The Journey: Take Your Idea & Build a Business

THE JOURNEY: TAKE YOUR IDEA

& BUILD A BUSINESS

new venture

accelerator

Entrepreneurship isn’t just about having an idea; it’s about understanding how to bring ideas to reality. At the New

Venture Accelerator at Auburn University, we understand the challenge and are commied to helping entrepreneurs by providing experienced mentoring, counseling, and support each step of the journey. The book you are about to read is wrien by Greg Cessna, one of the NVA’s entrepreneurs-in- residence with signicant experience in family owned and operated businesses.

Having a great idea could translate into building a great business; but the journey is challenging. The business start-up process, outlined here, helps you understand what to expect, manage your process, and determine if you have the commitment it takes to build a business. BUSINESS START-UP

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Tinder

LET’S DO THIS! Congratulations, you decided to pursue your idea and have told yourself and maybe others, let’s do this. What an amazing decision. You should be proud of yourself. So,

where do I start?

starting begins with writing down everything you can about

it has for solving the problem. As you begin to specify your idea, think unconstrained and document all that you can

For now, you want to capture everything possible. Keep

important for patents or copyrights later.

to add or delete by giving yourself some downtime. When you do return to your notes, focus on organizing your thoughts into categories. When we brainstorm, in an unconstrained manner, our thoughts are somewhat

categories around your thinking. Getting organized is a key to early success.

As you begin to document your idea, set time aside to answer these key questions: • What do I know and don’t I know? • What do I need to be successful?

• What scares me about this idea or process? • How hard do I think this will be to get done? • How much time can I devote? • Who can help me?

Making a list of what you know and don’t know is helpful. Make it a running list that you refer to now and then. You will be amazed at how helpful being honest with yourself can be as you formulate your idea. As an example, maybe your idea will require engineering and design, but you are not an engineer. Now you know, hey, I don’t know how to do engineering, so I need help. It is equally helpful to think about what success looks like for your idea. Is it a happy customer? Is it a company? Is it money? Knowing what success looks like helps you develop a mission for your idea and ultimately for your business. Don’t be afraid to dream at this time. Anything is possible!

As you dream, it is normal to question your dreams and even be scared by the idea of success or failure. Remember, the fear of failure is real, and fear will nd you along this journey. So, why not document what you might fear along the journey and think about how to face those fears? What scares you about the process? Dig in and be honest with yourself. It will lift the burden of fear o your shoulders. As you start, you will quickly realize that pursuing your great idea will take time and be dicult. So, accept that the process is dicult and think about how those diculties will challenge you. How much time will it take and how much time can you devote to the process? Remember, you get to choose how much time you can devote but the process will still require the time it takes to be successful. So, your expectations on being successful are far more dependent on your ability to devote your time to the idea than on the process for developing the idea into a business. e more time you can devote, the faster your idea can be developed. But ultimately, you get to decide based on your available time and priorities. Just be honest with yourself. Right about now, you might be asking yourself, “is this idea good enough”. Remember that negative thoughts and self-doubt will always cause you to question your idea. You are very early in the process, and you have done everything you could to move forward and get to this point with your idea. ere is no reason to give up now. So, ignore that feeling and push forward. Remember, you said, “let’s do this”.

However, before we can tackle any pitch behaviors, we must have a good pitch. So, what are the attributes of a good pitch in terms of content? A great pitch must captivate, communicate, and convince the audience. e goal is to encourage them to want to know more. You don’t need to tell the audience everything in your pitch. You simply need to inspire their curiosity. To stimulate an interest, you must be interesting, memorable, and succinct. Your pitch should communicate your personal brand and what you want to be known for, convey your unique selling points, and answer these key questions: 1. What is the problem you solve? 2. Who are you? 3. What has been done to conrm the need?

4. Where are you now? 5. What do you need? 6. Are there any questions or feedback?

So, a great way to start developing your pitch is to determine what the real value of your product or service is to customers. You have done some of this work earlier but now it is about getting very specic. It might be helpful to see some elevator pitch templates or examples online. Here is a link to Harvard University’s Mignone Center for Career Success:

SCAN HERE TO READ MORE

In general, you will feel compelled to include all your thoughts on value; however, try ranking the value attributes from top to bottom and focus your pitch on the top one or two attributes. Here is a great example from Airbnb. “Most tourists booking online care about price and hotels are one of the highest costs when traveling. On the other hand, platforms like Couchsurng have proven that over half a million people are willing to lend their couches or spare bedrooms. We have created a platform that connects travelers with locals, letting them rent our rooms, or even entire places. Travelers save money, and locals can monetize their empty rooms. We just take 10% commission.”

