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Archive for the ‘Funding Startup Businesses’ Category

Taking Shortcuts in Order to Secure Investment Funds Is the Pursuit of Fools Gold and Insures Failure

Thursday, August 29th, 2013

by: Geoff Ficke

Just today, on a single Linked-In group I visit, I have seen at least five naked pitches seeking funding for a new consumer product, concept or invention. This occurs almost every day on these sites. The efforts are always clumsy, transparent, sophomoric, and can only lead to futility.

How do I know these attempts to secure investment funds lead to futility? Because they continue for weeks and typically become more desperate and shrill sounding. As a consultant who has worked in the Venture Capital and Investment Banking space for many years I can state with certainty that if an item or project is as good as claimed, this is not the way to excite a funding round from sophisticated, serious investors.

Social media is a wonderful new vehicle for spreading and gaining knowledge, acquaintances and opening exciting new doors but only if handled professionally. The same steps that must be accomplished when seeking funding from traditional sources must be followed in this new world unless the offer is to be dismissed as that of a carnival barker. Here are just a few tips.

  • Support the appeal for funding with a compelling set of bullet pointed factoids that reflect that you have performed essential due diligence.

This type of support is almost never on offer. Claims to wondrous product benefits are stated with no supporting research offered.

  • Offer to provide a customized Business Plan after completing a Non-Disclosure Agreement that will confirm the assumptions stated in the appeal for funding.

The shortcut most indicative of a project built on dreams and whimsy is one without a well constructed plan that demonstrates how funds will be used and the realistic return on Investment that can potentially be realized.

  • Be very careful not to scare off possible targets of opportunity with claims of scientific breakthroughs.

Just today I read an appeal for $1.5-3 million for a technology that targeted cures for numerous serious physical maladies. These maladies included the “O” word: oncology! Cancer centric treatments require hundreds of millions of dollars to pass unbelievably rigorous testing hurdles. A few million dollars would not buy enough Bunsen burners to start a project.

  • Research and create a customized Marketing Strategy and Sales Model that will support the assumptions needed to interest funding sources in investing in the project.

A perceived good consumer product idea is of no use unless there is a strategy in place to fully commercialize the good or service in the frenetic retail marketplace. This kind of professional service is readily available from consultants, universities and local government agencies. What is the Unique Selling Proposition that separates the item from competition? Who is the competition? What is the needed profit margin necessary to prosper in the space? These and dozens of other questions and issues will ultimately need to be addressed.

  • In order to raise awareness and interest from serious funding sources have perfected prototypes, manufacturing sources, logistics, dead net landed cost of goods per mass production of the item and pricing models available.

Many of the requests I review in social media have one or several of these steps nailed down. However, almost never do they have the full flotilla that would indicate that the prospective entrepreneur is serious and viable. This is a shortcut that we see in every form of funding request that we review.

  • The hardest money to raise, in social media, cloud investing or traditional Venture Capital is small amount requests.

Investors, whether individual or sophisticated groups, like to see sweat equity from entrepreneurs and this includes that they have money on the table. Small requests for $10,000 or $25,000 are referred to as 3-F money. These are funds that come from friends, family or fools. Typically this level of funding is much too small to be of interest to traditional sources of Venture Capital.

There are a near endless number of deals and projects seeking a finite amount of capital. If you seriously believe your project deserves consideration for funding then fully demonstrate your passion. Do not take shortcuts. If you do you simply obviate yourself and your project from any possibility of success.

First-Mover Disadvantages Must Be Carefully Guarded Against When a Consumer Product Is Truly Novel

Thursday, August 22nd, 2013

by: Geoff Ficke

Every business school student, entrepreneur or consumer product marketer knows and understands the advantages and importance of being the First-Mover in a given
product category. Even those not actively participating in the space instinctively understand that it is best to be first to market with a breakthrough product. First-Mover Advantage (FMA) has become popularized with the dawn of the internet age. However, the concept has been around as long as we have been packaging and selling goods.

An easily explained example of FMA was the introduction of disposable baby diapers to the consumer product marketplace by Proctor & Gamble. P&G discovered a synthetic fiber then only available in Europe. The acquisition of the proprietary fiber enabled disposable diapers to be massed produced at prices that were exceedingly popular with parents. This created a new category and P&G enjoyed a FMA in the disposable diaper space that the Company exploits to this day.

