From time to time I have the opportunity to meet entrepreneurs in search of legal advice or money or both. The single unifying thing about entrepreneurs is that they are full of ideas. Some great; some not so great.
I love talking to entrepreneurs because they always have an enthusiasm, still unbridled by “real world ” concerns.
I try to give practical advice to entrepreneurs without extinguishing their passion for the idea.
I often find myself offering the same advice over and over so I thought I would share some quick tidbits with you.
Advice #1: Be able to articulate a real, concrete idea. Saying “I want to create a Facebook for pets” is not an idea. Or saying “I’m not sure what I want but I am real good at writing code” doesn’t help either. In 30 seconds or less you should be able to explain your idea including who your target audience will be.
Advice #2: Be able to articulate how you plan to monetize your idea. How are you going to turn clicks into money? Or potential users into customers? How much are you going to charge? What are you going to charge for?
Advice #3: Run the numbers. Prepare a pro forma; write a business plan. This doesn’t have to be some sophisticated financial model. Start with the basics. Assume you want to start a cupcake shop. You’re going to sell your cupcakes for $3 per. How much will it cost you to make that cupcakes? Of course you have to buy your baking supplies. You will also have rent, salaries, utilities, kitchen goods, ovens, cooling racks, display cases etc. I know you don’t know how many cupcakes you will sell but run several numbers based on different scenarios. 500 cupcakes will gross you $1500. 2000 cupcakes will gross you $6000. You get the idea. Then compare that to the expense side of the ledger. If it looks like you’ll need to make $6000 per month to cover your expenses, that means you’ll have to sell 2000 cupcakes. That’s over 60 cupcakes per day. That would be 30 customers buying at least 2 cupcakes per day.
Advice #4: Keep it (mostly) to yourself. Find a small, trusted group of advisers to brainstorm with. No matter how much I think I have trouble shot an idea I am always surprised about how much I learn from others. And I’m talking about new thoughts that never even occurred to me. Oftentimes these people will put me on to an even better concept than the one I was toying with. BUT keep this group small for 2 reasons. First, you don’t want anyone to steal your idea. Second, most people are negative. They will shoot you down just for the sake of shooting you down.
Advice #4: Form strategic partnerships. I cannot tell you the number of people I know who have partnered up with their friend or family member because they want to share their adventure. That’s fine as long as that person brings something to the table besides camaraderie. Ask yourself, what specific talent will that person contribute? And can I get that “contribution” elsewhere for cheaper?
These are just a few things to be aware of. Now for one final piece of advice: Get going…..now. Don’t waste too much time trying to cover all of your legal bases i.e. entity formation, trademarks, venture capital meetings. Get your idea up and running as quickly as you can. These things are a mundane drain. Have some real momentum before you worry about these things.