The 5Ps for Successful Venture Start Up and Development

Entrepreneurs and business owners of any age or business stage will benefit by considering Sylvester’s 5Ps for Successful Venture Start Up and Development.

1. Potential

First things first. Let’s discover the potential of your new idea for your offering – whether it is a product, service or solution.  Take a look at who would use the offering and why. Are you fulfilling an established need, but doing it better? Have you identified a pain point that has yet to be addressed? Or do you have something people would love to buy if it were made – the Steve Jobs approach. Finding specific applications that are valued by specific potential users will give your venture a focus. You have a starting point to estimate potential sales volume, consider segments of users and define customer characteristics that will evolve into important understandings to define both your offering and your market positioning.

2. Prototype

Next, stop thinking and start making. Build a prototype – a rough working model of what the product, service or online community will do or look like.  Do not be afraid to try and fail with many iterations. After all, that is the creative, invention process. What is important is this – to test your idea with a prototype that will allow you and your potential users to see, feel, and touch the offering.  When you build, either physically or conceptually, you will become aware of requirements, cool features as well as constraints and bottlenecks. More, as you better understand product challenges, you will be at the right viewpoint to generate relevant solution ideas and product innovations. Be sure to test with sample target users to receive feedback on the usability and customer experience with your offering – and do this continuously throughout the product design phase.

3. People

As the saying goes – “People make the world go round”. Many successful entrepreneurs and industrialists have said that putting the right people together was equal or  more important for success than the business concept or product itself. Beware, though, of setting the right expectations.  Specifically, clarify from the start – the initial and long term roles, compensation and duration of the relationship. From first hand experience as a strategic business advisor, many ventures become derailed, or at least seriously delayed at critical investor or stakeholder negotiations due to lingering confusion or conflict among people involved with a start up venture. Vague promises and expectations – both spoken and unspoken, lead to massive problems. But have hope. Make a real effort to define stakeholder roles, expectations and compensation formulas. Begin yourself to document these understandings and also summarize your venture governance approach from a business viewpoint. Then formalize these in legal agreements. It is important to be clear and fair from the start for the benefit of the venture as well as for individual stakeholders. In many cases thing are already underway and a tangled mess. In these situations – stop everything and reset expectations. If necessary, make use of a business advisor or other professional to establish a new foundation. This can be addressed as a key goal of a strategic review or corporate offsite.

4. Priorities

As everyone knows, building a new venture requires executing an extensive list of activities and tasks. These may overwhelm many people and can lead to paralysis. Lack of priorities is a root cause for many venture team bottlenecks and burn out. Importantly, a lack of focus due to lack of priorities is expensive and demoralizing. It leads to inefficiency and higher than necessary cash burn rates.  The starting point for a solution is to clearly establish venture direction and goals; next set priorities and align them among the team. These are the essential outputs of your strategic planning. Be sure to socialize the prioritized roadmap among key stakeholders and across the organization to promote common understanding and commitment to execute your technology development and go-to-market plans.

5. Pace

A fifth lever for your start up is to decide the pace, or speed, for your venture commercialization.  Pace shapes your activity levels, drives your resource needs, and sizes your cash burn rate. Thus pace influences your finance needs and options. For most ventures a fast pace is a necessity. This may be due to an expiring patent, a desire for first mover advantage or taking advantage of an IPO window.  At other times patience is an asset.  In all cases, defining and guiding the required pace of your venture is an advantage for navigating your venture commercialization.

In conclusion, intentionally addressing the 5Ps of potential, prototype, people, priorities and pace, will allow you to better drive and shape your new venture for successful commercialization.

About Sylvester Di Diego

Sylvester empowers people to ReThink, ReCreate and ReLaunch technologies and businesses for successful commercialization, strategic market positioning and business development.

About the Author, Sylvester Di Diego

Sylvester Di Diego is founder (in 2001) and Managing Partner of Strategy Dynamix, LLC, a boutique consultancy that offers services to strategize, innovate and implement for business creation, development and transformation.

Learn more at http://www.strategydynamix.com/.

Sylvester advises, guides and leads entrepreneurs, business owners and executives to ReThink, ReCreate and ReLaunch technologies, products, services and businesses. He leverages a global track record in management consulting, finance and global business operations and has assisted over 312 businesses and helped to raise over $300 million.

Learn more at http://strategydynamix.com/aboutus/executives.php.

©Strategy Dynamix, LLC

The 5 Reasons VCs Invest in Ventures

Entrepreneurs are challenged to find and convince serious investors to evaluate and actually finance their new ventures. There are common characteristics that attract venture capitalists (VCs) as well as other investors – whether family, friends, angels, or strategic investors. Designing your business model with these five key components will contribute to success in financing your new business.

First, there has to be a big market opportunity. The total market itself has to be substantial – well over US$1 billion or more depending on the sector, and there must be a large ‘available market’ for the company’s product or service. Of course, one also must convince potential investors you have a realistic go-to-market plan and scale up plan to access and play in the market.

Second, the offering, whether technology, product or service, has to be new, novel and competitive. The new or novel features, benefits and performance characteristics have to be at least several magnitudes of improvement over alternative available solutions. And these advantages have to be well protected in order to provide a sustainable leading competitive advantage over a significant period of time.

Like all competitive endeavors, a team of stars is a must. Individuals have to be outrageously excellent leaders in their field with relevant accomplishments to propel the venture forward and upward. More, the combination of talents of the team has to be significantly complementary and the cooperation among members has to be evident and robust.

Fourth, an extraordinary financial opportunity has to be clear. Projections must demonstrate top line revenue growth potential with attractive cost and profit structure that drive great cash flow generation. Most importantly these measures need to be rooted in specific go-to-market plan and scale-up plan that are convincing and defendable.

