Business is done by people, for people. Your startup is no exception. “Chapter 12: Management, Staffing, and the Founding Team” covers everything you need to know regarding the people who will help you get your new business up and running.
“Chapter 13: Where Does the Money Come From?” addresses the topic that seems to be at the forefront of every new entrepreneur’s mind—funding. There is much more to a successful venture than money, but a venture won’t go too far without significant funding. This chapter delves into the various forms of funding including the truth about venture capital and angel investment.
Despite some of the anecdotal evidence you may have heard, if you are starting a business you need to produce a business plan. This is true even if you aren’t seeking funding. “Chapter 14: Do You Really Need a Business Plan?” discusses the advantageous uses of a business plan and debunks some of the common misconceptions surrounding their necessity and implementation.
The remainder of this book “Chapter 15: Introducing Your Venture, Chapter 16: Your Value Proposition,” and “Chapter 17: Your Business Model” explore the exact steps to take when constructing your own business plan. Each step-by-step section delves into what to include, what to omit, and how to compile the information you will need to write your own winning business plan.
Let’s get started.
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Your Big Idea
Chapter Overview
The difference between an idea and an opportunity
What makes a great opportunity?
The nature of competitive advantage and distinctive competencies
You’re a brand-new entrepreneur who has a big idea and a boatload of passion. You wanted to start your first million-dollar business yesterday, because you know your idea is so big that it will thrill your customers and fulfill your dreams in the process. The first question you have: how much is this idea worth?
Nothing.
Ideas are numerous, and they exist without inherent value. An idea—no matter how big or small—is a series of electrochemical reactions inside your brain. No one purchases ideas, and ideas cannot be assigned a dollar value. This does not mean that ideas are without potential—ideas are critical first steps toward developing opportunities. Unlike ideas, opportunities are the stock and trade of successful entrepreneurs. Opportunities are actionable, and they have the potential to provide value both to customers and to you. The distinction might seem subtle, but the difference between an idea and an opportunity is a critical one. Attempting to follow through with ideas that have not become opportunities will spell disaster for your venture. It will be doomed before it even begins.
Ideas and opportunities do not exist independently of one another, and they do not exist independently of people. Everything that has been created by people started out as an idea, but not everything that has been an idea has been created. This is the root of the value assigned to opportunities: execution. Opportunities are valuable in their execution. Just as an idea that is trapped in your head has no value on its own, an opportunity that cannot be executed has no value either.
There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations. We keep on turning and making new combinations indefinitely; but they are the same old pieces of colored glass that have been in use through all the ages.
– MARK TWAIN
Mr. Twain was correct. There are no new ideas. Every business idea is a permutation of existing ideas and conditions. Whether or not an idea can be evolved into an opportunity determines whether it will become reality, or whether it will just be another series of electrochemical reactions.
How Are Opportunities Cultivated?
A common misconception is that opportunities simply “occur” to entrepreneurs in a flash of insight. That may be how ideas come to us, but the process of uncovering opportunities is a little more complex. Opportunities aren’t just waiting around for an enterprising entrepreneur to come and find them. They are an extension of the entrepreneur.
Each person is a unique blend of his or her background, talent, insight, and perspective. Together these facets form a kind of “thumbprint” that is just as unique to each of us as our actual fingerprint. The concept of an entrepreneurial thumbprint is essential to understanding how opportunities interact with the entrepreneurs who cultivate them.
First, where do opportunities come from? Opportunities are cultivated through a variety of methods, and each of these methods is dependent entirely on the entrepreneur and his or her entrepreneurial thumbprint.
Opportunities Come from Active Search
An engaged, structured, and disciplined process of searching for ways to evolve ideas into opportunities will yield better results than a passive process. Instead of searching for new ideas or new knowledge, focus on solutions to existing problems. The simpler the better. A compliment that an entrepreneur should love to hear after pitching an idea is “That’s obvious!” Simple solutions to common problems have a higher potential for success.
Quick Case: Jazzercise, a legacy name in active fitness programs, was founded in 1969 by Judi Sheppard Missett. Judi was a teacher at a dance studio in Chicago when she noticed abysmal dropout rates among her students. Young women would attend dance classes to get a workout, but as the lessons progressed, students who had little interest in becoming professional dancers would abandon the class. To keep fees flowing in, Judi began holding warm-up classes with a focus on fun and fitness rather than honing dancing skills. These classes were later rebranded “Jazzercize” and developed into a fitness phenomenon.
Opportunities Come from Information
Entrepreneurial opportunities exist because different people have access to different information. What is an idea for one entrepreneur may be an opportunity for another who has the resources and the means to execute it. An opportunity that exists without the means to execute it does not have value. It is simply an idea.
Quick Case: Qualcomm is a name that for many doesn’t immediately ring a bell, despite the fact that the company is responsible for the functionality of devices that we rely on every day. Qualcomm is the telecommunications and semiconductor company responsible for—among other things—3G cellular technology. Qualcomm also holds patents for the technology that powers 4G connectivity and is a leader in the 5G space. When the company was founded in July of 1985 by former University of California, San Diego professor Irwin Jacobs, he didn’t have a business plan or a particular product in mind.
What the founding team