So you’ve got a groundbreaking business idea. It’s new. It’s novel. And you can’t wait to unleash it to a hungry audience. But how do you do it? This guide will show you precisely how to build a foundation for your idea and walk you through the entire process, all the way up to raising capital from investors. Let’s get started:
Create a Memorable Business Name
The first step for any entrepreneur is to come up with a catchy, clever and memorable name for their business. Oftentimes this and their domain name go hand-in-hand, however with so many .coms taken these days, many innovative entrepreneurs are looking at extensions like .ly and .io to create a name that’s memorable and easy to type.
But why is a memorable name so important? Imagine talking to your prospects on the phone and telling them your business name. Is it easy to spell or could it be misunderstood for a different word? If you think, there’s no way they could mishear you, consider this:
A few years ago, the Universal Tube and Rollform Equipment Corporation suddenly got tons of visits to their little pipe mill and rollforming website – a very niche industry. They got so much traffic, the servers couldn’t keep up.
That’s when they realized that the bulk of this traffic was coming to their site by mistake. They were looking for YouTube and found UTube instead.
But what makes a name “memorable”? The answer is two-fold. First, it needs to be short and catchy. Second, it needs to instantly connect with the service you’re offering and lend itself well to that service.
Sometimes, however, it can be hard to come up with names that are both available to register as domains, and that are clearly related to the product you’re offering. In those cases, it can be worth digging a little deeper – such as looking at an underlying meaning or even using a different language.
For example, Hotmail was so named not because it was just an online email service, but because it contained the letters HTML — the programming language that the site was originally written in. Lego is a combination of the Danish phrase leg godt, which means to “play well”.
Choosing a business name is not a task to be taken lightly, and even if you’re certain you’ve got the next big name in business, take the time to mull it over. And don’t forget to register a few domain names of your favorites – they’re so inexpensive that you can always let the unused names expire.
- Keep your domain short, catchy, memorable, and easy to spell
- Consider other domain name extensions like .io and .ly if the .com isn’t available
- Look for a name that blends your business idea or references it
Conduct a Thorough Industry Analysis
Once you have an amazing name and have taken the steps to register the available domain name for it, the next step is to conduct a thorough industry analysis.
The industry analysis is, in a sense, the pulse of the company. When you begin to approach investors, you’ll use this information to analyze the industry, see past trends, discern the interplay of supply and demand and future profitability forecast.
There’s a great deal of research already out on the market in nearly every industry you want to get into, so be sure to look at that first. Make sure to look into sub-industries as well, as they have their own unique peaks and valleys with regard to the aforementioned trends, supply/demand and forecast.
Because investors want as much assurance as possible before they invest, an industry analysis will show them the complexity of the industry – including ways that it could develop or change. How are sales doing today? How have they been historically? How might they be in the future?
These are just some of the questions you’ll want to answer about the industry (as well as any particular sub-industries or segments you’ll be focusing on), in addition to things like the overall size and attractiveness of the field, how much profit/hiring potential is out there, who the target market is, and the competition.
- Check for statistics and research already available online
- Don’t forget to look at historical data (where available) to plot a course that shows a potential future for your idea
- Find out who the typical customer is, their age, gender, job, hobbies, where and how they’re spending his time, etc.
- Look into sub-industries to target specific audiences better
Conduct a Complete Competitor Analysis
A competitor analysis is an honest assessment of the strengths and weaknesses of your competition. Doing an analysis like this allows you to present a proactive “attack” and “defense” plan to potential investors. What are your competitors doing right? What are they known for, and where are their weak spots?
With a competitor analysis, you look not only at your industry and who your competitors are, but who the customers are, what the main success factors in this industry are, and how your competitors score in those areas. It is, in a sense, a matrix which lets you decide on the most important metrics and the weight you give them, along with how each competitor aligns with them.
For example, being able to scale growth in the industry may not be nearly as important as constantly innovating and distributing new products. Alternatively, being able to scale quickly and stay focused on customer acquisition and retention may be the lifeblood of the business. You’ll need to figure out which success factors are right for your business and then judge your competitors accordingly.
You’ll want to find out how long your competitors have been in this industry, what sectors they are active in, how much money they raised and so forth, so that you will essentially have a springboard to jump from when preparing your own funding presentation.
- Create a matrix-like grid that lets you accurately weigh the most important metrics in your industry.
- Include any important information about your competitors – years in business, relationships, selling proposition, weak spots, funding
- Look for YOUR unique value proposition and differentiation in the industry
Create an Ironclad Business Plan
A solid, reliable business plan is a map that not only helps you plan your funding journey, but your marketing and growth journeys as well. Generally, you’ll want to base your business plan on both the industry analysis and competitor analysis so that investors have a clear, precise picture of your plans.
Common things to include in your business plan are both your long- and short-term goals, who your target audience is and how to reach them, how you plan to make money with your idea, and of course the deadlines by which you want to achieve each goal. You’ll want to explain how you’re different from your competitors and back up that statement with research, facts and statistics that help alleviate risk and maximize rewards in the minds of your investors.
