Launching a New Business or Product Line

Forbes (see the March 26th article by Melanie Lindner linked below left) today published in it's entrepreneurs blog a good refresher on starting a business (or from my seat a new product line). They point out the biggest issues - having a solid Value Proposition and defining your Sustainable Competitive Advantage. You do hear these two mantras ad nauseam from venture capitalists, as well as smart angels for that matter. The only way you can obtain significant start up funding is with strong answers to these two issues.

One of the big issues not mentioned in the article was Exit Strategy, what I discussed on Monday. Investors want to know how they get their money back. Do have a read of this one, it will help you from making a fool of yourself.

Think of Your Exit Before You Enter

Exit strategies - how do you make the most from your business when you want to do something else or retire? To a great extent it depends on the type of business you've built, and the market you compete in. In today's market the most active buyers are the growing web companies like Google that pay up for niche businesses that augment their business model. A great majority of companies that are sold are bought by competitors, rather than going public. Recently, a start-up launched about 10 years ago "became" exit-able.

Local Harvest is a focused website that maps sustainable restaurants, farmers markets, grocery stores, and the like. It is a niche business in an area where some big folks are playing, notably Google Maps, which of course didn't even exist 5 years ago. If Local Harvest can succeed in gathering and holding both locations and the customers looking for these locations, then the recent mega-wave to sustainable foodstuffs will drive it's value exponentially, and make Google, Mapquest, or Yahoo take notice and think about a bid.

Now I know most entrepreneurs don't start a business looking to sell it, and these guys probably didn't. Successful businesses are driven by passionate people who really find a market to serve. But if you were starting a business from scratch today, or revising your business, it wouldn't hurt to focus now on who might want to buy you later.

Data Good - Too Much Data Bad

In the constant balancing act between searching for good information without overloading your workers, Inc. magazine finds that an astounding 89% of an average workers' time is spent conducting research, attending meetings and searching for documents. This leaves at most 11% of the work day (probably much less) for using and acting upon information.

Challenge your staff and technology suppliers to find better, more intelligent research tools and technologies that fit your niche so that quicker, better actions can become the norm. Faster computers should enable this process.

Effective judgment and good (which I equate to rapid) decision making will continue to differentiate successful companies from those that flounder. Don't let your workforce get lost in the avalanche of data.