Have you ever had a brilliant idea for a product or service that could take the market by storm? Maybe you’ve identified a solution to a common problem faced by many people. Whatever your business idea, you’ll need to make some important decisions along the way, like whether to find investors or how to assemble a great team.
In this blog, we’ll guide you through the various options available on your entrepreneurial journey. We’ll discuss the advantages and disadvantages of each option, helping you make informed choices that suit your vision and goals. By the end of this read, you’ll have a clear understanding of how to structure your company and turn your entrepreneurial dreams into reality. So, let’s dive right in and explore the path to building a successful company step by step.
Understanding the personal sacrifices
Founding a company is an ambitious endeavor with significant personal costs to consider. While many people have great ideas, turning those ideas into marketable products requires different skills.
Launching a business is a massive undertaking, and it can profoundly impact every aspect of your life. However, the chances of failure are high; statistics show that only one in ten startups become viable companies, and half of those fail within five years. Therefore, before diving in, it’s crucial to reflect deeply on whether you are ready for the challenges ahead.
Regardless of your funding strategy, there are three essential points to consider before investing your time, money, and energy in your business concept.
Firstly, analyze the market thoroughly. Identify your ideal customers and talk to people who fit that profile. Understand the problems they face that your product aims to solve. This will help you determine if your idea provides a unique solution, setting it apart from competitors.
Secondly, carefully assess the resources required to bring your product to market. Can you handle the necessary tasks yourself, or will you need to hire skilled professionals? Calculate the minimum funding needed for a viable product, including administrative costs like incorporating your company. Decide if you can cover these expenses or if you need external funding.
Lastly, consider the significant time commitment. Building a business demands substantial time and effort. Assess how you will manage and allocate that time effectively. Will your venture be a side project while you keep your current job? Are you willing to dedicate your leisure time to build and manage your business? Being a founder can be a challenging and isolating journey, so be prepared for the sacrifices needed to succeed.
Founding a company is demanding, and there are considerable personal costs involved. Before embarking on this journey, take time for self-reflection and evaluate if you possess the dedication and determination needed to overcome the obstacles and make your company thrive.
How to connect with quality talent
When Sevetri Wilson started her first company, Solid Ground Innovations, she didn’t need to hire anyone else, so she could manage everything herself and keep costs low. However, when she started her second venture, Resilia, she wanted to create a technology platform for charities. Even though she understood her customers’ needs well, she lacked the technical expertise to build the platform on her own.
To solve this problem, Wilson decided to hire a team of platform developers. Hiring full-time employees would have been expensive, so she opted to work with freelancers. Freelancers are independent contractors who work remotely, often from different countries. While they can be cost-effective, they might not have the same level of commitment as full-time employees, which can be a challenge for successful collaboration.
The main message here is that if you need to outsource work to freelancers, it’s crucial to choose the right people for the job.
If you’re just starting out and don’t have a network of reliable freelancers, there are ways to find good talent. You can use various platforms that will ensure you get top-quality professionals. Referrals from other entrepreneurs or networking in Slack channels and Facebook groups can also lead you to trustworthy freelancers.
However, keep in mind that these sources may have a lot of competition for freelance work, making it harder to attract the best talent. In such cases, you might need to pay a bit more or offer flexible working arrangements to entice skilled freelancers to work on your project.
Another option is to work with an agency that can connect you with freelancers. This can be a good choice when you’re developing your first product. However, be aware that agencies charge a fee, which adds to the overall cost of hiring freelancers through them. Before deciding on an agency, it’s essential to research their reputation, read reviews, and talk to people who have experience working with them.
In summary, when outsourcing work to freelancers, choose wisely by using curated platforms, seeking referrals, or connecting with agencies after thorough research. The right freelancers can make a significant difference in the success of your project.
How to win over investors
Securing investors for your business is more about building relationships and trust in you as an entrepreneur rather than just showcasing your product or idea. Let’s take the example of Wilson, a 19-year-old college student who became an entrepreneur with her idea for an online newspaper called B-NOW (Black News Our Way).
When Wilson shared her concept with her professor, Dr. Leonard Moore, he believed in her vision and became her first investor by providing her with $150 to start the business. This experience taught Wilson a valuable lesson: fundraising is not just about the product but also about the connections you build.
If you need financial support to develop your product or business, getting investors on board is usually the way to go. Even if you have some capital, sharing the financial risk with investors can be beneficial. However, raising funds can be challenging, especially if you’re not already a well-known startup.
To increase your chances of getting investors, start building relationships early on, even before you need the money. Look for potential investors, like angel investors, in your local community, startup hubs or platforms like PitchSee where you can connect with Investors directly. Wilson, for instance, found investors in her home state of Louisiana for her venture, Resilia, by establishing relationships with them.
Your ideal first investor should believe in you as the right person to turn your idea into a successful business. They will have faith in your dedication and commitment to making your company thrive.
If you don’t have existing connections with potential investors, create opportunities to meet people who might be interested in your vision. Focus on selling yourself as a capable and determined founder rather than just promoting your idea. Remember, many people have great ideas, so you need to convince potential investors that you are the one worth backing and a 120 second straight-to-the-point video pitch can help you do that.
Harnessing the power of storytelling to win Investors
Sevetri Wilson had a brilliant idea called B-NOW, aiming to bring together students from different communities to solve a problem.