While we instinctively know why a FMA is desirable and of premium value to a product, we often do not anticipate the pressures that can be applied to such a novel new product. This is called a First-Mover Disadvantage (FMD).

One paramount concern is Free-Riders. These are businesses that study a breakthrough product, its Research and Development, manufacturing processes, formula, marketing, etc. and replicate without exposing themselves to the upfront risks that are endemic in launching any breakthrough item. Imitation costs are much lower than
innovation costs. There are successful firms that specialize in this technique.

The Limited was amazingly successful at replicating the style and the detail of couture ladies fashion dress and suit designs, streamlining production, lowering costs and moving customers from boutiques and department stores to their own eponymous shops. RIM, created the Blackberry, a smashing success, only to be almost fully displaced by Apple and Samsung products that studied, improved and advanced on their technology.

Another FMD is the assumption of marketing risk. It can be expensive and difficult to educate retailers and consumers to the features and benefits of a new product.  Innovators often exhaust their resources in the development and introduction of their product(s) only to expire before they can be successfully commercialized. The initial mover assumes all of the market creation risk. Subsequent Free-Riders can often fill the void with a version of the alpha product and often are more successful.

Technology shifts often create a changing consumer. Remember the VHS video player? The cassette tapes these bulky units played were an entertainment tsunami. That was until the DVD format was developed and introduced. The smaller compact DVD discs and superior quality literally crushed the purveyors of VHS products within months. Especially with technology, you are never the greatest only the latest. Brother’s typewriters, Eastman Kodak and Polaroid are examples to consider.

Incumbent inertia is another FMD to be guarded against. Some management’s become inflexible, rigid or content to operate the way they have always operated even as markets change. Simply search the list of national and regional retailers that has disappeared in the last 40 years. It is stunning. Major department stores have been bankrupted or merged into more aggressive groups. Sears, once the largest and most successful retailer in the world, is on life support as I write this. They could easily go the way of Montgomery Ward, Circuit City, Mervyns and countless others.

Another sign of incumbent inertia is the inability, or conscious decision not to cannibalize an existing product. The Ford Motor Company was the most successful industrial enterprise in history in the first third of the 20th century. Henry Ford was brilliant but inflexible. The consumer could buy a Model T in any color, as long as it was black. As a result, his firm was displaced by General Motors and its brilliant maestro Alfred Sloan. Sloan designed a stair step series of marketing and brand platforms that moved
consumers from Chevrolet, to Pontiac, to Buick, then Oldsmobile and ultimately to Cadillac as they moved from various stages of life and success.

Charles Revson did the same with Revlon cosmetic, fragrance and skin care products. Revlon in the mid-20th century was the most successful beauty brand in the world. Rather than sit on his laurels Mr. Revson introduced the higher priced Ultima II line and then, for exclusive specialty stores, Etherea was launched. Estee Lauder Cosmetics has accomplished the same with her brands stepping to Clinique, Bobbi Brown, MAC, and Origins among others to successfully fill market niches. Contemporary beauty product and fragrance lines of the day like Erno Laszlo, Imperial Formula and Frances Denney atrophied to nothing as they did not innovate and adapt to market changes.

We advise many of our clients when customizing their Business Plan to anticipate the cannibalization of their product by themselves. If an item is successful it will be copied by others. It is incumbent on innovative entrepreneurs to maximize all possible returns on their investment, creativity and hard work. Replicate and reposition your product before others do!

By garnering the smallest niche within a huge category a product can be hugely successful. This FMA may be tiny but it can be lucrative. Just remember that success breeds copycats. Anticipate that you will experience Free-Riders and plan the appropriate strategy to maximize and safeguard protection for your hard work.

Entrepreneurs Should Realize There Are Absolutes in Life Other Than Death and Taxes

Wednesday, August 21st, 2013

by: Geoff Ficke

The great Founding Father, Diplomat, Scientist, Inventor and Writer Ben Franklin once so presciently said, “In this world nothing can be said to be certain beside death and taxes”. This most famous bromide has been restated endlessly in every possible venue since the great man first uttered the phrase. It is an absolute of the human condition that is so obvious as to seem almost trite.

