Want to Launch a Successful Business? Think Like an Investor
You want to think about the money when launching a business that you want to make successful. Few entrepreneurs do that and inevitably get crushed. Here's what you should do.
You want to think about the money when launching a business that you want to make successful. Few entrepreneurs do that, and they try to copy Amazon or Apple or any business model that exists out there in the world. They inevitably get crushed and blame the market for its stubbornness. What they don’t understand is that it's not always about getting to scale quickly.
It's about building a business that takes time to procure customers and builds a legacy on its own merit. A VC would love to invest in that business, because the risk is smaller, and the returns are bigger. That’s why startups should think more like VCs and understand where they invest their time, money and leadership qualities
Many would think that it's dumb luck that some start-ups get successful and others don’t. What they don’t understand is that behind every successful business is a genius business plan and model that works well around the market. You don’t need to invent the next iPod to become successful. You can do the unpopular stuff to make a name for yourself in the circles that matter the most.
You have to conduct yourself in a way that’s most appeasing to VCs as you wouldn’t want to invest in a rouge CEO. Think about Uber and what they went through with that Taxi-Cam confession. The CEO pretty much revealed the entire business strategy in 2 minutes.
You need to understand how things run, from a VC’s perspective. They are focused on providing value for their shareholders, as should you. You don’t want to create an unstable ground on which you create your business. A VC shouldn’t be asking – “Will this business work”, but instead be looking at you and saying – “How will I make it work?”
A founder should look at Mark Zuckerberg and Steve Jobs less and understand how major VCs make more bucks investing than in building businesses. They’ve mastered the fine part of making successful business, and they’re out there to promote you if your concept works.
That’s key here. You should be asking yourself whether your idea and business model really works or whether it’s a pipe dream. Because a VC can smell it a mile away and back out. If you smell BS in your business plan, then you should back out as well.
It’s all about risk vs reward in the VC game and timing is everything. They look at macro-trends and so should you. Think like an investor and you should be more successful in your business.
Make your business unique
Often, businesses are built overnight, and the plan may not be that clear cut. You meet a couple founders, you head over to a bar and you make a cocktail-napkin business model. You think about all the possibilities of what could happen, and you try to make it happen with a bit of seed money. You feel great, until you hit your first setback, and everything falls apart from there on.
Investing is all about going after unique business models. While you don’t really know which company has a good shot, you want to make sure that you are investing in a unique business. These are the kinds of businesses that make you want to invest in them and talk to the founder about.
That should be the way that you approach building a business, if you are looking for success and capital. Revenue is another important factor here, as a unique business often taps into hidden consumer demand that nobody even knew existed.
Making your business stand out is the first thing you should be doing if you’re seeking growth and success. It takes patience, consistency and making sure that you are offering your customers a unique business proposition.
Presenting a clear vision
When you are investing $1Million into a company that you’ve just met, you want to make sure that you’re investing in a business that has a stable vision. The vision shouldn’t be – “I want to build a VR game”, but it should be “I’m building a VR simulation of Angry Birds made specifically for gamers between 12-15”.
The clearer the vision, the better you can visualize the win. You don’t want any room for guesswork or any scope for miscommunication or mistakes. A VC understands these odds and wants to play fair and square. They want the best returns for their money and a company with a clear vision has a better chance at winning.
A lot of companies start out as consumer brands but become an investment firm themselves because of the amount of cash they hold. This is because they partner with a VC early on and have a clear vision about their brand. Once that vision is met with, they branch off into different projects and deals. This is the difference maker when it comes to vision and thinking like a VC would.
Keeping building yourself
When a VC has enough capital from one investment, they don’t stop there. They leverage their resources and develop their capital to grow further. That should be the way that you face the challenges in your start-up. You don’t want to continue down a path of barrier-solution, but you also want to seek out new opportunities and focus on what’s next.
You don’t want inertia to weigh you down and you want to face important decisions head on. Before you pick out the best decision for yourself, think about it from a VC standpoint and ask yourself how much money this will make me and the shareholders.
If the answer is a lot, then take that risk and build on it in the near future. If the answer is no, then you shouldn’t be wasting your time there at all. You want to locate the best options for yourself so that you can build your personal portfolio of start-up accomplishments.
Build something and develop it like an investor would. An investor is invested only in the growth of the company, and when you think from their shoes you gain perspective that you would have otherwise lost.