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In his blog earlier this week, Cuban announced a concept he called “open source funding.” The idea, aside from investment stimulus for businesses, is the sharing of lean and profitable business plans. The only way one can hope to qualify for investment is to meet all of Mr. Cuban’s criteria, including posting your business plan publicly for review.

Of course, there are some dissenters who complain about the criteria but hey, when you’re giving away money, you have to make some rules. There’s also the general ruckus about stealing ideas but that’s also part of the reason for the public posting – “sharing” ideas. If someone else has the means to start a business using your idea, that’s another new business start-up. The idea is to get more Americans into business.

However, a by-product of this open air discussion and sharing of ideas on the internet is the dozens of other potential investors jumping into the arena, posting on the blog, offering additional backing, and taking notice of the flow of ideas. Whether it’s for the chance to do business with the Dallas Maverick’s owner, or the for a share of the spotlight, the end result is that the gauntlet has been thrown for these big money moguls to re-invest in American know-how.

It’s time to check your patents and dust off your spreadsheet.

1. Jot down a rough business plan; this helps you to focus your time and energy in the right direction.
2. Pick something you really enjoy doing since you’re going to be doing it a lot.
3. Network and make new contacts, utilize your existing rolodex.
4. Start the business while you are still working, this ensures adequate flow of money while you are still going through the startup phase. Try giving your product or service away for free to get your first customers. This will also help you learn a great deal about what your future customers will expect.
5. Get a support system while starting your business, people whom you can bounce ideas off of and get to listen to your latest business decisions.
6. Join a related industry or professional organizations prior to starting your business and do more and more research on your industry, services, until you become an expert.
7. Save your time and money in the long run by hiring or partnering up with expertise that compliment your skill sets and experience.
8. To finance the business, save your money, as well as approach potential investors and lenders. Also prepare a backup plan in case your first financial plan falls flat.
9. Bring a professional attitude and process to your business right from the start, to let people know that you are serious about your business.
10. Before starting your business, learn about the legal and tax issues.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Smart Stalking: Just finding investors can be tough. They hide because otherwise they’d have everyone asking them for money all the time. The best way is to get a personal introduction from someone that knows the investor. That’s where networking comes in handy. You can also use resources such as LinkedIn to find potential investors. Also, many people that call themselves “investors” actually don’t have experience investing in companies, so be sure they have done investing before.

Speak Their Language: When you are presenting your business ideas in front of the investors, be very careful regarding the language you use. There are industry-specific terms which might not be understood by everyone; so speak in simple, plain language to avoid misunderstandings.

Remember That It is Their Money: One investor pointed out that the key for an entrepreneur seeking funding is to figure out how to convince an investor to pull out his or her wallet and why they should invest. Put yourself in their shoes. Why would you invest in your business?

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

I’m taking a cue from Norm Brodsky, who wrote about his highly publicized acquisition in Inc Magazine while it was still taking place (and falling through and then taking place again). Because of its public nature, I can’t get too much into the details, but I’d still like to share my experience with some of you who might find yourself in the same position one day.

After two years of not knowing what would happen the day-after-tomorrow, it’s finally good to know that my partners and I have had a successful exit. That doesn’t mean that we won’t continue to work for the acquiring company, we will, it just means that our few years of doubt and hard work, have had their first payoff. The second payoff will be in working with InventBay (a publicly traded pink sheet company) to maximizing their value to shareholders and owners.

It’s funny though, because there were definitely days that I didn’t know how much longer IdeaTango would be around. Usually it had to do with cash. Sometimes I had to reach into my own pockets. Later, I had to ask for help from my inner circle of friends and family. As you can see my earlier posts, we even thought about approaching professional investors.

We made the decision to sell the company for three reasons. First, we realized we needed more resources ($$) to take IdeaTango to its full potential. Second, we realized that we were running low on both the time and energy needed to pitch, get rejected by, and then acquire some investors. The time horizon for selling a company like ours would save 75% of the time. Third, my partners and I sacrificed for two years (no salary, no benefits) and needed a shot in financial arm to rejuvenate us.

It was not an easy decision to make, and of course I would have liked IdeaTango be sustained and grow using its own internal cash flow. But with a model like ours, which requires a long time horizon, that just wasn’t possible. Perhaps that’s a lesson learned for my next startup.

Overall though, my partners and investors were happy with the deal. Myself, Pablo, and maybe even Lisa will continue in some capacity with the acquiring company.

Feel free to ask me questions about how my experience might apply to your situation.

