Lessons Learned – Refining (or finding) the Initial New Business Concept

In my last post, I mentioned I had been working on a change of direction for this blog. Instead of digesting the fifty or so articles I post weekly on the LinkedIn, Applied Entrepreneurship group site, and then giving my thoughts and impressions of common threads, I’m trying something new.

The current plan is to continue to use the rapidly growing Applied Entrepreneurship archive of some 1,400 articles on entrepreneurship (also available from the Boxnet application on my LinkedIn profile page), as well as new articles I post from this point forward, The difference is that instead of just blogging about the articles, based upon whatever gets posted on a daily basis, I’m going to try to “connect the dots” in a different way.

The premise of the blog’s new direction will be to use those articles, as well as your comments, in a step-by-step journey to starting a new business venture. Beginning with this post, I plan to walk through the process of starting what could be either a hypothetical business, or perhaps an actual business. I plan to have some fun with this, and I hope you will too.

There are at least a few things, which could make this a little more interesting.

• First, quite some time ago, one of the posts referenced an article I’d run across describing a “virtual incubator” project. Without going into too much detail, entrepreneurs posted their interests online in an ongoing user generated blog format, in hopes of matching talents, opportunities, and other things necessary for a start-up. The goal was to actually create one or more real business ventures out of the “sparks” generated through the virtual community.

I followed much of the string from the beginning, which ended up consisting of hundreds of posts. I won’t spoil the secret of the extent to which this generated real business ventures, but I would like to think this series has at least the same potential.

• Second, a group of professionals with whom I have served on a board of directors, has been exploring the possibility of continuing to work together in some new endeavor. We all spend some of our time on charitable boards but have an interest in the potential of working together to make some money together. We like each other and respect the talents we have seen each other display for many months, while we served on the board of the same enterprise. We plan to get together socially in the near future, and I’m sure this topic will come up.

There is the potential that we can use the output (from me) and input (from you) of this blog series to help us gel our thoughts, pick a plan to go forward, and actually get a business off the ground.

• Third, simply posting “the best of” articles and gathering feedback from readers should allow me to periodically post “best practices” lists and discussions. The Applied Entrepreneurship reading list, referenced above, contains literally scores of articles on many different aspects of entrepreneurship, as well as the process of starting and running a successful business. Some of the articles contain conflicting points of view. Some are better than others. Some are the best for one situation, but may not work for another. This is where experience, a good dose of luck, and the art of applied entrepreneurship come into play.

There is no one book, which will walk you through starting up every type of business under every set of circumstances. I’ve bought and studied enough of them to feel comfortable in making that statement. I’m still buying them and reading them, but I doubt I’ll ever find that silver bullet. On the other hand, there are lots of millionaires, and quite a few billionaires, who got where they are through imperfect means and methods. You don’t necessarily have to do it perfectly, but you do have to do it well enough to beat the competition and sustain that long enough to get it to the bank. (Read the article I posted by Anthony Robbins, Don’t Try To Be Perfect.)

I plan to use this blog series to generate a series of “best of the best” business startup and business operations articles, which I hope will provide you with both an opportunity to participate in the selection process, and benefit from the results. The success of this part of the plan is as much dependent upon you as it is on me, so let’s get started.

On The Threshold of Starting a New Business Venture

One of the threshold issues in such an endeavor deals not with issues, but people themselves. An article by Noam Wasserman, which I posted on the Applied Entrepreneurship site earlier this month, Founding with Friends, Founding with Strangers?, deals, as the title suggests, with the issue of whether one is better off founding a business with strangers or friends. The article gives pros and cons, and was certainly worth reading as a preface for this venture.

Another of the threshold issues is whether the concepts entrepreneur “wannabes” are working with are real ideas or “just” opportunities. Often, I find my new clients come in with great excitement, having found what they think is the “better mousetrap.” Just as often, someone has apparently just found the “perfect” business opportunity, but they have to act fast to make it work. In both cases, there is a great danger that they will rush past the basics on their way to the “gold rush.” Sometimes that can work, but the odds are slim.

Yesterday, I posted an article by Tim Berry (founder of Palo Alto software and great business blogger), titled Ideas vs. Opportunities. Here are a couple of points from his article:

The business planning process is about filtering the opportunities — a precious few, requiring focus, and planning — from the idea.

An opportunity has some of the following elements:

• Industry and market potential: look at market structure, industry structure, growth rate, margins, costs, etc.
• Economics: capital requirements, fixed costs, cash flow, return on investment, risk.
• Competitive advantage: degree of control, barriers to entry, availability of sufficient resources.
• Management team: people who know the industry, the market, the operations, the logistics, the road to market.

So now we’re starting on the journey with at least two things in mind. The two issues are:

1. Is it better (or reasonable) to start a business with friends than with strangers?
2. Are we better off looking for an idea for starting a new business, or just looking for the right opportunity?

There are clearly many more issues one should consider at this stage, including the old entrepreneurial quotient self-evaluation. We’ll get into that and dozens of other startup questions and answers as we travel down this road together. If you have suggestions on answers to either question, above, or would like to suggest other threshold questions, please contribute to the process.

This is the first post in the business startup series. For others in the series, check the series index.

Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.