Innovation and Entrepreneurship are creative processes. They are usually born out of dissatisfaction with the current order. Here are a few words on the required mindset and some introductory advice.
Entrepreneurship is about leveraging resources to create ‘new futures’
Innovation and Entrepreneurship are fundamentally about visualising new potential futures. New Futures that solve real-world problems for consumers – and then constructing a path towards that future. The task involves leveraging scarce resources. Entrepreneurship is not easy, but entrepreneurs that focus on creating specific consumer solutions find ways of realising that new reality – many without substantial management expertise, or financial skills.
Just because many entrepreneurs lack certain management and commercial skills does not mean they don’t need them – they do. Successful entrepreneurs bring these skills into the organisation as required and don’t take on important tasks they know they cannot do well – though they may well have to do many less important tasks that they are not ideally suited for. For this reason the founding team is key.
Ideas without commercial skills are worthless !
The largest single failing in technology or innovation based companies is too much focus on the technology and not enough on commercialisation. The foremost skill that you must bring into the founding team is a very strong commercial manager. Someone who can focus the project on its reason for being – which is to exploit the technology in the market – it will not sell itself!
You need someone to give you a reality check and say “look, I don’t care about the technology, I only care about having a product to sell and the benefit is provides the consumer”. That may sound harsh, but without someone inside obnoxiously pushing that perspective it is unlikely you will realise your potential.
You also need strong skills in sales and marketing in their broadest terms – not necessarily in developing marketing campaigns, as you can use an agency for that, but in focusing the organisation on its channels to market and how it will reach and serve consumers in a way that has a competitive edge. Someone to focus on decisions through from target markets to ‘positioning'(the mixture of price and features), within that.
You don’t have to be a major company executive
Another important point is that large company managers often don’t make good new-company entrepreneurs. Their considerable skills are based around managing substantial resources – emerging entrepreneurial projects always have scarce resources – through from finance to management. They are a distinctly different animal.
A large company executive may make a good non-executive chairman in a new project company. Primarily they will play pivotal roles in large Management Buy Ins / Outs. These relate to organisations that have large asset bases to which the expert manager can apply their skills to substantially improve performance. We do devote considerable site resources to helping with MBOs, MBIs and BIMBOs (that is a combination of both MBO and MBI), as these are very important new enterprises and account for 50% of all venture capital funding in the UK.
Make the project as tangible as you can
To help you to secure investment, and do so on reasonable terms, you must make your project as tangible as you can before approaching investors.
An idea or patent will not do much to convince investors to become involved. A working prototype, or pilot, is far more likely to as they can see you have made the transition to application.
A working prototype, with a set of graphic images demonstrating a potential consumer product, and a management team in place, ready to come on board once funding is secured, will be even more tangible and add more value.
Firm interest from customers will add even more value, or features in the trade press…
This is probably the stage at which you have the greatest opportunity to leverage your position as each of these steps will add far more value than its cost. Work at it hard before you approach investors.
Don’t be afraid to ask for help and learn
You cannot leverage without learning. Be smart, there is no room for vanity in this game.
Don’t give personal warranties and don’t grant anti-dilution clauses
Some investors will ask you to give personal warranties – resist this. You have given up your security and made many other sacrifices to move your project forward – do not commit more. If you are forced to grant them make sure they are strictly limited to your shares and nothing else. Do not grant any personal guarantees to banks or others as these can mean ruin and you should not face that in the event of the project not working. Find another way, or another bank.
You must also resist at all costs anti-dilution clauses put in by investors – they are a particular favourite of some venture capital companies. They effectively say that when more equity (shares) are issued, their percentage ownership is not affected but everyone else’s is. This only leads to resentment and, worse, can put off later investors who dislike being used to subsidise the interests of one party of investors at the expense of all others. We would go so far as to say they are immoral (tongue in cheek). Go with investors who are prepared to share your fait so your objectives are shared – that serves everybody’s interest best.
Always be scrupulously honest and substantiate statements
This does not mean revealing all your trade secrets, or act weakly in negotiations – after all entrepreneurship is about leveraging – but if there is one thing that will stop a project in its tracks, or worst have the founder thrown off the board, its a collapse of trust. Never perpetuate a falsehood.
To make sure that you don’t run into delays at the financing stage, when investors do their ‘due diligence’ (checking of the material facts behind a project), make sure that any statements you make in your plans are specific and can be easily verified – otherwise omit them. State sources of information so that there are no unnecessary delays. Delay is the mortal enemy of the entrepreneur.
Be careful not to make un-substantiated general statements. These will only lead to a lack of credibility by investors who will perceive that you haven’t done your research properly. If you do want to make a general statement or assumption, make it clear that is what they are.
Following this code will help you build integrity and will inspire confidence.
Be positive, optimistic, determined, and have fun
Lastly – have fun. The task in front of you will probably be one of the toughest challenges you have faced in your life – but passion and the sheer thrill of it can make you achieve what you thought impossible. To succeed you have to be determined to overcome the obstacles that will confront you – and there will be many.
You must be positive if you are to get through this. If you are an eternal pessimist then this is perhaps not for you. Rejection is an occupational hazard – don’t take it personally – you need to be able to cope with it, learn from the experience, and move positively onto the next task.
=> Good luck in creating the new future! Use this site to help you – it is here solely for you and the only reward we seek is that of knowing we have helped others, in whatever small way, to achieve their visions.
