Phase 2 Preamble

Phase 2 Preamble

Phase 2: Preamble

OK, so by now you have refined and validated your product/service idea, and you feel confident that you have found a high potential opportunity in your industry.  What next?

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It’s time to get you and your business ready to “open your doors” to the world and launch.

What will that look like and how will you know when you and your business are ready?

If you Google: “What kinds of questions will investors ask startups,” you’ll get a good idea of what you need to do to prepare yourself and your business to officially open up and go live.

Here’s a short list of questions most investors would ask you...
  • What problem (or want) are you solving?
  • What kinds of people, groups, or organizations have that problem? How many are there, where are they, what do they do about it now?
  • How are you different?
  • Who will you compete with? How are they different?
  • How will you make money?
  • How will you make money for your investors?
  • How fast can you grow your business? Can you scale up volume without proportionally scaling up headcount?
  • What’s proprietary? What are you going to do to defend that?
  • What traction have you made?
  • What milestones have you met?
  • How are you going to get the word out?
  • How are you going to close sales?
  • How are you going to get started?
  • How are you going to spend investors’ money?
  • What makes your team suited for this business?
  • How did you come up with this idea?
  • Who are your investors so far?
  • How strong is your patent?
  • Could you grow faster with more money?
  • Do you realize you’re vastly underestimating your marketing expenses (or sales expense, or margins through channels, or headcount required for direct selling)?
  • Do you know comparable numbers for similar businesses?
  • Why don’t you do this yourself? (Meaning, why do you think you need investors?)
  • What sales have you made so far?
  • Have you actually talked to those companies?
  • Who else is interested?
  • Who else have you shown this to?
  • How did you come up with that valuation?
  • Why would anybody want this?

Source: Bplans.com

(Click the triangle toggle to view list)

And here are even more questions you’ll likely face from investors...
  • Is there a great management team?
  • Is the market opportunity big?
  • What positive early traction has the company achieved?
  • Are the founders passionate and determined?
  • Do the founders understand the financials and key metrics of their business?
  • Has the entrepreneur been referred to me by a trusted colleague?
  • Is the initial investor pitch deck professional and interesting?
  • What are the potential risks to the business?
  • Why is the company’s product great?
  • How will my investment capital be used and what progress will be made with that capital?
  • Is the expected valuation for the company realistic?
  • Does the company have differentiated technology?
  • What is the company’s intellectual property?
  • Are the company’s financial projections realistic and interesting?
  • Is your legal formation clean and in compliance with applicable laws?

Source: Forbes
So, why do investors ask all these questions?

Short Answer: They know that the more of these questions you are able to answer, the better prepared you will be to succeed when you open for business.

Entrepreneur spotted pitching to investors unprepared. 😉
Entrepreneur spotted pitching to investors unprepared. 😉

The risks that investors take are calculated risks, meaning that the chances for success are higher than the chances of failing. 

And they know that the better prepared you are (the more of these questions that you can answer) the higher the probability of success for you and your business.

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Good News: You already have most of the answers to most of these questions from the Secondary and Primary Research that you have been doing since the beginning of Phase 1.

Question: How will you know when you are ready to launch?

Answer: You’ll know that you are ready to launch your business when you can answer most of the “Investor Questions” above with confidence and conviction.

Our Goal in Phase 2 is to walk you through the rest of what needs to be done to get ready to launch your business. Then we’ll help you organize everything that you have into a powerful, concise Business Plan.

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