Finally, the investment opportunity must fit with investor’s criteria. Not only must target financial metrics be available – including meeting the hurdle rate for Return on Investment (ROI), but just as critical is the fit with the investor’s preference for certain sectors and geographic locations.

To conclude, entrepreneurs and leaders with a business design for a new venture that is composed of these five critical components are well positioned to attract investor interest in a viable business. It is your job to articulate these characteristics in a compelling manner in your business plan and in person to close the deal!

Best, Sylvester Di Diego

A Thanksgiving Tribute to Mayflower Entrepreneurs

Thanksgiving is paying tribute to the most successful entrepreneurs in American history. Let us take note, reaffirm and recommit to the power of entrepreneurship and the opportunity for prosperity when brave men, women and children pursue big goals in uncertain times with high risk, deep self confidence and open faith in Providence.

Like many successful entrepreneurs, the Pilgrims sought in 1620 to leave behind old organizations and countries in order to invent “the new”. This venture to the new world had investors (two stock-holding companies), a large ambition for a huge untapped market and everyone took great risks. The Pilgrims themselves invested seven years of their labor to the venture – real ‘sweat equity’. Their initial goal was Virginia, but when thrown off course they adapted, (like all of us must), and set a new course for what is now Massachusetts – landing in and naming Plymouth.

As everyone knows, there was great hardship and 46 of the original 102 persons on the voyage did not survive the first winter. Folks, this is ‘all-in’ entrepreneurship and risk taking. Today’s entrepreneurs are likewise risking hearth and family and often feel oceans away from established governments and organizations.

In the following spring, the Pilgrims’ captain pleaded with them to gather remaining provisions and return to England from whence they embarked. But these hearty and steadfast entrepreneurs were resolute on moving forward. With persistence, determination and hard work, plus a key strategic alliance with the Wampanoag Indians, they prayed and planted and reached a bountiful harvest. These first fruits were a prototype and proof point of what could be accomplished! From small successes they evolved – milestone after milestone. We are thankful for their perseverance.

Of course, there was dissension among the members and a veering of interests from original investors – as they took over control of the venture and wrote the Mayflower Compact – a social contract and mission statement. Nevertheless, confident in themselves and with faith in Providence these entrepreneurs designed their business and social model, then by blood,  sweat and, surely, many tears they moved ever forward. Truly, “what did not kill them made them stronger”1.

Today we especially honor those first of America’s entrepreneurs and also intentionally tip our hats and offer our sincere appreciation to all you hearty souls who are today pursuing new ventures and businesses in attics, garages and coffee shops throughout the Americas and around the globe. Though you may feel alone, desperate and forgotten by most, please do hold firm that we are many who sincerely salute you. For it is the combination of the unbridled human spirit, kindred fellowship, inventiveness and the grace filled hand of Providence that have and will forever spur our economies and the development of our human race onward and upward. Thank you for your sacrifices.

Best,  Sylvester Di Diego, Strategy Dynamix, LLC

For those interested, a replica Mayflower ship and ‘Plimoth Plantation’ with historical reenactors is an educational and thought expanding experience in Plymouth, MA. More at http://www.plimoth.org/features/mayflower-2/)

Note 1:  Paraphrase of“What does not kill me, makes me stronger” Friedrich Nietzsche, Twilight of the Idols, 1888

The 5 Signs of a Viable Business

Whether you seek to gain more clients, become more competitive or to raise capital the burning question is – What makes your business viable?

Viability has to do with your ability to identify and meet a need like no one else. Your offerings delight customers and satisfy their urgent needs. People can not wait to place their orders. Customers enjoy using your product, technology or service and engage with it as often as possible. Your offering makes their life easier, solves their important problems. Customers readily spread the word and enjoy telling their friends and associates. They become your biggest fans.

Viable businesses are profitable for your company. There is a low cost structure and good profit margins – at certain volumes. Because the offering is special with high customer value, one can imagine that profit levels can be maintained for long periods.

Growth opportunities abound for viable businesses. There are good prospects for growing demand in your home market, good potential for global expansion and often additional opportunities to extend your core technology or value proposition into ancillary products and contiguous markets.

Partners are easy to find for viable businesses. Whether you need to recruit professional employees, alliance partners, research collaborators or distributors, they all easily understand there is a real business, can readily see the value for customers and appreciate the competitive strengths.

Finally, viable businesses offer positive prospects and can raise financing in any market environment. Bankers, angels, venture capitalists and strategic investors can understand and measure the total attractiveness of the business model, the value proposition and see positive revenue, cash flow and return on investment (ROI) potential.

So rest assured that with these five compelling attributes of a viable business you will be swimming in customer loyalty, pumped up employees and delighted stakeholders!

Best,  Sylvester Di Diego

Welcome!

Business is fun! Especially when you own and direct a venture. Sure there are risks, but there is nothing to make a person feel more alive than to have too little time and too little money, but plenty of ambition to solve the world’s problems, become a commercial success, give back to the community and to be called upon for ‘sage advice’ once you’ve made it. Of course not all of us make it that far – at least not yet, but real entrepreneurs never give up while trying again and again. And that is what makes us unique. What makes us successful is failing in the right way, constantly learning, gathering capable advisors, adapting and leveraging resources wherever available and moving forward in the right direction.

Thus my blog. My hope is for this to be a valued resource of ideas, tips, tactics, strategies and inspiration for serious entrepreneurs, business owners and leaders who are active to commercialize technologies, finance new ventures, enter new markets, scale operations, and to reinvent businesses, industries and economies!

You are invited to dive in and join the conversation. Welcome.

Best
Sylvester Di Diego