How do I start a business?

Because I’m a serial entrepreneur and because some of those companies did well and because I’m a management consultant and startup mentor and coach and because I’m a business plan/pitch competition judge, I get asked this question in various forms—a lot.

Here is one recent example:

How would I go about researching an on-line business idea?  I have an idea and have done some Google searches but don’t know how to tell if there is room in the market for someone else.  I have some ideas to be more unique and have a plan to slowly enter the market, but not sure how to go about everything.  The last time I tried a business it failed miserably, so I want to avoid that and keep things simple.

My answer:

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Marketing in 123 Words

It is marketing’s job to create and sustain the perception of need.

There are three stages of customer perception of need:

  1. Nice to have
  2. Want to have
  3. Need to have

Moving customers from 1 to 2 and then from 2 to 3 requires significant investments of time, energy and resources.

If you start with customers who already believe they need what you are selling, you have a much more efficient, scalable sales model.

If you have to drag customers from nice to want to need, it is a very slow, painful and expensive process.

Even worse, it takes a lot of time.

Time is the most precious resource.

You must create a marketing message that engenders a perception of need.

Why didn’t I get funded at the Angel event?

I’ve seen more than 200 startup pitches in the last couple of years.

Most pitches do not get funded.

Sometimes people who don’t get funded reach out to me and ask, “Why?”

Here’s an example of why one entrepreneur’s pitch did not find any response from the Angels in the room:

Congratulations on your idea and your startup.

You have identified a pain point in the marketplace.

Also, as you probably discovered, while you’ve discovered a pain point in the market, nobody at the angel investor pitch event was jumping up to invest in your idea.

I think some of the reasons are:

  • Business model (service vs. product)
  • Scalability (business model and processes)
  • Sales model (scalability, efficiency, etc.)
  • Team (solo startup, almost always a big red flag)

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