Wilson knew that stories had the power to capture people’s interest and motivate them. So, when she shared her idea with her professor, Dr. Moore, she presented it as a compelling story. Dr. Moore was inspired and supported Wilson by providing the money she needed to start her business.
The lesson here is that storytelling can win over investors. Before approaching them, craft a story that reveals the problem you want to solve and why you’re the right person for it. Wilson’s story focused on the lack of diverse voices in news reporting, a problem she had personally experienced.
Practice telling your story until it feels natural and genuine. Wilson’s genuine connection to her solution, Resilia, made a strong impression on her investors. They saw her as someone who understood her customers’ needs.
Having a personal connection or an existing relationship with the investor can be an advantage. When investors know you’re passionate about your company’s field, they’ll have confidence in your ability to create a successful solution.
Consider the nature of your relationship with the potential investor and tailor your approach accordingly. A close relative might respond better to an in-person conversation, while a former college classmate might prefer a call and follow-up email.
If the person you’re approaching has never been an investor before, be transparent about the risks involved. Let them know that there is a chance they might lose their money, especially with family members who invest.
In conclusion, storytelling is a powerful tool to win over investors. Craft a compelling story that showcases your passion, knowledge, and ability to address a problem. Let your genuine connection to the solution shine through, and consider the nature of your relationship with the investor when approaching them. With the power of a good story, you can secure the funding you need to turn your entrepreneurial dreams into reality.
The untold expenses of pitching your startup
Consider the real cost of pitching opportunities before diving in. Competitions like TechCrunch Disrupt may promise glory and investment, but they can be expensive. For example, Wilson had to pay for her travel and accommodation and ended up feeling unprepared due to last-minute feedback from an investor. It turned out to be a costly and disappointing experience.
Even if you pitch well, winning is not guaranteed. Wilson’s second pitching event, in her home state, was determined by the audience vote, and she lost to a professor who had rallied his students for support.
Instead of solely relying on pitching competitions, consider joining free platforms like PitchSee. On PitchSee you can present your project to Investors from all over the world. You just need to create a profile for your project, upload a clear and concise video pitch and share it with Investors with just one click.
In summary, think carefully about the costs and benefits of pitching opportunities. While competitions offer a chance to shine, they might not be worth the investment. Platforms like PitchSee, on the other hand, provide support, the largest data base of Investors, and networking opportunities that can be more advantageous in the long run.
The role of repeatable revenue
To be successful, a company needs a steady flow of income that keeps coming in predictably. This consistent revenue allows the company to plan and grow. So, the key to success is having repeatable revenue.
There are three main aspects to achieve repeatable revenue:
- generating leads,
- targeting the right customers effectively, and
- tracking conversions.
To generate leads, assign members of your sales team to find new potential customers or present your product to interested clients. Once you figure out what works best, create a clear process and share it with your team.
To target the right customers, create a detailed profile of your ideal customer and make a list of people who match that description. If you’re contacting someone within a company, try to get their name and email address from the reception. You can also personalize your outreach by mentioning a colleague who referred you.
For busy executives, use smart marketing techniques. Research your target and find personal information about them, like their hobbies. Then, reach out in a creative way that shows you know and care about them, like sending them a book they might like. Building rapport is important for future sales.
No matter what approach you use, keep track of every interaction with potential customers. This will help you measure your success and see how well your sales strategies are working.
Strategies for successful series A fundraising
When your business is doing well and customers love your product, you may want to raise more money to take your company to the next level. This is called a Series A round of funding, where investors buy shares of your company in exchange for their money.
It’s important to remember that more money isn’t always better. What really matters is how much money you actually need to achieve your next big goal. So, keep a level head when raising funds.
Let’s take an example of Wilson and her company, Resilia. She wanted to raise $8 million for her Series A round. The fact that she had already received seed funding and had existing investors who believed in her made her more appealing to new investors.
Before starting your fundraising campaign, you should identify the key characteristics of your company, like its viable business model, potential for growth, ability to adapt, and how well it’s doing in the market. You need to show that you’re making money but need extra funding to reach the next level.
Timing is crucial. Wilson once made a mistake by starting her campaign right before people went on holiday, which made it hard to get in touch with potential investors.
It’s a good idea to get legal advice to ensure that the deal terms are in your favor. This round of funding might involve less friendly negotiations, so you want to protect yourself from any disadvantageous terms.
Lastly, be selective when choosing investors. Treat it like a long-term relationship, almost like a marriage. Don’t just accept any offer that comes your way. Think about whether the investor’s vision aligns with yours and whether it feels like a good fit for your company’s future.
When seeking Series A funding, stay focused on your needs, pick the right time, protect yourself legally, and choose investors wisely. By doing so, you increase your chances of taking your business to new heights.
In conclusion, building a business from the ground up requires careful consideration and strategic decision-making. The first step involves choosing between seeking investors or bootstrapping with existing resources. Sourcing talent, which may involve hiring freelancers, is crucial for the development of your product or service. Once you are ready to enter the market, shifting your focus to sales and building strong customer relationships is essential for long-term success.
Inspired by a book “Resilient: How to Overcome Anything and Build a Million Dollar Business With or Without Capital”; Sevetri Wilson