- Bryan Daigle

A marketing plan should cover the following:

• Market research: surveys, focus groups, or secondary research
• Target market segments: characteristics, needs, trends
• Competitive analysis: what do your competitors offer, for what price, what features do they have
• Differentiation: how will you be unique and different from your competitors, you need to stand out
• Pricing strategy
• Marketing and advertising execution strategy
• Sales strategy

Start with an outline of the marketing plan, and then write as you go. Your plan is a living document and will change over time. After a few major revisions, consider starting from scratch with a clean slate to help you think clearer.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

To know what your market wants, you need to conduct a market survey. However, before you start, prepare a list of questions to ask your target market customers. Here are some examples to get you thinking:

• Will they buy your products? If so, how much will they pay?
• How would they improve the product?
• What are the problems that you face and want them solved immediately?

An experienced inventor once told me he would sit outside his grocery store and ask passers-by the above questions.

Another inventor told me he would approach people in the area of the store where his product would be found, and survey people. Here was his trick; he would tell them he was doing a survey for his friend’s invention so the person being surveyed was more likely to tell the truth (rather than avoid hurting the inventor’s feelings).

Try some of these techniques and develop your own process. The most important thing is that you have a process for surveying customers.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

To pitch to investors, we have to re-capture that vision and the excitement we started with. Many entrepreneurs make the same mistake; they forget that they are needed to excite investors and not to teach the investors about the nitty-gritty inner-workings of their business.

So, when you are going to meet the investors, keep in mind that you are not there to educate them, but to excite them. You should always remember that it is absolutely necessary for you to understand the needs of your investors and cater accordingly.

Therefore, before going for the investors’ meeting, cook up an interesting story about how and why you started your business. As humans, we are always interested in good stories and if your story is interesting and not over-dramatized, then the investors are bound to like it. I tried this with a pitch for ideatango and it worked fabulously at grabbing investors’ attention. Also, I don’t recommend putting your story on the slides; just speak from your heart.

Your presentation slides, however, should hit the highlights of your business. The rule I’ve heard is have no more than 10 slides for a 20 minute presentation, because that’s often all the time you have. Here are some things you should strongly consider including in your presentation slide package.

1. Introduction & Agenda: The name of your company, location and tagline with the presenter’s name and designation should be mentioned. Brief overview of what you’ll talk about.
2. Brief Company Overview: Generally explain what you are and what you do. Build the vision and story here. Keep this high level.
3. Customer Pain & Benefits: Talk about why customers buy your product or service. What benefit do you provide them? Potentially include some customer testimonials.
4. Market Information: Discuss market size, potential market share, and growth and trends for your target customers.
5. Competitive Advantage: How are you different from your competitors? This slide is probably the most important to investors, because it will help them ensure that you are unique and difficult to copy. Mention intellectual property you own.
6. Execution Strategy: Also a critical slide, more important the farther along your business. Talk about how you market and sell to your customers, how products are distributed, and day-to-day workings of major operations.
7. Management Team: Who makes the decisions? Who’s on the board?

8. Financials: Highlight 3-5 year sales, expenses, and profits for the investors. Stay at a high level, not too many numbers, otherwise eyes glaze over.
9. Capital Requirements: Talk about how much money you need from investors, how many rounds of funding, what sort of return should they expect, when they get their money back, and exit strategy.
10. Backup slides that have more detail if investors are interested.

Don’t forget to leave time for questions at the end!

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Cover Sheet

a) Mission
b) Long Term Vision
c) Short Term Vision
d) Description of Services
e) Marketing Plan – who are your customers and why do they want your product/service
f) Marketing Strategy & Execution
g) Competitive Landscape
h) Market Research
i) Go-to-Market Execution Plan
j) Management Team & Personnel
k) Financials for 3-5 Years
l) Executive Summary – do this last but put it first

The earlier you are in your business, the more important are your vision and strategy. As you mature, your execution strategy will become more important than anything else.

Some investors will also look for other documents including: capitalization tables, detailed financial projections, breakeven analysis, balance sheet, marketing materials, inventory list, resumes, etc.

Whether or not you decide to bootstrap or get funding, thinking about these items ahead and during the startup will help put you on the right track.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

• No business plan: You must have a business plan in place beforehand; otherwise both you and your business will most likely get off course. Even if it’s only a few pages, the process of writing the plan will help you think through the proper steps. As many smart entrepreneurs have said, the benefit of the business plan is not the document itself, but the thinking process that goes with creating it.
• Insufficient cash: Most small businesses fail due to lack of cash. To avoid this, create a rough financial outlook and estimate what you need to have before the business starts generating its own cash. Because we entrepreneurs are naturally optimistic, take your expenses and double them and half your revenue. This gives you a more realistic financial outlook.
• Wrong business structure: It is essential that you can understand the business structure that is right for your business to flourish. Consult an attorney or accountant for expert advice that could save you big time in the long run.
• Not giving time or effort: You cannot get maximum benefit with minimal effort. Be ready to spend endless hours at office, or as much time you need to get the job done.
• Not doing market: Only a great idea is not sufficient to have a successful business, you need to have a good understanding of the market, the industry, and your competition. If the market is not ready to receive your product or service, then your idea is of no use.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog