The times are obviously difficult economically for many people, companies and organizations. There is uncertainty about what the future holds. Many of us are worried about the “new normal” and exactly where we fit into these norms, if we could define them. There is a certain paralysis of action that accompanies change and uncertainty. This is to be understood.

For entrepreneurs, however, nothing much ever changes. The optimism that must be hard wired into their constitutions is omnipresent. Real entrepreneurs, those that “do”, not just dream, see opportunity behind every tree and under every rock. Most importantly, they act while others strategize, stargaze and pontificate.

We review hundreds of entrepreneurial opportunities every year in our marketing consulting business. But only a hand-full of these ever become functioning commercial entities. At the end of each calendar year, we review every presentation file we analyzed over the previous 12 months. We are always struck by how many excellent consumer products, concepts or services we saw and how few actually move beyond the talking, dreamy, gauzy muddle of the old Texas axiom, “all hat and no cattle”.

The most distinguishing factor we see that separates a successful entrepreneur from the dreamer is the ability to simply get started. I see much better than I hear. Words are cheap. Action is dear. The “do’er” is driven to get started in pursuit of their goals and aspirations. The time is always fine for them to get into gear and move their project ahead.

The first issue we see nascent entrepreneurs almost universally attempt to address is the perceived need for working capital. When we ask how much investment they believe is required to get their product to market, they never can justify what they identify as their magic number. I have yet to read a business plan that can justify the assumptions that are utilized to support the capital investment being sought, ever, and I read dozens of business plans each month.

My consulting firm reviews hundreds of new product ideas every year. Many have wonderful commercial prospects. However, almost none of the entrepreneurs offering these opportunities for funding have considered all of the possible avenues available to launch their idea. Funding is the “Holy Grail” in the eye of most entrepreneurs, and yet, a capital raise is the single hardest route they can attempt to utilize.

Investors, unless family or friends, demand a very high level of due diligence before they will stage a capital investment. Strong management, a clearly identifiable Unique Selling Proposition (USP), first mover advantage and a 35% return on invested capital kicking in between months 24 and 36 of operation are the basic guidelines typically utilized when underwriting opportunities. These are standards that very few entrepreneurs and inventors can achieve.

There are many ways to “bootstrap” new products or services before seeking a financing round. They are not glamorous, more like the old parable of the tortoise and hare. These strategies require the oldest trait known to inventive man: simple hard work!

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Recently I reviewed a Business Plan that was submitted with a goal of raising a $2 million angel funding round. The product was a Hair Care Accessory that had real commercial potential. If I were grading the plan in one of my classes I would have given it a solid B. I was smitten with most of the assumptions that the document detailed to support the projects viability, except one. 

There was only one very major red flag that any Venture Capital investor would seize upon and consider a disqualifier; the $2 million angel funding round. The question that is always asked when a prospective Entrepreneur presents to Venture Capitalists (VC) is this: “How much have you invested of your personal capital into this project”. In some way, shape or form this question always pops up. It is usually not well answered. 

In this case the Inventor wanted the $2 million for salaries, a manufacturing facility, travel, staff and offices as well as for inventory build and Marketing. My job is to prepare Entrepreneurs for the rigid cross-examination they will surely receive from the VC panel that examines investment opportunity. I quickly had to refocus my prospective client that funding sources want to know what you are going to do with their money, as well as what you are not going to do with it. Building fixed overhead falls into the category of what you are not going to do with investment monies. 

Ask yourself, “Would you invest in you”? If you will not invest monies and assets that you own in your project why would anyone else. For decades banks required a significant down payment before loaning money to buy a house. Housing was considered a great investment for those who had equity in the property. About 20 years ago underwriting standards were loosened and today we see what having no skin in the game has done to housing and the economy. 

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 Recently, the unbelievable pace of change the world business climate is undergoing has been reconfirmed. Visionary fashion designer Liz Claiborne died and her Company announced that it would sell or close 16 divisions. And, pioneering retailer Leslie Wexner announced that his firm, Limited Brands, Inc. would put up for sale the Limited and Limited Express chains.

The nature of retail, like most other industries, has undergone radical change. Big box category killers like Staples and Best Buy have evolved into dominating international success stories. Tesco, WalMart and Carrefours offer enormous scale, one stop shopping unimaginable a generation ago. Specialty retailers such as Wet Seal, Aeropostiale, Abercrombie and Fitch, L’Occitaine and Talbots attack specific niches.

Consolidation, bankruptcy and liquidation have allowed fewer and fewer national department store and supermarket chains. Macy’s has consolidated nationally after absorbing numerous regional department store chains such as Lazarus, Bullocks, Burdines and Marshall Field. W.T. Grant, Montgomery Ward, AyrWay, Venture and Gold Circle are only a few examples of once strong groups that no longer exist.

The Limited began in 1963 as a single clothing store in Columbus, Ohio. Leslie Wexner saw an opportunity to create an amazing retail growth story by replicating designer clothing designs, mass producing offshore and selling tailored business clothing to the rapidly emerging population of female businesswoman. He became a billionaire by leveraging and extending The Limited to numerous additional store brands including Limited Too, Victoria’s Secret, Henri Bendel and Bath and Body Works.

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Domestic and International, startup or growth company, Duquesa Marketing  creates unique product development strategies , on time and on budget, that achieves success. There are many different marketing consultant services we offer to insure clients have the greatest opportunity for success with product development and marketing.

Domestic and International, startup or growth company, Duquesa Marketing  creates unique product development strategies , on time and on budget, that achieves success. There are many different marketing consultant services we offer to insure clients have the greatest opportunity for success with product development and marketing.