FAQ

I have a new product idea. What do I do now?

First, see if what you have in mind would sell if you had it. Who would you expect to sell to? (Buyers, wholesalers, retailers, catalogers, reps, distributors - not family and friends). Go talk to a few: "If I had a product that would do such-and-such, would you be interested? At what price?" If it's a middleman you're talking with, get a feel for the markups (to end-user) involved. See the articles Ideas vs. Inventions and Screening Ideas. Second, get a feel for whether what you have in mind could be made at a low enough cost to yield a reasonable profit -- as a first pass, figure 1/2 selling price. If you still want to proceed, decide which path you wish to pursue -- Licensing or Venturing. For a low-cost approach to Licensing, see New Product Licensing. For a low-cost approach to Venturing, see A Low-Cost Approach To Venturing. Good luck.

I need capital. Where can I get it?

First question is whether you have a big-league opportunity, i.e., the business you have (or have in mind) has a real shot at growing to a $100 million business in a 5-year period -- and whether you want to play this game, i.e., your primary motivation is to make a lot of money. If so, you'll want to find a strong, well-connected Venture Capital partner that knows how to play in this league. Most business service providers can point you to local VC firms, or you can find a directory of them in the library. You'll need a good written business plan that sells them on two points: 1) that the opportunity is real, and 2) that you can pull it off. See the article How To Target & Land Financing For Your Startup.

If this doesn't fit your situation, then you're stuck looking for private investors, or Angels. This offers good news and bad news. The good news is that Angels have a much broader range of motivations than the VCs. Although they're interested in making money, that's not necessarily their sole -- or even their primary -- motivation. The bad news is that they can be very difficult to locate. See the article Midwest Lacks Venture Capital - NOT!. You'll still need a good written business plan, but instead of offering fast-growth and a huge-return, you might offer a good-return and other "benefits" that might motivate prospective Angels, e.g., the "glamour" associated with a movie venture.

In either case, before you go looking for investors, be sure that's what you really want. Using other people's money carries both some moral responsibilities and some "gun-to-your-head" tensions. Be certain that you can not only live with that, but thrive on it. There are alternatives -- see Startup Financing -- Why & How To Avoid the Investment Community.

I want to get out of this job and into my own business. Where do I start?

Business -- all business -- starts with a customer -- not with the "great idea". The only value of a business idea is to give you an excuse to talk with potential customers to find out what they really want. Take your best idea to your intended customers -- "I'm considering offering a product/service that would do such-and-such at such-and-such a price. Is this something that would interest you?" And listen closely for responses like, "No, but can you...?" If your idea is wanted -- great -- but it's much more likely you'll find your successful business in the "No, but"s. See the article Finding Entrepreneurial Opportunities.

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