I used to utilize the quote myself. As my life, experiences and career has entered their fourth quarter, however, I have expanded on the phrase and the paramount certitude of death and taxes in our lives. Several additional phrases that I have regularly encountered have brought me to doubt their veracity and the trustworthiness of those utilizing the lugubrious language contained therein.

The first is “I am an honest man”. Whenever I hear those five words I put my hand on my wallet. An honest person would never have to state these words in order to confirm their honesty.

Next is when adults imply “It’s for the kids”. Virtually never have I ever heard adults beatifically working for the kids unless there is some benefit involved that enhances their position. Think teachers unions. Think government programs. Think foster parent programs that have become income subsidies. There are certainly adults who rejoice at the opportunity to volunteer, mentor and work with kids. Wonderful people all. However, they usually do not self-promote and seek funds that are really for them and not so much “for the kids”.

Finally, I run when I hear the phrase “it’s not about the money”. I hear this one a lot in my work. When I hear these words, it is in actuality almost always about the money. And if it is not it usually should be.

I am a serial entrepreneur. For many years I have helped inventors, entrepreneurs, small businesses and licensors fund, market and develop a wide array of consumer products. I am always amazed when a prospective entrepreneur states that they are not seeking to profit from their idea but want to help society, employee their neighbors, aid their community  or some other vanity they prefer to the pursuit of commercial success.

Do not get me wrong these are admirable sentiments. But only after success is achieved, profits made and growth occurs. Then the opportunity to dispose of the fruits of one’s labor is an option that can bring wonderful personal and societal rewards.

John D. Rockefeller, Henry Ford, Howard Hughes, Thomas Pew and John T. MacArthur are famous examples of successful industrialists that have been dead for decades. While alive they created vast wealth by driving thriving business empires that employed thousands of people. Their companies prosper to this day. And though long
deceased, their charitable foundations perform inspiring good works in many fields of endeavor such as museums, medical research, cultural entertainment and caring for the less fortunate. Without profit, money, none of these benefits would still be happening today.

I am amazed when a person seeks funding for a project that includes a statement of disinterest in a profit motive. Venture Capital is in the business of profit. The realistic potential for Return on Investment is the tent pole upon which projects are seeded and nurtured to fruition.

Most projects that we review make unrealistic revenue and profit projections on the high side. However, not a small minority seek a funding round with the upfront proposition that the project is about some form of social activism, not the earning of profits. There are other avenues that social entrepreneurs can follow to realize these dreams. But if it’s “not about the money” it is not likely to achieve success.

Problem Solving is Key to Realizing Success In the Hyper-Active Consumer Product Marketplace

Tuesday, August 20th, 2013

by: Geoff Ficke

Many of my students and prospective clients often ask a similar question: “What is the key to successfully launching a new product or service”? While there are many elements that allow for market success there is one that stands out. That is the ability for a product to provide a solution to a problem that consumers readily are able to recognize and understand.

A few years ago a direct response marketing company launched a product called the Snuggy. Initially the short form infomercial that introduced the Snuggy was considered a bit silly. The product after all is a blanket with sleeves and it looked a tad cumbersome to wear. However, as the campaign took hold, and the benefits of the Snuggy became apparent sales took off. Since launch, the Snuggy has sold well over 25 million units and has resulted in the building of a brand that regularly expands with new product
introductions
. The Snuggy offered comfort and freedom of motion.

Direct response marketers are constantly looking for products that solve problems. The items they most prize can seem almost mundane. But, if a better mousetrap can be discovered, and the product works as promised and can be built at the right price, deals will get done.

The best ideas we review almost always are generated from the creator’s personal environment. Work, a hobby, or special interests act as laboratories for the flowering of ideas that enhance the inventor’s tasks. Avid cooks devise the most useful food handling items and kitchen implements. People involved in fashion and design create interesting beauty products, jewelry concepts and other related products. Most of the useful hardware and DIY products we have reviewed evolve from a handyman, or craftsman’s drive to improve their end work product. This truism applies to every area of endeavor.

I have, on many occasions, discovered really clever problem solving gadgets being used in an acquaintances home. The item is almost always jerry-rigged, homemade, often crude but able to solve a specific problem as the creator intended. The designer usually has never considered commercializing and launching their item as a consumer product for sale in the retail marketplace. They simply built the device to solve a problem and are happy that their effort has provided the appropriate solution.