You’ll also need to include how much money you feel you need in order to achieve these goals and how you plan to invest it. Getting people on board with your vision is all about showing them that you have a detailed plan that makes their money work hard for everyone’s benefit.
- Base it on the industry & competitors analysis you’ve made
- Introduce your main audience and how you’re going to target them
- Include long- & short-term goals as well as their deadlines and how you’re going to reach them
- Mention the budget you need for your business and how you’re going to invest it
- Be clear about how your business is going to generate money for the investors
Design an Engaging Whiteboard/Explainer Video
A whiteboard video, also known as an “explainer video”, is similar to someone writing on a whiteboard to present a lesson – only digitally. This kind of video takes the place of traditional (and outdated) long-winded speeches and gives potential investors the big picture “in a nutshell”. Around 60-90 seconds is ideal. There are many professional animators who can create such a video for you, but it is up to you to plan how it will be laid out and what it will say.
If you feel like it takes multiple sentences to get your idea across, look for ways that you can simplify it. This is because if it’s confusing to you to explain, you can be certain that investors won’t be able to follow it either.
Once you have the big idea, the next step is to write the script. If you feel overwhelmed at this point, you’ll be relieved to know that there are many professional voiceover script writers who can help make your whiteboard video more compelling and engaging. You can also hire talented radio and TV voice professionals to read your script aloud to give it an even greater edge.
- Your video should explain in the simplest way what your business is all about
- Make sure your video is short and to the point, around 60-90 seconds
- Choose a voiceover artist that represents your audience, male/female, young/old
- Use a professional writer and voiceover artist to make your video look and sound professional
However, the explainer video is just one piece of your overall presentation.
Craft an Incredible Presentation
The presentation itself is where real decisions will be made, so it’s vital that it’s done right. This is where you can showcase your product or service, share important, decision-making details and show that you’ve done all the legwork with regards to research and planning.
Typically, your presentation should be around 10-15 minutes long, starting with your whiteboard video. Include the market and competitive research you’ve done and the conclusions you’ve drawn from it, as well as a brief summary of your business plan. You’ll want to inject some clean, honest humor in there and communicate in a way that’s succinct and precise. Remember that investors get a lot of pitches, and you are likely not the first to come to them with what you sincerely believe is the next big thing.
Make it worth their while to pay attention to what you have to say.
You’ll want to get your point across in a way that’s as visually digestible as possible, so be sure to use large bullets, clear titles and images. Resist the urge to turn every slide into a sentence and simply read your presentation aloud. The presentation is meant to help guide you, not act as a replacement for your own speech.
- Use a clean, simple template
- Include your research and the big picture of your business plan
- Keep things short and to the point, around 10-15 minutes long
- Use large bullets, clear titles, images charts or diagrams
- Include some sense of humor in your presentation – but not too much!
Find Investors and Make Your Pitch
The final step in this journey is to actually find the investors and make your pitch. Before you do, however, look to your mentors up to this point. Chances are, they had to go through the same kinds of steps you did in order to get to where they are. They can be within your own industry, or outside of it. They may even be able to refer you to people who helped them along the way.
The next question to ask yourself is the type of investor you want investing in your idea. Do you want someone more hands-on and available at a moment’s notice for crucial decision-making, or do you want to work with a company that’s active in your particular market? Every investor and firm has their own style, tone and expectations. Just as with hiring someone for a job, make sure you check out their references which, in this case, would be other companies in their portfolio.
Some investors even have defined minimums in place for the amount you want to raise. Smaller amounts might be easier to get funded, but also keep in mind that you’ll get less of the investor’s attention than their larger portfolio clients.
And investors aren’t the only angle you should try in order to fund your idea. You can also try crowdsourcing. Look at other projects similar to yours – were they funded? How soon? What were the rewards for getting on board and how are the various tiers? Sites like Kickstarter and GoFundMe are ideal platforms for this type of work, but you’ll need to realize that there are many, many people out there with the same or similar ideas – all wanting an infusion of cash.
So how will yours stand out? Look at some of the most successful crowdfunding examples to see what you could learn from them.
The most important takeaway at this point isn’t whether or not you get funding, but once you do. The investor or company will likely have certain expectations and a game plan for how to achieve them. You’ll want to be sure that you and your investors “mesh” as far as strategy, profit projections, values and other experience so that when your idea is released into the world, you’ll be able to put all of these plans into practice full steam ahead.
And even if you don’t ultimately receive funding for your idea, you’ll nevertheless gain invaluable experience and learn the types of questions investors ask so that you can go back to the drawing board, reassess your goals, refine your strategy and try again.
- Look to your own mentors; they might refer you to people who helped them
- Think which big or middle company in this industry could be interested in your idea
- Use Kickstarter, GoFundMe, and other crowdsourcing websites
- Be sure that you and your investors “mesh” as far as strategy, profit projections and values are concerned
- Realize that even if you don’t ultimately get funding, the experience will still be invaluable
Gigs That Bring Your Idea To Life
Now it’s your turn. Have you successfully turned your idea into a full-fledged business by raising capital? What tips or advice would you give those who are new to raising funds? Share your experience with us in the comments and let us know how the process went for you, as well as what others can learn from it. We’d love to hear from you!