“10 Elevator Pitch Examples From Successful Startups”

You will nd a lot of resources online to help you develop your pitch. ere are any number of templates and approaches one can use but ultimately, my advice is to nd a pitch that makes you comfortable, that is truly representative of your objectives, and inspires you and others to move ahead. Remember, this is your idea and selling it to others should be fun and done with the passion and sense of ownership that only comes from you. Here are some great questions and thoughts to consider as you develop your pitch. • What is the is the real value. • Who cares about my product or service? • What do I need to make this happen? • What do I want? • Who can help and why should they help? • What is this worth? • What problems am I solving? • Is this fun?

Wait a minute, the last question is about fun. What does that have to do with a pitch. Well, in my experience, if you are not having fun with this process and building on your idea, you might reconsider the decision to “do this”. All great business entrepreneurs possess one key attribute, they enjoy building and creating around their ideas. ey are passionate believers in their idea and working to achieve a successful outcome is fun. So, answer the question, is this fun. If you say no, ask yourself why it isn’t fun. Maybe you are allowing the stress and sense of urgency to overcome you. Perhaps you are allowing fear to overwhelm you. Stop and consider why you started this process in the rst place. In reecting now, you will be able to refocus on the fun in building your business. Once you nish your pitch, it is time to practice, practice, and practice. Practice makes perfect but ultimately, practice makes your pitch sound natural and genuine. As you practice your pitch be sure to focus on the pace, the point, and the audience. Give them time to digest your pitch piece by piece. It should be savored by the audience. To accomplish this, pace is important and inection is important. Remember, you are not just pitching your idea, you are also pitching yourself, your commitment, passion, and belief. ere is no room for self-doubt in your pitch.

THE PITCH! Now you have a pitch, but you don’t have an audience, let’s create one. Just as you talked with trusted resources and people about your idea, go back to them and others and ask if they would hear your pitch. Pitch them with purpose. Be prepared for constructive criticism and support as well. Probe the pitch with them to improve the message and your pitch posture. And most importantly, listen. Listen to their questions, opinions, and criticism. Take this information and go back to the drawing board. Hone your pitch because the next time, it will be for real. PITCH IS MASTERED... NOW WHAT?

With the pitch mastered, you now should have great clarity on your product or service and a sound point of view on your evolving business vision. Now what? It is time to begin thinking about the requirement for success in a real way. What resources are needed for How much start-up capital is required and what sources are available for raising capital? What is the sequence for success? What is the market opportunity and what is your pricing strategy and margin objective?

Generally, at this point in time, most entrepreneurs

need capital. Finding help can take many forms. For students at Auburn University, they are lucky to have

or more students, a strong community, and the New Venture Accelerator for entrepreneurial success, you have much of what you need. For those of you not at Small Business Association, Chamber of Commerce, Rotary, and perhaps even accelerators that will help you.

and selling stock. You are going public with your business and your dream. Your idea that has been nurtured from birth. Now you must learn to nourish it and grow it to a reality. A lot of entrepreneurs don’t make it past

need for capital often slows the process of ideation and frustrates the entrepreneur. But, for those that are committed and believe, the hard work begins.

TIME FOR A BUSINESS PLAN It is time to write your business plan. You can nd references for writing a great business plan online. I won’t bother to provide you with much detail here. More importantly, I will focus on a few important considerations.

1. e purpose for the business plan 2. e importance of the Purpose, Mission, Vision, and Values

e purpose of the business plan according to the SBA (Small Business Association)

1. Help steer your business development 2. Provide support for funding 3. Establish key milestones

e business plan should be a living document that addresses every aspect of the company. As for format, you can nd many examples online. e key is content. While some content can be based on your opinion and ideation, it is important that you support your business plan with solid research, facts, and references. In the end, you can’t think of everything at this stage. Your business plan will evolve and grow as you learn more so get as much as you can in the plan but be prepared to evolve. Business plans take time and much like the pitch, they require review, editing, reconsideration, and testing. Don’t hesitate to reach out to others and ask them to read the business plan, comment on it, ask questions, and oer suggestions for improvement. e business plan should look out 3-5 years and provide clear milestones for success. e plan should also outline responses if things don’t go as planned. What alternatives are under consideration? I believe the Purpose, Mission, Vision, and Values represent the heart of the business plan. Spend most of your time getting these right and succinct. e Purpose Statement should focus on the “why do what we do?” It goes beyond prot and margin and is focused on the long-term impact the organization wants to have on its customers, employees, community, and suppliers. Purpose is oen where we see companies align with ESG objectives. e Mission statement describes what your company does and who your product or service supports. What business are you in and how do your customers value your product or service. Why do they hire you? e Vision statement creates a picture of the future state of the business. Who will you be in 5, 10, or 20 years and why is that important to you and the company. e Vision Statement is your lighthouse, guiding you to the future. Values are the guiding principles of how you will work, how you will get things done, what you believe in and how your thoughts and decisions are guided. Values are so important because they will determine your company culture. While they are oen seen as ideals, values are really the boundaries around how decisions are made, and the company will be led. What do you stand for today and long into the future?

Your business plan coupled with your pitch now put you in a position to launch.

RAISING CAPITAL Raising capital is one of the hardest things you need to do. If you are lucky, you have the money to fund your start-up. However, if you don’t, it is time to think about how to raise capital. Before you approach people, banks, or the SBA for capital, you need to think through the “use of capital”. In simple terms, if you had the money, how would you use it and why. I suggest that you build a Use of Capital Schedule in your business plan with milestones and explanations. More than once, you are going to say, I never imagined. As you start the process of raising capital, you will get questions that you never imagined. When you know the answer, answer in a genuine and straightforward manner. When you don’t know, simply ask for time to research and consider the question with a promise to get back to the investor. Remember, raising capital is lled with time friction. Don’t get discouraged; do the hard work.

As I mentioned, time friction is real at this stage. Raising capital will take multiple meetings with the investors and it should. ey will help you sharpen your business plan, your ideas, your process. Engage in the challenge and don’t beat yourself up with “why does this take so long?” It takes as long as needed to raise capital. In addition to capital, you need to think about space to develop the business. Ideally, you want a space that is free; but you might need to rent a space, if product development requires resources or room for the team. It is still early, but at this point, begin to think about a working space. It can be a garage, basement, or room somewhere, but make it the landing spot for your start-up and nothing else.

As you ght the battle with time and other obstacles, remember everything is negotiable. You can manage your way through anything. It is worth the ght.

WE CAN DO THIS! a plan, you have some money, and you are making progress with measurable progress against short term objectives and goals. Building the business is now real and you are energized by you progress. Leverage your small success stories. Build your company culture. or focus group. It is real. Now for some contradiction, I have mentioned time friction. While 99% of everything is negotiable, some things are not negotiable without consequence. Your word and your promises to yourself and others are not negotiable, but it is manageable. As you set objectives for realistic, provide investors, your team, and others with frequent and honest updates on progress. Do not surprise people with bad news.

How do you avoid surprising others? It starts with being organized and purposeful in everything you are doing. You and your team, regardless of the team’s size, are now accountable to get things done. It is exhilarating. Lean-in to success short term. Your business is real so treat it like a job that you love doing every day.

develop a pitch deck. A pitch deck provides more detail than your pitch. You should approach it in a more deliberate manner because you know more.

A great pitch deck will include: • Your mission or vision

• • • Your product — and what makes it unique • Traction and revenue • Evidence that your team can execute

Obviously, you have developed your mission and vision statements in your business plan, you understand the problem

team and business. It is very important to demonstrate that you can lead, and your team can execute.

Importantly, your business is likely to be pre-revenue at this stage. Pre-revenue is a challenge because your pitch deck is the primary tool you will use to build interest from investors. Every investor will want to see your revenue and income expectations. How you develop your revenue forecast is very important.

In addition to the sales proposition, it is important to have a customer service or support strategy in place in advance of selling any product or service. What can customers expect from you? If you decide to build the service model inside the channel with partners like wholesale or distribution partners, what are your expectations of these partners? For example, sales commissions will scale as a variable expense. Every time you sell a product, you owe someone a commission. However, selling more products might not change your cost for accounting or rent. As you think about margin allocation, it becomes important to understand the dierence between your xed and variable costs. Doing so allows you to gure out your break even point and how your prots will scale with volume. Again, there is plenty of information available on “break even analysis” online. Do your research and understand your prot engine.

“IDENTIFY YOUR DRIVING FORCES IN BUSINESS” SCAN HERE TO READ

You did it! You took your idea and created a business. Maybe it took a month or maybe it took three years or more. It doesn’t matter because you are here today with real business. Nurture your success and give back to those around you and remember those who gave to you. Success is only meaningful when we share it with others. I hope in some small manner, this document has supported your journey. Share it with others as you see t and congratulations on your success.

ABOUT THE AUTHOR Greg Cessna is an experienced Director in family owned and operated businesses or privately owned companies facing

generational change, strategic challenges, or seeking improved

governance. Currently the Lead Director serving on three family-owned company boards, Greg has demonstrated the critical thinking to guide the family and executive management through dicult succession decisions, strategic choices, including the merger, acquisition, and divestiture process, and engage the board and management teams while structuring good governance and commiee practice. Greg also serves as an Entrepreneur-in-Residence at Auburn University’s New Venture Accelerator.

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