There are numerous variables that are involved in the ultimate success or failure of any consumer product or service. Design, packaging, branding, a customized business
plan
and marketing strategy, research, cost of mass production, and many other elements enter the equation that decides the success or death of a product. However, the one factor that will offer the greatest potential for a successful outcome is the ability of your project to provide a solution to a readily recognizable problem. Does your item solve a problem?

Drop the Dreams and Establish Solid Goals and Plans In Order to Succeed in Start-up Business

Wednesday, October 3rd, 2012

by: Geoff Ficke

Drop the Dreams and Establish Solid Goals and Plans In Order to Succeed in Start-up Business

Recently I watched a television show which featured Inventions, Small Business Start-ups and Entrepreneurship as central program topics. A panel of experts reviewed product submissions and interviewed the prospective entrepreneurs about various aspects of their projects. The interplay was interesting, and disappointing.

The word that was most commonly used by these first time would-be business owners was “dream”. They each seemed to be enamored of their dream. The dream element was imbued and layered into many aspects of their commercial opportunity. Unfortunately the panel of experts never made the point that dreaming is not doing, and doing is what successful entrepreneurs must aspire to do.

Every successful entrepreneur I have ever counseled has been goal driven. They set realistic goals. These goals may require climbing seemingly difficult hurdles but successful small business start-ups possess the ability to meet and overcome every market challenge. And the challenges are many.

If it were easy to commercialize an invention or launch a small business there would be exponentially more successful, rich entrepreneurs. The fact that it is difficult to convert an idea into a profitable venture is a natural culling device employed by markets to stop those not possessing the necessary makeup from taking the difficult plunge into entrepreneurship. It is hard to start a business from scratch and compete in a cluttered marketplace and it should be.

For every successful entrepreneur that we work with there are at least a hundred that approach, discuss, attempt to sell their concept and are turned away. Virtually all we decline to work with have one thing in common: they are dreamers. It only takes a few e-mail questions or a minute on a phone call to discover if we are talking to the 1% (goal driven) or the 99% (dreamers).

The goal driven inventor, entrepreneur or small business candidate might not possess the knowledge or necessary skill sets necessary to immediately commercialize their plans.  But they recognize their shortcomings and are fully committed to working, studying and researching their way toward gaining that knowledge. Whether they are
self-taught, or contract for professional consulting talent successful entrepreneurs innately understand the importance of proper due diligence and having a well vetted plan.

The term “American Dream” is as old as the republic. Whenever we hear the term used colloquially we immediately recognize the speaker as referring to the successes deemed so important in our culture: owning a home or business, education, career choice, etc. These goals are invariably gained through hard work, not dreaming. Success at almost all of life’s enterprises is attained by setting solid goals and having a plan. That the American Dream is achieved by doing, not dreaming, is ironic.

Duquesa Marketing Appoints Dennis Nemcek & Associates to Act as Sales Agents for Fashion Accessory Client

Friday, September 14th, 2012

Duquesa Marketing

www.duquesamarketing.com

Press Release

For Immediate Release

Contact: Geoff Ficke

859-567-1609

gficke@msn.com

Duquesa Marketing Appoints Dennis Nemcek & Associates to Act as Sales Agents for Fashion Accessory Client

Premiere Agency Based in Livonia, MI to Represent Lori Leigh Designs™ Earring Chalets™ in MI, IN, IL, MN, WI, SD and ND

Florence, KY  Geoff Ficke, President of international Consumer Product Development and Branding Consulting firm Duquesa Marketing announced today that his group has
appointed Dennis Nemcek & Associates to handle sales of Lori Leigh Designs™ Earring Chalets™ in the states of Michigan, Indiana, Illinois, Minnesota, Wisconsin, South Dakota and North Dakota.

“Dennis Nemcek & Associates has a strong history of success with luxury fashion accessory and jewelry lines”, noted Mr. Ficke. “Their Chicago and Minneapolis showrooms are stunning and their strong retail relationships were crucial to our decision to roll out this stunning line with Dennis Nemcek’s team”.

“We love lines like Lori Leigh Designs Earring Chalets”, said Dennis Nemcek, President of Dennis Nemcek & Associates. “Products that offer unique consumer features and benefits and include color, style and value are exciting for our agents to represent. These vibrant Earring Chalets are perfect for any lady with an extensive jewelry  collection”.

