We have all probably at one time or another thought of owning our own business. And especially when jobs are hard to come by it may not be such a bad idea. But, that startup money, the initial investment you need to get going may be holding you back. The resources you require to turn your vision into a business is a big hurdle that you have to be able to get over.
So, unless you have a healthy savings account or just won the lottery you must convince others of the great financial potential of your endeavor. Depending upon who you are trying to convince (because there are many different kinds of people whose support you may need) you will have to fine tune your sales pitch specific to that investor in order to convince him to invest in your business. You will also need to gather a talented work force. But, typically a startup business cannot compete with established companies in the amount of salaries they can afford to offer.
So how does a startup convince investors or attract talented prospective employee?
Regardless of your audience, what you are selling is not something that can be seen – it is intangible. Peter Cohan, president of a management consulting and venture capital firm has labeled this intangible “emotional currency.”
So what exactly is that and how do you sell something you can’t see? Let’s break it down into something we can all understand – goals. In order to mint this emotional currency, turn your vision into dollars you must define your goals – both long term and short term – in a way that has meaning for your audience. You must define your mission for your startup and this mission statement should tie together your values and passion in a way that helps potential employees, customers, and investors understand why your startup exists and how it will be profitable.
First, choose a mission for your startup that you find meaningful. Your passion will inspire a talented work force. Small startup businesses have some advantages over bigger established companies and you need to make the most of this. What you can offer is a challenging environment where new ideas and hard work will make a very noticeable difference to the success of the business. This passion will also enthuse your investors and hopefully will lead to the building of a business that creates products that customers will want.
Second, the mission statement must explain to investors how they will profit. When an entrepreneur approaches investors to raise capital, there is always a discussion of how the investor will get a return. Whatever the ultimate goal is for the business, whether selling franchises, going public or just building a small family business, you must be able to convince the investor he will get a return on his investment and be able to explain how and when that will materialize.
Finally, and possibly more difficult to articulate are your short-term goals. These consist of a set of real-options – these are moves that you plan to make to help your startup learn as quickly as possible what it needs to do while spending the least amount of money. Assuming the budget is limited and you are trying to meet the expectations of your investors your immediate goal is to get customers to pay buy your product before you run out of money. If you choose right you will get the most out of your limited resources and will have the opportunity to then move into other products or areas. You will have put your business into a position to branch and grow enough to raise more capital and set a new series of short-term goals. You will be on your way to owning and building a successful business.