What are common mistakes entrepreneurs make? How can we avoid those mistakes?
As you can imagine most anything can happen when being an entrepreneur. The most deadly mistake I see and have experienced is not getting the product - market fit right. In other words there is no market or little enough market to make your idea work. You can minimize this by researching the market in depth on the front end and expending most of your resources in the market once the product launches.
Undercapitalization, disagreements among founders, or taking too long to get to market are other common problems.
How do you know if you have an idea worth pursuing? What are some factors you should take into account?
This is what I tell my students each week. Research, research, research, Test, test, test.
Research if there are solutions already out there. Use surveys (simple 3 questions) to validate market. Come up with a cheap, easy to produce beta and test it.
With whom would I consult to determine if my hobby could really be a business? Or how to develop it (make it scale-able) to become a business? Marketing person? Business coach? Some other title I don't know?? thanks! Love this chat!
I would try researching it first on the Internet. There is a tresure trove of info. This is free.
Depending on your hobby you can see if others are doing this already. Then ask yourself: Is what I am proposing to do materially different? Or can I do this much better...cheaper?
I have a hard time matching salary with contribution to the success of a business. There seems to be a trend where the owner of a business should make six figures. If someone goes from a key employee to a business partner, they suddenly need a big raise, even if they are essentially doing the same job they have always done. Why does it matter what a programmer, secretary, manager, etc. is paid in other companies if this business is more or less profitable than others? How do you figure out what a job is worth and how much of the profit should be shared or kept by the owner(s)?
Figuring out what a job is worth is a market-dictated exercise. It matters what payscales are within industry jobs if you want to be competitive and hire good people.
Regarding how much profit should be shared or kept by the owner, there are as many answers as there are flavors of ice cream. I personally favor a balanced approach of returning capital to owners based on a fair return for risk taken, sharing with employees who helped make the success and keeping some money in the business for future expansion.
In your opinion, what is one of the most important things an entrepreneur should keep in mind when pitching to possible investors?
The most important thing to remember is that you probably won't get to yes on your first try.
Regarding the pitch deck: Is it simple to understand? Have you clearly defined the problem you are solving? Is our solution implementable? Have you made a compelling case as to the market? Are your financials believeable? Also, describe the strengths of your team.
A friend said he needed some fabric for puppets he was making so they sent fabric samples to China. Even though each puppet only needed a few inches of the fabric, the factory in China made enough to fill a warehouse. When asked why they made so much, he was told that in China it was more important that people have stuff to do at work. I wonder if that philosophy could work here. Keep your employees busy and your equipment working near capacity. Although I don't work in a factory, I find myself with a lot of idle time at work and can never seem to get enough to do from my manager.
I wouldn't agree with the assessment that it's more important that people have stuff to do than it is to efficiently produce a product that the client wants. So I don't think it would work here.
My startup has some interest from a large corporation. Based on initial meetings, I think they want to buy my startup. What are some tips for negotiating a deal? I may be in over my head.
First of all, congrats in advance. If you have reasonable belief that they are serious and the renumeration is in the fair ballpark, then I highly recommend you hire a lawyer. No advice I can give you hear will substitute for a professional opinion.
I have a retail startup idea. To accomplish it I needed a co-founder with retail experience. I'm struggling to find places in the D.C. area where I can find like-minded professionals who want to pursue a startup. Any ideas on where I could seek out a co-founder?
There are numerous D.C.-based startup communities, for example DC Tech on Facebook. I would talk to people in the retail field your choosing like store managers to learn more about it and see if they know anybody.
I pursued a hobby as a business a few years ago. It's grown, but I'm not making a living at it. I'm not sure if there are ways I can expand in a particular aspect of it or grow it in a specific direction or simply describe it differently -- I'm a health coach but rather than give meal plans, I help people identify the underlying behaviors/choices/emotions. I am not trained in psych nor do I have credential there, so I doubt corporations would hire me (i.e. corporate wellness centers). I do some public events and get rave reviews about my lectures - am learning a little more about moving into that as paid work - but I think it will take someone with more business acumen than I have to figure out how to shape that and be able to expand it. Lectures can lead to private clients, but that doesn't pay much. Thanks!
Are there complimentary businesses you can partner with to expand your business? Like a health club, food delivery services, pschycologists?
I would suggest reading the blogs of Tim Ferris ,(4 Hour...) who agressively took his hobbies to a multi-million-dollar business.
Harry, what's your take on raising funds through Kickstarter? And what happened to Elana Fine? She is great - we love her chats.
Elana is alive and well and will be returning, don't worry. I believe she had a conflict today.
I like the crowdfunding models out there like KS and Indi-Gogo. First you need to research which one will fit your idea the best. Then spend a lot of time on the site, look for what idea's are being funded, how much they are asking for, what type of media are they using to get their point across. The most successful ones I have seen out of the Dingman Center are niche consumer products that really had well produced video's.
Great advice thus far - thank you! Solving a problem, as you mentioned in an answer below, is very important to any startup in order to make sure there is demand and interest that will lead to product market fit. How about if a business is trying to disrupt a market that already exists? Would the same logic hold true? Because when you disrupt you may not be solving a problem, but rather something you deem inefficient?
Trying to disrupt a market that is already proven gives you your answer.
I hear a lot of talk about disruption and my caution is that everyone uses the catchy verb to describe what they are trying to do. So are you really disrupting a market like Amazon disrupted book stores, Napster disrupted the retail music business or Uber is trying to do in the sedan/limo business? Is your model truly disruptive and how so?
I have a product idea that I've been working on designing and prototyping for the past month. There is nothing on the market like it, but there are other products that may be deemed similar. I have never seen these products for sale, all I see is a patent for them, which leads me to believe they are on the market. My product design has some similar components but I am not sure if it will be patentable. If I cannot patent this product, is it even worth pursuing the business? Should I worry about the patent issue before testing the product and finding product-market fit?
You would need to speak with a patent lawyer on the specifics, but generally: You should worry if the cost to protype is large. Have you considered trying to license or joint venture the patent, especially since there is no product out there?