to structure the deal

2.5

Team & Management Risk