So you have a good idea. What does it take to turn that idea into a business, and how can this be supported by funding? In this blog I will cover what is available to the digital entrepreneur, and the likely skill set that will be needed to turn ideas into reality.
I will also be highlighting some of London’s upcoming start-up companies, interviewing their founders and speaking to some of the king-making VCs and accelerators that turn these new enterprises into household names.
Beauty is in the eye of the beholder, and the first thing to do with your new idea is to “kick the tyres” and get some external input. Try to pick a diverse group by age, sex and demographic and then listen to them. Unless your idea is ultra-radical, and beyond the comprehension of a mere mortal, you should be able to establish through this audience test whether or not you have a viable business.
Now I’m not going to get bogged down here with how you should research, develop and build a business plan for your idea. There are a variety of methodologies that can be adopted and plenty of online resources you can use. Choose one to suit you: but above all make sure you personally speak to your market.
Don’t be afraid to adapt and reinvent. Some of the best businesses have come from others. Shell Oil used to trade exotic shells and artifacts on routes, which positioned it well for the emerging oil trade. Avon sold books before it moved onto perfume and cosmetics. Nokia made paper before phones.
Google never used to charge for search listings; Espotting was the cost per click innovator that then sold to Miva. Google now derives the majority of its revenue from Adwords.
Now somewhere in your business plan you will need to develop a P & L budget to cover your initial outgoings. I recommend you think in three key stages.
- MVP (Minimum Viable Product): This is the base product you can enter a market, usually to Test Market – (founders, friends and family)
- Operational stage to break even(angel funding, early stage funds, EIS funds, crowd funding)
- Venture capital series "A" – Scaling (VCs)
Now you don’t have to follow these stages, but these funding routes are well travelled, and planning against them can help. While VCs have funded businesses with no revenue, it is rare. I have always found that this first stage needs to be self-funded or at least supported by friends and family.
So your initial business plan is likely to look like the expenses you will need, including any wages for yourself to take you to an MVP, and subsequent test marketing. Don’t expect too much angel or early stage fund support and you will not be disappointed.
Next time I will cover Stage 2 - The Operational Stage and how to get the funds your business will need to break even. The good news is that every stage gets easier, and with government initiatives such as SEIS and EIS Tax relief, this stage is now even more attainable.
If you have got this far, you will be ready and capable to take the next step.
Phil Cooper is founder and CEO of Kippsy.com