“We are overwhelmed at the strong market response the Earring Chalets have received”, said Nancy Ficke, General Manager of Duquesa Marketing. “We will be announcing a number of agency appointments and retail launches in the coming weeks. International distributors and trade shows are also being organized.

Duquesa Marketing Appoints Next Step Reps to Act as Sales Agents for Fashion Accessory Client

Friday, September 14th, 2012

Duquesa Marketing

www.duquesamarketing.com

Press Release

For Immediate Release

Contact: Geoff Ficke

859-567-1609

gficke@msn.com

Duquesa Marketing Appoints Next Step Reps to Act as Sales Agents for Fashion Accessory Client

Premiere Las Vegas Showroom to Represent Lori Leigh Designs Earring Chalets in Southwest USA and Hawaii

Florence, KY  Geoff Ficke, President of international Consumer Product Development and Branding Consulting firm Duquesa Marketing announced today that his group has
appointed Next Step Reps to handle sales of Lori Leigh Designs Earring Chalets in the Southwest United States and Hawaii.

“Next Step Reps has a strong history of success with luxury fashion accessory and jewelry lines”, noted Mr. Ficke. “Their new Las Vegas Mart showroom is stunning and their strong retail relationships were crucial to our decision to roll out this stunning line with Jackie Moon’s Next Step Reps team”.

“We love lines like Lori Leigh Designs Earring Chalets”, said Jackie Moon, President of Next Step Reps. “Products that offer unique consumer features and benefits and include color, style and value are exciting for our agents to represent. These vibrant Earring Chalets are perfect for any lady with an extensive jewelry collection”.

“We are overwhelmed at the strong market response the Earring Chalets have received”, said Nancy Ficke, General Manager of Duquesa Marketing. “We will be announcing a number of agency appointments and retail launches in the coming weeks. International distributors and trade shows are also being organized.

College Campuses Are Amazing Resources for Entrepreneurs to Utilize When Launching a Business

Wednesday, August 15th, 2012

by: Geoff Ficke

College Campuses Are Amazing Resources for Entrepreneurs to Utilize When Launching a Business

Recently I read about a new cosmetic product that was launched on a college campus. This bootstrapped product was taking advantage of a resource that can be available to all, but is rarely accessed by any. The entrepreneurs behind the novel lip balm Kisstixx offer an example of just one way to leverage the benefits that are present in abundance on university campuses everywhere.

Shake Smart natural smoothies are another example of a start-up bootstrapped on a university campus. Clever entrepreneurs for this breakthrough concoction looked closely at their personal environment and realized that many, if not all, of the assets they needed to perfect, test and launch their product was on offer within their schools facilities.

The modern university is an amazing amalgam of talent, facilities, knowledge, money and energy. Students are almost universally ambitious. Faculty is experienced and keen to see their student charges succeed in their chosen fields. College administrators are excited to leverage their facilities and resources in ways that drive institutional reputations and endowments. This is the perfect confluence of opportunity and assets for innovators seeking to commercialize their novel business concepts.

Let’s start with the student body. Each member is majoring in an offered course of study. Each is driven to gain as much education as possible in their field of study and compliment this knowledge with practical, complimentary work experience; Thus, the scramble for internships.

For our client consumer product development projects we often visit college deans and ask for student participation in accomplishing specific research and development tasks. Inevitably the dean is happy to recommend one or more students. The students are thrilled for the opportunity to add to their credentials with a hands-on work
experience that can be detailed for future employers to consider. Our clients always are amazed at the enthusiasm and quality of the work product provided by
their interns.

We all read about the technology advances that are born in some university and then become massive commercial successes. Universities across the country have taken notice of this opportunity and almost all have Technology Transfer programs established or in development. They actively seek ideas that can be patented and commercialized by utilizing the massive resources, and fixed overheads, that are a constant in every college. Entrepreneurs are encouraged to approach these programs with their concepts and ideas for review, consideration and possible joint venture collaboration.

We have utilized the resources of colleges and universities on a number of our Consumer Product projects. Schools are not only keen to develop science and technology opportunities. They are aggressively seeking products and services that can be perfected and launched in many areas. For one client we used the Nutrition and Dietary college program to develop a gluten and sugar free line of bakery goods. Focus Groups and test markets conducted at colleges are ideal venues for gauging market sentiment about key elements of Branding, Packaging, taste, pricing, etc.

