Raising more questions than it answered...

Today (yes, Christmas Eve!) I accompanied my business buddy to visit a potential manufacturer for his product.

It was a really useful trip for a number of reasons.

Firstly, just spending time (it was a 2 and a half hour drive there and back!) with my business buddy chatting about his idea and my idea.

Second of all, it felt that we were making real progress with the idea by visiting a manufacturer.

Thirdly, the positive reaction from the manufacturer just in seeing the idea for the first time. They were actually blown away with it, and one of them asked at the end if they could keep it.

And as always there's a downside - and for us there was a realisation that finding the right "combination" was our challenge. The range of designs & functional elements is massive, and so far we haven't landed on an absolute.

My business buddy's first words in entering the car was to say "let's focus on more research" and answer once and for all which design & which functional elements were right for his idea.

Tip Off Pays Off...

I wrote previously about finding similar ideas to mine, and this weekend I yet again came across an interpretation of my own idea, thanks to a tip off from a friend...



Now at first I thought "Shit!" as this was similar in execution, but then I realised it had many serious flaws...



First, I hadn't heard of it. This lack of awareness was a serious problem for them (and a bonus to me!). I have been hunting on the Internet for approximately 18 months for exactly these type of things, and only found it now. You would need to know what you were looking for to find it, and they have (as yet) not found a way to breakthrough their awareness. I believe that my awareness will be built at Point of Purchase of a related product as an ancillary service



Second of all, the route to consumer is completely different (and I believe flawed) compared to mine. The chosen route for this competitor means that they have a more direct relationship with the consumer, but that is a problem for three reasons - one is that there is insufficient awareness (see point one above); secondly, I believe that the direct relationship with the consumer is the wrong relationship to establish, as the consumer will struggle to connect with the product in a relatively sterile environment, whereas I believe that by involving another party (which involves, unfortunately offering the other party margin!) the consumer will be fully connected and more likely to use the product. And possibly the third (and biggest) reason is that their costs to serve will probably be higher than mine - this may seem counter intuitive, as one would expect a direct relationship to be more profitable, but in this instance their cash collection rates will be higher as they are outsourcing their cash collection through a third party and only maintaining a maximum of 60%), who in turn will charge significantly more than the margin my retailers expect to make.



The third main flaw for this competitor is their pricing is between 250% and 800% more expensive than mine (depending upon how I can resolve the cost of goods issue).



Fourthly is that for some bizarre reason, they have restricted themselves to a specific category in a very wide market opportunity. Now this represents several million opportunities in totality but is only 1% of the total market, so it is very very limited whereas I believe mine is much much wider.



So in summary a good idea, broadly in line with mine, and the big differences are that I've come at mine from a commercial point of view whereas I think they have come about it from a technology / addressing a specific need without seeing the broad appeal of their idea and then thinking it through from there.


P.S. One thought that enters my head is perhaps to approach them to perhaps see about using their systems to support my idea in the short term...

My time machine... set the dials for 2016

I had another session with a life coach the other day, and we circled around the hairy topic of what I was looking for in the future and helping me make decisions about work, life, the universe etc....

One of the tools was for me to paint a picture of a time in the future that was relevant to me. This was my first big challenge... when in my future life was I going to be measured? This was part of the problem... I didn't know where I was going and didn't have a goal set for the future, so couldn't then work towards it. So in the end, I plumped for (randomly!) 7 years time in 2016...

I was then invited to brainstorm what the future held for me and then to reflect back upon that future to this time and place, generating a list of what had happened by 2016. Once I completed the list, I was invited to then prioritise my list, and my coach then interrogated & really challenged my priority of these items (but not the items on the list) and what became clear was that some were not the priority I thought they were and some were linked by cause & effect.

It was an emotional experience, especially the realisation of the shadow of my dad that I have created in my life, even at my age now. I don't think it will be the last experience with a life coach (as I've got many other issues needing to be resolved, e.g. self limiting behaviour...) and thus far its been very very helpful...

So I thought I would share with you the glimpse I have into this future with my list in order of importance...

1. I am on a path/direction for the future. I have clarity.
2. I feel stable; I have roots. I continue to be close to my friends. We are emotionally close, involved in each others lives; my family is their family and vice versa.
3. I have felt challenged and successful at meeting that challenge – this is my destiny.
4. I am financially secure – if I have an idea, I can go and do it; I am not constrained.
5. I am challenged by my father and have met that challenge and he respects me for that.
6. I am a catalyst eg. helping people take an idea through to selling a product.
7. I have broadened my skills, professionally and personally.
8. I am having fun.
9. I have brought fun and happiness into peoples lives.
10. I have helped other people (either directly or indirectly) as an inspiration.
11. I am set up to be emotionally, financially and physically supportive of my mother.
12. I am healthy and active.
13. I am married with children. I have found someone who wants to challenge me, who I perceive is (at least) equal to me, emotionally secure, respects me and accepts my challenge.
14. As a leader, people have met their own potential including myself.
15. I own at least one property – possibly London, Italy and Scotland.
    

