Robert Ochtel’s Blog

An Experienced Approach to Venture Funding

Entrepreneurs, A Bunch of Singles, and Not a Single Homerun Event is Usually the Path to Success for Start-up Companies

Most, if not all, entrepreneurs hope to take the short and quick path to success.  This approach to success usually relies on hitting a homerun your first time up.  While not only unrealistic, this swinging for the fences strategy is not the most likely path to success for your start-up company.  Why?  Because from the beginning your start-up company and its product “concept” or “idea” are often too ill defined, have not been vetted by the realities of the market, and often will not be ready to bring to the market for an extended period of time. All of these characteristics are red flags for potentially interested customers, strategic partners, and investors.  So, with a vision and a concept, entrepreneurs need to focus on building a given level of reality in the development of their start-up company, its product offering, and their necessary associated market rollout strategy.  This requires your start-up company to hit a bunch of singles on its way to success in the market. Why is this important?  Well, like in baseball, the greatest homerun hitters only hit a homerun once every 14 to 16 times at bat, an average of 6.5% of the time. On the other hand, a great batter gets on base over 33% of the time, usually by hitting singles.  So as an entrepreneur, you need to focus on doing the little and necessary things everyday to move your start-up company and its technology, product or service offering forward. By doing this, you will in essence be focusing on hitting a bunch of singles.  This will in essence allow you to move forward step-by-step, and is generally the more successful path in which to build your start-up company.  It also allows you to continue with you to continue to build momentum, which will help create more success as you implement your vision. In what follows is a short discussion regarding what issues need to be continually addressed as you knock out singles on your path to success in the market.

Continue to Add Value to Your Product Offering Everyday

Start-up companies generally only focus on a given set of “core competencies”. These same core competencies generally do not always allow this same start-up company to offer a complete product offering in the market.  As such, as a start-up company you need to continue to add value to your product offering to complete your product offering and create a competitive position in the market.  This includes:

  • Identifying and engaging in the right strategic partnerships to complete your product offering,
  • Focusing on adding the appropriate features and functions to differentiate your product offering in the market, and
  • Protecting your product offering by securing the necessary patents for your start-up company’s “core competencies”.

By focusing on adding the necessary value to your start-up company’s core product offering, you will be positioning your start-up company in the market and with your potential investors.  So, make sure that you spend the time and energy everyday to complete the necessary tasks that will add value to your start-up company. Although individually, they may be a bunch of singles, together they will allow you to develop a differentiated product offering and gain a long-term strategic advantage in the market place.

Always Engage with Customers

Talking with customers is invaluable to any start-up company.  Why, because it is only by talking to customers where you learn what is truly important to your customer base.  This includes:

  • Prioritizing product features, functions and capabilities,
  • Learning marketing channel priorities, and
  • Identifying market segments and sub-segment growth segments.

In addition, by always engaging with customers, this will allow you do develop a personal relationship with these same customers. As such, when you are ready to bring your product to market you will have already identified potential customers that have an excellent understanding of your start-up company, its product offering, and why it will benefit their customers. Finally, it may be that one or more of these same customers will take a strategic interest in your start-up company and its technology, product or services offering and want to engage in bringing your company and its product offering to market. This will be invaluable, as these same strategic partners will have their own market channels and customers that will be interested in purchasing your product offering.  So, take the time to always engage with customers. This hitting singles approach to developing your customer base will benefit your start-up company in the long run and will often result in defining a successful go to market strategy with a much more competitive product offering.

Continually Develop an Invaluable Executive Management Team

As you develop your start-up company you will need to also develop an invaluable executive management team that will bring your product to market.  In this process, you may have early executive management team members that fall by the wayside, due to various personal and professional related reasons. This is just part of the process. What you need to do is to continually focus on finding and developing the best executive management team such that their backgrounds, experience, and expertise will necessarily make your start-up company successful in the market. The process of finding, securing and developing an appropriate executive management team is not a one-time event. It takes a lot of time and focus to identify what the necessary skills and functions are required to bring your technology, product or service offering forward from a “concept” into a value added product offering in the market.  In addition, you need to match this with the right individual executive management team members that can grow with your start-up company and offers the necessary skills and capabilities that are required by a fully functioning company.  Often, the executive management team members that begin with your start-up company are not the same executive management team members that will end of with your start-up company, once it becomes successful.  But, one truth remains, you will need to continually develop an invaluable executive management team, by hitting singles with each new team member, as it is this executive management team and its skills and capabilities that will make your start-up company successful in the market.

Most successful start-up companies are generally not made from a single homerun event, but are developed through a hitting a bunch of singles that continue to add value to your start-up company from the initial vision and concept to the final successful functioning entity. By taking this “bunch of singles” approach to developing your start-up company, you will reach your final goal of success in the market place.  So, do the little things every day that add value to your start-up company it will lead you down the road to success in the market.

This information was taken from Robert’s new book: “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies”.  Available at www.amazon.com.

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June 14, 2010 - Posted by | Venture Capital | , , , , , ,

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