A Start-up Starting Place Process For the Beginning Entrepreneur

Taking an idea to a viable business is the heart and soul of an entrepreneur, but the path is full of failure points and blind alleys. Some 90% or more fail in the first three years. A major help is to follow a proven process with experienced advice that can lead to success in the best possible manner. There are many books on start-ups and much discussion, but what most people need is a good starting place. While this is a list, the exact sequence is not as important as covering all the points in this initial process. There are many ways to entrepreneurial success and the CEO Space LLC process has a proven track record in helping many in this process, and has excellent material even non-members can benefit from.

The focal point for a new business is the business plan and the investor presentation. This is true in every stage of business all the way from start-up to every day in the life of a growing organization. In reality both are evolving documents that change as the business progresses. A good CEO will tailor them both as the business needs change and to the needs of each different investor and investor group.

A great place to start is with a vision or advisory team who can help define your concept and how to make money with it. These should be people who are already experienced in businesses related to your idea, and who also have general business experience. Limit the number of people who are your friends but have little practical business experience; one or two is more than plenty. Require everyone to sign a non-disclosure agreement. While you are working with your vision team begin organizing yourself to start your business. Here are two beginning approaches with a demonstrated track record to accelerate your total growth. While no means complete, both have enough detail to get you going.

Here is the first:

1. Get and study the "Super Rush Seed Capital" and "The Magic Folder" CD sets from CEO Space. In 2008, the cost is about $150 for both in a set.
2. Get a business plan software package, whatever you can find at your local office supply store, for around $140. Find one that you like and work with it.
3. Get a disc with all kinds of business forms at the same place, around $30. This will have at least one non disclosure agreement to use with the Vision Team and others as appropriate.
4. Start writing your business plan. Do not hire this out, force yourself to do it. Hire advice to help you, but you do it. In a crunch with investors or in making a key decision, if you are weak here, you will make wrong statements and limiting decisions. You must know your limits and get someone with strength to be in charge if you cannot do this, but you can do more than you ever thought possible as you work on it.
1. You can hire an accountant for around $3-500/day to either input your cost data or review it for adequacy. This will help establish your financial model. As you refine this you will get a great education on your business model, and the total cost should be no more than round $1500.
2. You can hire business plan writers for a fee. The range can go from $1500 to well over $40,000. For a start-up company in the seed round this is typically not needed as it costs the new CEO money and deprives them of the critical understanding needed to answer questions of investors and lenders. Better is to develop the business plan with the financial model first and then have it reviewed with comments by the plan writer. This can cost a lot less and still help the new CEO learn the business of their business.
3. Use the same process for any expert you hire. Get smart on the subject. Then look for a document already close to what you want, edit it and have the expert review it rather than have the expert make it from scratch. 90% of the time this will save you lots of money and time.
5. Pick a name that works for you and form a corporation. Get advice from an accountant or corporate lawyer for your concept and the appropriate structure, S, C or LLC. LLC can be changed to a C if you get bigger. Cost to incorporate typically ranges from $200 to about $1,000. If you spend more, go back and listen to the CDs in step 1.
6. Look for a web name that matches your idea and reserve it, but do not put up a web site at this time. Once you start your marketing-branding study, you will also want to reserve other names, but that is later.
7. In a business you will live and die by your customers, so know them well always. Do an in-depth marketing study of who are your target customers, what they want and why they will spend money on your products and services. You can never know too much about your customers. Meeting their needs and wants gives you a business.
8. In a business you will live and die by your competitors, know them well and always. Do an in-depth competitor study of who else is offering products or services that people are using, and look for what or how you can be different. One of the key elements of any investor presentation is a detailed listing of all competitors and how you stack up against them. Leave this out and your credibility will suffer. Your competitors include all the reasons why customers are not knocking on your door right now to pay you money for your goods and services. You can never know too much about your competitors. Meeting your customer's needs and wants better than your competitors keeps you in business.
9. Get yourself a version of QuickBooks that works for you and keep track of all expenses and expenditures in it. Make an absolute rule all money goes through your accounting system. That includes any self funding you do to get going.
10. Once you get a handle on this start talking to your friends about venture investing. NO PRESSURE, just tell the stories of what you have seen at CEO Space and in magazines such as Inc or Red Herring. I have been told that some 97% of investors keep their money in non/low-performing stocks/mutual funds thinking they are being "safe." Portfolio investing in ventures is a much more effective way to grow your assets. High return, high risk seed investors talk in terms of 5, 10 and 50 times returns and not 5-17%. So to help them overcome their fears, talk about private placement venture investing in a non-threatening and friendly manner with no requests to fund your project. This may take 3 months to several years to get them to be comfortable with different kinds of investing. Start this yesterday and do it every day. Do this right and you will be known as a key contact for anyone wanting to participate in private venture investing, and investors will come looking for you. If you are in a state that allows finder's fees, you will enjoy the additional income.
11. As you work through this process interview all the professionals for not only their services but who they know that might be interested in your project and in private venture investing. Take a copy of your business plan and meet with them whenever possible. Just show them you have a plan you are working on and that soon you will need their services and want networking recommendations as part of the interview process. Do not ask them to read it. The idea is to interview every bank, lawyer and accountant in town, not just one. Ask other business people for professionals they would recommend. Let everyone know you are starting a business and that you may soon have an exciting investment opportunity for those qualified. Network and cultivate the venture investing attitude everywhere you go and with everyone you can.
12. Once you have done all the above, start talking to people about your dream and as the conversation leads, ask them to become part of your capital team to help make your dream come true per the CDs of item one above.
13. Start refining your advisory team, who is your vision team after your idea has some "money-meat" on it. You may need to add new members or change out those who no longer can add value to the process.
14. Working with your advisory board identify any unique intellectual property, and if you have not do so before, file the appropriate patent or trademark applications
15. Look for at least one board member to show investors you will accept some control.
16. Find a lawyer who is experienced in start-ups raising early stage capital. You do not want one who only does IPOs or worse yet, has never done any stock offerings. They will advise you on the best kind of capital offering for your project.
17. Build a preliminary web site to support your funding process. All you need is a basic site, nothing fancy. It should include elements of your refined pitch and perhaps the executive summary. Have your lawyer review your site to make sure you stay compliant to state and federal laws.
18. Raise all the money using the process in item 1, and then solidify the rest of your team. You will be very glad you did steps 10 through 12 above.
19. Once the money is raised, then perform a more detailed strategy retreat to refine your execution plan.
20. Also start a marketing-branding study which will include marketing channels for positioning and names. Then go back and reserve web domain names that fit the brand. Now you can start designing your web site.
21. If you get stuck anywhere in the process, call a CEO Space friend, go to a local CEO Space meeting and get back to a Forum in LA.

Another way: Read "The Art of the Start" by Guy Kawasaki. Work on your pitch, when you get it right, start writing your business plan. Meanwhile do the above 21 steps anyway.

Both ways work. Other paths work also, but these have proven track records; your choice.

The focal point for the start-up is the business plan and the investor pitch. Many agonize over which is more important. The answer is both are critical and as one is refined, so is the other. Both are living documents and change as the organization grows. So start on one and use it to develop the other.

Copyright 2008 Donald C. Mann. All rights reserved

Don Mann advises CEOs and business leaders across the globe. In organizations ranging from start-ups to Fortune 100 he has delivered level-raising results of improved innovation, sales, profits and cash flow in good and hard times. His results include developing and improving highly productive and lean organizations with more rapid responsiveness, reduced stress and profitable customer delight. Sitting on a number of boards, he helps CEOs grow their companies and shareholder value. For more information, contact him at: www.RiteMann.com

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