Nothing Ventured

As I said in my earlier post, I met up with a Venture Capitalist (lets call him Charlie) and had a very interesting discussion over a bite to eat along with my business buddy.




We discussed many things including sources of finance and developments on my idea, and I thought I would give you a flavour of our discussions, but leave the details on my gorgeous ravioli for another time...




SOURCES OF FINANCE



Basically Charlie and most VC's don't get out of bed for anything less than £2m! And this £2m is not the total, but probably more than likely just the start of seed capital. And luckily for me, VC is one way to get funding, but not the only way.


He suggested a couple of sources of finance...

Family & Friends - using friends & family to contribute sufficient funding to get to the next level, such as banks, Venture Capitalists by proving the viability of your concept (either by actually producing the physical idea or by researching the concept with users).

Banks - through a number of different ways banks can help start the ball rolling. They can offer personal overdrafts or perhaps credit cards can offer a solution. They can also be approached for loans for equipment or other assets. The government's small firm loan guarantee scheme may be an option to consider.

Grants - A list of grants is available through Grantnet or through the Government which has an array of funds available but also in most cases requires matching private sector finance. European funding is also available through http://ec.europa.eu/enterprise/funding/index.htm or http://ec.europa.eu/enterprise/entrepreneurship/financing/index_en.htm

Third Parties, like Business Angels who are individuals willing to invest start up cash in return for a share of ownership in these companies... its a bit like Dragon's Den...

Local Enterprise Agencies - these are quasi public bodies throughout the UK that support and sometimes finance local business and start-ups. They may be able to help across a number of areas... helping to find premises, marketing & sales support, consulting, training and counselling - the NFEA will help you find your local Enterprise Agency. Business Link is the probably the best place to start to find out general information

DEVELOPMENTS ON MY IDEA

I pitched my idea to him over lunch in a straightforward way and, in his eyes, this was a "niche" idea, especially as it wasn't developing breakthrough technology or radically changing the economics of it all. Now part of me at the time was like "Niche? I'll give you niche!" but I think what he was meaning was that it was specific to a certain field and a certain area. He's probably looking at fields which are broad in their use like bio-technology or electronics - both of which have much wider opportunities.

One thing he did start to point out was that my level of experience in starting up a business is limited and the industry into which I am plunging I know relatively little about, and he suggested that I gain some kind of support either directly with a partner who has background in this type of area or perhaps a mentor who can guide me through some of the ups & downs. Not a bad idea for the future...

He also suggested looking at different sources of income and also different sources of supply. Income was an interesting one as he thought the key was in offering my product for as little as possible, perhaps even free and fund the cost through advertising or selling data. Both of these revenue streams I had considered in the past but am not confident they will cover my costs never mind actually offer margin for myself or for the retailer. Definitely one to consider in the future to help improve my margins over the long term.

As for sources of supply, this was actually a key thought about how I can get from where I am now to where I want to be. I am testing my product by using a bodged method of different components and perhaps by using a third party's systems I can reduce my per unit costs until such times as i reach a critical mass and can spin this out on my own. The other great benefit of this is great expertise

I asked him about how people pitch their ideas to him. Generally with an "elevator" pitch of 2 sides of A4, and then, if he likes or is intrigued by the idea he invites them for a follow up meeting with a short 40 or so slide presentation. A business plan is not critical but it can help.

So all in all, I found the meeting pretty helpful, though I did leave in a bit of doubt. Doubt about what was the right way to finance and other income streams to consider But at least I know that VC is not for me...

Sum of all fears

No, this isn't a critique on that crap film with Morgan Freedman and Ben Affleck.


It was recently suggested that I should focus on what keeps me awake at night on my little project so I can bring to life my fears and face them down.

I feel I have lots of fears, and that in some way these fears are holding me back in some shape or form. The following is not an exhaustive nor thought-through list, but just a list at precissely this point in time...

I fail completely - I've put a great deal of emotional energy into my idea and told lots of people that I want to start my own business. And that's deliberate to keep me motivated and commited to the idea. But the other side of that commitment benefit is the risk of embarrassment and failure.
I lose money - I've already put in quite a bit of cash into my idea. Not big, life changing amounts of cash, but the several hundred of pounds here and there, that would have gone on more interesting things. The real worry is that I lose other people's money (should I be able to / need to get people to invest).
My business doesn't live up to my expectations - My business doesn't give me the challenge, rewards, prosperity, confidence in my future that I expect. This is the biggest worry I have - that I get to the destination and realise I don't enjoy it.
Somebody else nicks it before I've started - this was for a long time my big worry, but as time has gone on it has regressed p[artly because there have been other people out there with a similar idea but just nnot the same execution.
Somebody else produces a ME Too once I've started - now this really is a worry, but I hope that by keeping my costs low and having a great offer, that the chance of a ME2 starting is reduced. I also hope that by designing my terms & conditions that it would become less appealing for others to come along and immediately nick my customers.
I can't meet demand - I worry that I've not got enough resource (cash, people, time) to meet any rush (hark at me!) and I miss the opportunity...
I can't find anybody to stock it - this is a real worry. I don't have any direct experience in the market I'm in, but I'm confident I've found a proposition that works for them. But its still a risk and I worry that my ignorance means I'm doomed for disaster.
Its too expensive and nobody buys it - again another little worry that its just not perceived as being value for money.
I don't enjoy it - similar to the one about it not meeting my expectations, in that I really just don't enjoy running my own business and struggle to get motivated
I lose support - again similar to the first one about being a failure that I worry that my friends & family think less of me for trying and failing.
I can't get the start up capital - right now in the middle of recession, this really is a big worry for me. I could have a great idea, lots of energy and passion to start something but not a penny to get after it. I don't know how I would cope with that as it would be massively frustrating...
I lose my job - my plan is to go on sabatical to offset a risk of my business failing but there could be potential that I lose my job before or after my sabatical. Either of those would bring about a big decision to be made.

