Creative entrepreneurs can be fun to work with and present unique challenges as your imagination runs wild. The possibilities you imagine for your dream are endless and you may struggle with focus and reality. Learning to channel creative energy and limitless dreams into a plan of action that will result in some degree of business success can be a huge challenge for many. Nowhere is that conflict and contrast between a dream and reality more prominent than when the entrepreneur pitches his story to potential investors.
If you are one of the creative entrepreneurs, your reality check begins with the realization that investors are trying to assess the opportunity by evaluating the risks involved and the value created thus far. This can be a difficult process for the entrepreneur who is so obsessed with the creative aspects of the invention and the far-fetched dream in their head. Various statements that entrepreneurs make to seasoned investors are sure to get them up and running fast. They may like the product, but perceive you as the biggest risk impeding its potential. In that case, they can bid to buy the product, put the entrepreneur out of business, and insert their own management team.
Five statements frequently made by entrepreneurs that send investors running:
1. No one has done this before. No one may have done exactly what you created in the way you implemented it, but this statement reflects either complete ignorance of how people are solving the problem today or an astonishing arrogance in believing that you have somehow magically emerged from the mist. . of creativity and invented something so unique. First, you lose credibility with the investor because of your lack of knowledge, and second, you can convince them that there is no market for what you have created. Nothing good can come out of such a statement. You would do well to acknowledge the various ways others are solving the problem today, and then clarify why your creation is a better solution.
2. This product will revolutionize the world of… This statement is similar to the first, but reflects ignorance about consumer loyalty and purchasing behavior, the market, product adoption rates, distribution channels, and more. A million faster, better, cheaper and sweeter products have appeared that promise to revolutionize the world. Even large corporations are not immune to this problem. Being successful with your new invention doesn’t mean revolutionizing anything without having the slightest idea of how to achieve it. Instead, it requires a deep understanding of the issues involved in getting your product into the hands of willing customers and converting them into enthusiastic fans. Where it goes from there is up to you, your product, and your new fans.
3. We don’t need marketing. Oh yeah, this is the tried and true, “This product will sell itself. Everyone will want one.” Similar to number two, this statement reflects staggering ignorance about how you’re going to make customers aware of the product, persuade them to buy it, and then turn them into enthusiastic fans. Too many entrepreneurs prepare financial projections virtually devoid of marketing expenses, but showing astronomical growth from the day of product launch. The odds of being a successful strategy are less than slim.
4. Tens of millions of eyes will come to my website. The lack of marketing in building strategic plans is most often displayed in web-based business concepts. Entrepreneurs naively assume that simply having a URL, launching a website, and then doing some search engine optimization and social media will bring crowds to visit. They will happily cite YouTube, Facebook and other large successful web-based entities as examples. For each of those sites, there are thousands of potentially valuable and creative websites flooding the vast ocean of the Internet. They strive for relevance, attention, awareness, and a regular loyal fan base. Don’t assume a “build and they will come” attitude. You must sell it and have them come over and let them help you build it.
5. If only 1 percent of the US population bought one. Of course, if this were possible, it seems like a fantastic opportunity. The problem is that it reflects the same ignorance and naivety about previous marketing. Simply assuming that a very small percentage of a very large market will buy your product because the small percentage seems “too conservative” reflects a complete lack of understanding of who will buy the product, why they will buy it, how it will get delivered to them. , how you will make them aware of it and so on. Instead, design a sales and marketing plan to clearly show how you will acquire the first customers, then the next, and so on until you grow to a large number. Who knows, this may turn out to be a small percentage of a large market, but you get there selling to one customer at a time.
There are many more misunderstandings that can keep a potential investor from dreaming. For example, answering the question “What will you do with the money we invest in your business?” with, “I’m going to pay off my $98,000 credit card debt.” A dose of reality often makes more money in both investment funding and market success, as the entrepreneur takes a closer look at exactly what it will take to deliver the product, inform customers, and convince them to buy. . All this while turning in a handsome profit – yes, that’s what business is ultimately all about, and investors are eager to understand how you’ll turn their small contribution over time into significant financial gains. Revolutionizing the world is rarely included, but good judgment about the customer, product, business model, and marketing is usually included.