We have all likely been there, you have a fantastic product idea, you've told your friends and they all say, "I'd buy it." You're charged like a lightning bolt shooting to the ground, except you're not grounded (more about that in a moment). You run full-steam with the idea turning it into a reality with prototype designs, supply and manufacturing logistics and breakeven analysis. You're energized, it's ready for the marketplace you just need cash to set it flying.
You hear about crowdfunding and the success it can bring in creating the dream into a reality. You jump on it and the donations flow in as you watch your goal turn to accomplishment.
Boom!
The money is in and the orders are filled with the manufacturer. Except, what about the packaging, the shipping, the import logistics, the list of customers, the deliveries and what is going to happen next? You have been so focused on the immediate bolt that ran from the idea to the orders you haven't had time to think of the bigger questions. "What is Next?" is the big question because you are back to square one, a lack of money flow.
Remember that lightning bolt charging to the ground? Where to turn for financing will depend on where your feet are on the ground. Getting grounded requires a business plan, a plan that lays a path to profitability. I enjoy hiking in the White Mountains of New Hampshire, but I won't venture out into the Whites without being prepared with a plan, same goes for a business. A plan walks you along the path to profitability which in business leads to:
1. Cultivating Strategic Thinking - A product without the business components; personnel, operations, marketing, selling, research and development, manufacturing and financing is just a fictitious widget case study in a higher education business book. Its lacks a life and movement where people combine their hands and minds and work together in a cohesive unit. Walking the path of developing a business plan takes you through the forest landscape where the integral ecology interacts. You explore the vernal pool that brings to life the song of the pickerel frog and you learn how the conifer helps prevent soil erosion and supplies wildlife habitat. A plan requires you to look at the big picture and the small details at the same time.
2. Spotting Potential Challenges - Along the path you identify internal and external threats that if left unidentified may kill your product before it reaches the masses. You look at regulations, patents and legal considerations and determine if bridges need to be built or will you have to bush whack to keep moving forward.
3. Uncovering Money Flows - Rocks and decaying tree limbs along a wooded path hide benefits to the forest cover. Lift up one of those rocks and underneath you may find an eastern red-back salamander whose diet helps keeps pesky insects in line. Just as finding a beneficial under a rock you can uncover methods and funding sources to keep the needed money flowing into your business. Conducting an analysis such as breakeven, needed capital and liquidity helps establish the funding, marketing and sales strategies. Answering questions about how much is needed, how will financial operations be controlled, how much working capital is required, what budgets need to be developed and how will you maintain cash flow and liquidity.
4. Illuminating Customers - Lighting up a customer with a new product can be fairly easy if it's a flashy new tech gadget. Keeping the light shining requires mapping out the course and identifying the supplies you need to make the journey. You determine whom and where the customers are and what buying patterns they tend towards. You learn how they will get to know you and interact with you and what they want next from you. You are prepared to keep going after the initial bolt of energy. It is all outlined in the business plan.
Many people look towards the quick financial fix, the miracle magic oil that propels their product into a high demand, record selling, vogue item. A quick fix doesn't last and when you come down from the high you may find yourself alone with empty pockets. Funding for the long-term requires back to the basics planning that sets the course to profitability. If you are lost in the woods with just a caffeinated drink and no water, map or compass to find the way out you will likely require emergency assistance. A business plan will help you understand the bio-region your business lives in and the funding sources to get it funded. The funders will have greater confidence in the business when they know you have the information and analysis done with an outline of your path.
Question: Why do you think so many good people go for the quick fix? Leave a comment below or connect on twitter or Facebook.
Thanks for reading and commenting.
p.s. Need some hands-on, individual help with planning, connect confidentially here.