I'm sure that those are only some of the fears I have and I'm not sure I'm really facing them, but a bit of denial goes a long way...

Victor Charlie gets a free lunch

My business buddy has set me up to meet a friend of his who is a Venture Capitalist over lunch, and I'm looking forward to meeting up with him to get a sense of the lie of the land.


I'm hoping he can answer the following questions...

• What is the process for getting funding?


• Which are the right funds to approach and how do you get to find them? How do you get a meeting with them?


• How do they decide which projects to invest behind?


• What are the key things they are looking for?


• What is the most appropriate way to value a business? Is it a Discounted Cash Flow on mythical numbers?


• What will I have to concede in terms of ownership?


• How much will I have to invest myself?


• How long does it take to secure funding?


• What is the view on taking a sabatical from work rather than being truely free?


• Can I draw a regular salary from the company or will I have to be self-sufficient?

I'm not expecting to pitch to him or to present any of my ideas, just to chat through these questsions in return for him enjoying his free lunch...

The force is strong with this one

Last week, I did something that if my friend Kenny found out, he might strongly object to.

Now with statement like that, it might seem that what I did last week would be down right illegal, immoral or impractical.

But the reality is far less intriguing. I went to see a life-coach.

There. I admitted it. Kenny don't go mental!

For awhile I have been feeling listless about many things, and despite what this blog might indicate, I had not been feeling I was fully committed to getting my idea off the page.

So when a colleague who is studying to become a life coach asked for volunteers to allow his fellow pupils to try out their new found skills for free (normally they would cost up to £300 per hour!), I ripped his arm off!

I spent just over an hour with Jennifer (her name has been changed to protect the innocent, Kenny!) and at first it was a bit clunky, but at the end it was all worth it. I felt a clear understanding of where I was in my journey and what I could do to help me on the forthcoming steps.

We used a tool called the Force Field Analysis, and she guided me through how to use. First she helped me define what my decision actually was, and then what would it take to make this decision and what is holding me back, defined as Drivers & Constraints. Once I had a list of them I then scored out of ten just how big they were currently.

I was quite surprised just at the lack of high scoring Drivers I scored, but I suppose that is a reflection of just where things are right now and the lack of momentum I've been feeling. I was also surprised at how many of the Drivers were emotional where as most of the Constraints were much more tangible.

Now the clever bit... She suggested I use the things are currently big drivers to fuel the other Drivers which in turn will reduce the level of some of the Constraints I'm feeling, and come up with an action plan to build up momentum again...

Wind out of my sails

I knew, long before I embarked on my little voyage, that I would face tough times. Times where I might not know the answer, in fact I might not even know the question. I knew that my motivation may go up as well as down.

And the last 5 weeks or so has been exactly that. The wind has genuinely dropped out of my sails. I had had the wind & sun on my back for several weeks, and I suppose looking back on it now, it was bound to happen.

What has happened is a reflection upon a few things...

I had lost a bit of momentum back at the end of September (may be even before) when I was struggling to find a retailer to run my test (I think the number of blog articles I write might actually be proportional to my level of momentum & motivation - the more motivated I am, the more I want to share my thoughts in this blog, and charting it as I have in the picture seems to be in line with how I was feeling... anyway...). But I had knuckled down to find a solution, which I did find, but it meant it delayed me longer than I expected, and meant that during my break from work, where I should have been focused on delivering the test, I was busy setting up the test. So timing was against me!

I then started back doing my day job, just as I had agreed my test, and struggled to find the time to administer the test! My timing issue had caught up with me, and was now biting me on my backside.

On top of this I had budgeted to test in one outlet, so having twice as many outlets that I bargained for, presented a risk that quite frankly I couldn't cover if my product really took off.

So all in all, I had lost my way, lost my momentum.

But luckily for me, my buddy was on an up curve, and he has set me up to see a Venture Capitalist in the coming weeks so I can understand a bit more about the next big steps in the plan.

And that has injected a bit more life back into me, its re-built my desire and filled my sails. I now need to get the Point of Sale sorted, to get the test sorted out and get the results in, so that when I meet the VC I have some evidence of the potential of this idea. So need to get action planning...