Question: Is now a good time to start a business in this economy?
Answer: Whether the economy is soaring or crashing, entrepreneurs can always find a business opportunity. The key is identifying the unfulfilled need in the market, figuring out an innovative idea to fill the need, and making a profit. There is opportunity everywhere. Look for trends: low interest rates, high energy prices, demand for organic food, rising health care costs, aging baby boomers, increased traffic, global warming.
As these trends continue to unfold, opportunities will also.
Q: Do you need a business background to start a company?
A: A business background is nice to have but isn’t a necessity. In Hawaii many successful entrepreneurs did not have business backgrounds — D.K. Kodama, Henk Rogers, Anne Namba and Karin Frost, to name a few. What all four entrepreneurs have in common is an unbridled passion for what they do. You can’t delegate passion in your company. However, it’s important for entrepreneurs to build a strong support team (outside professionals or employees) whose skills complement their own, and at least one team member with a business background is essential.
Q: What qualities do successful entrepreneurs possess?
A: What sets “successful” entrepreneurs apart from others is their higher tolerance for risk, great common sense (often described as business acumen or savvy), superior communication skills and the ability to adapt and make decisions quickly while learning from mistakes.
There are so many good reasons why you shouldn’t start a business, and expect to hear all those reasons when you begin to tell friends and family your plans. A wise entrepreneur will ask questions, listen, modify their plan and still launch their business if they believe in their product.
Q: If you’ve got a business idea, what should you do now?
A: First and foremost, ask questions and test the product/service with your target market. Talk to 100 people who aren’t your friends and family — people who will give you an honest answer. Will they buy your product? How much will they pay? Will they give you a commitment now? What is the decision process? Will vendors sell to you? How is your product different from what’s currently on the market?
Use this feedback, along with other research, to develop a business plan. The plan should include the size of your target market, marketing, sales and distribution strategy, financial model including your assumptions, and the team members who will make your plan a reality. You should also develop a very short elevator pitch. This pitch is used when someone asks you to describe your new business. It identifies the target market’s unfulfilled need, highlights the differentiating advantage of your product and how you’ll make money. The goal of this pitch is to build excitement and interest in your idea.
Keep in mind that having a well-thought-through business plan does not ensure success. Instead, it should be viewed as a working document that will constantly evolve as new information is discovered.
Q: How do I minimize risk in business?
A: Doing your homework and becoming the most knowledgeable person on your target market and products is one way to reduce risk. Your 100 interviews and business plan will help. If there are advantages you have that others don’t, such as access to scarce or unique resources like a patent, employees, partners, or access to funding can set you apart and minimize risk factors that hinder your competitors.
There is always risk in a new venture, and entrepreneurs need to be comfortable taking risk. However, thoughtful planning can help to mitigate risk.
Q: How do I raise money to launch a business?
A: If your financial model indicates the need for outside capital, there are several options available to the entrepreneur. The source of the funds will depend on how much money you need, what sort of business you’re starting and whether you possess any assets. Many small businesses are started with the owner’s credit cards. Borrowing from friends and family is another option. If you possess collateral such as a home or stock, a business loan may be an option. Emerging online investment sites such as Kickstarter may also be possibilities.
High-growth companies may need investment from “angel” investors — high-net-worth individuals — and venture capitalists. Keep in mind that these investors will expect an equity share of your company and a high return rate in exchange for the investment.
Q: Once I have an established business, can I still be entrepreneurial?
A: Definitely. Established companies that are unable to evolve their business models and retain customers risk becoming overcome by more nimble competitors. You only need to open the business section of the newspaper to see the latest victim.
The term “business as usual” should be stricken from your thoughts. The world is changing faster than ever. Business owners and managers need to constantly challenge their business model assumptions and re-create themselves, taking new markets, technologies and competitors into consideration. The best ones do it even when business is booming. Now, more than ever, we all need to think and act entrepreneurially.
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Interviewed by Kristen Consillio