Business Schools today almost universally emphasize an Entrepreneurial course of study. A capstone class requirement to qualify for a degree is that each student must write or collaborate on creating a customized Business Plan. Let these eager students work on your Business Plan.

Many inventors approach us seeking help in designing, prototyping and engineering their product idea. Many colleges possess every tool needed to create CAD art, scale models, assembly and engineering plans. The College of Engineering is a wonderful tool to access when needing prototype work completed on a small budget and with professionalism.

Wellness drinks and supplements, skin care, oral care, exercise and sporting goods products, fashion design and juvenile products are all product areas in which we have used the assets that are available, and FREE, at a local college or university. Students, faculty and administrations actually welcome the chance to apply their theoretical knowledge to gain practical project experience from working on real world product development. Take advantage of this wonderful resource. After all, as a taxpayer you are
paying for these excellent resources.

Lori Leigh Designs™ to Attend LA Gift Show After Receiving Strong Market Response at JCK

Saturday, July 21st, 2012
Duquesa Marketing

Press Release 

For Immediate Release
Contact: Geoff Ficke
859-567-1609

gficke@msn.com

Lori Leigh Designs to Attend LA Gift Show After Receiving Strong Market Response at JCK

Novel Fashion-Gift Line of Earring Chalets Organizers to Be Displayed at Booth #1643 July 27-30 at Los Angeles Convention Center
Whittier, CA   Lori Torline, President of Lori Leigh Designs Inc. announced today that her fashion accessory atelier will unveil its range of unique Earring Chalet organizers at the upcoming Los Angeles Gift Show. This semi-annual mart is considered the most successful show of its kind for retailers located in the Pacific time-zone.
“We launched the Earring Chalets in the United States in June at JCK, the huge jewelry industry show and results were overwhelming”, said Mrs. Torline. “Based on the brands performance at JCK, we immediately expanded the trade show participation and are aggressively organizing sales coverage in every market”.
“The unique features and benefits of the Earring Chalets, great pricing and their colorful fashion cues make the products the perfect impulse gift item”, said Nancy Ficke,
General Manager of Florence, KY based Duquesa Marketing, managing consultants for this project. “We are expanding the production capacity and both USA and
international schedules to meet ramped up demand”.
Lori Leigh Designs offers the Vanity Earring Chalet in three fashion colors. The Traveler is available in five designer colors. The line can be viewed at www.LoriLeighDesigns.com. The Brand is supported with a strong sales promotional program.

Duquesa Marketing Client to Introduce Earring Chalet Organizers at July 27-30 Los Angeles Gift Show

Friday, July 20th, 2012

Duquesa Marketing

www.duquesamarketing.com

Press Release

For Immediate Release

Contact: Geoff Ficke

859-567-1609
gficke@msn.com

Duquesa Marketing Client to Introduce Earring Chalet Organizers at July 27-30 Los Angeles Gift Show

Managing Consultants Plans to Accelerate Speed of USA and International Launches as Initial Market Response Is Overwhelming

Florence, KY Geoff Ficke, President of award winning international Consumer Product Development and Marketing Consulting firm Duquesa Marketing announced today that his group will launch Lori Leigh Designs range of Earring Chalets at the upcoming Los Angeles Gift Show.

“The Earring Chalets are equal parts fashion accessory, jewelry organizer and the perfect thoughtful impulse gift item”, said Mr. Ficke. “We launched in the jewelry area at the recent JCK Show in Las Vegas and were overwhelmed by the retail response to the unique features and benefits of the product. The client has agreed to accelerate the launch by adding more shows and production capacity”.

“Lori Leigh Designs™ has created the perfect gift item that any woman with an extensive collection will appreciate and enjoy, and let’s face it, that is almost every woman”, said Nancy Ficke, General Manager of Duquesa Marketing. “As Managing Consultants for the Earring Chalet project we are keen to push the launch forward and expose these beautiful items to a greater number of markets”.

Lori Leigh Designs line of Earring Chalets is crafted to help women more easily access, organize and protect their extensive collections. The product is offered in two styles: The Vanity is presented in three fashion colors and the Traveler is available in five designer shades. For more information, visit www.LoriLeighDesigns.com.