Backing good business ideas

BACKING GOOD BUSINESS IDEAS

Backing good business ideas, what makes a good business does not always require a good business idea

Some ideas get kicked into touch immediately because they are obviously unworkable or totally ridiculous; and many applicants are evidently not cut out for the cut and thrust of business; and occasionally (too often in fact) some are simply total lunatics. I could write a whole chapter on nutcases I have encountered in the last decade. Most of the time, business ideas are dismissed simply because the person has not done any research, and is patently lacking any commonsense. They just approach us with a business proposition without any plan or idea as to whether it has a marketplace. Often, these people have a dozen ideas that they want to pitch but have never done anything with them. To us, that's a sure sign that we have a dreamer on our hands.

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Good ideas are a dime a dozen. We all have business ideas. I can have a half hour conversation with David and between us we will moot ten ideas off the cuff as the conversation evolves. A good business idea does not necessarily constitute a good business. What matters are the market and income potential, and whether or not the business idea can be brought to market in a way that will make it profitable.

We get approached by people who, because they have had an idea for a business, believe that we should put up all the money and run the company, and that the person who had the idea should earn money from the business without doing anything else. Just because someone has an idea doesn't make that idea worth anything. It is extremely rare that we get approached with a totally unique idea for the internet. I always suggest the person goes to their bank with the same proposition and see what they say. We and the banks invest in people first and foremost; the business idea is secondary to the person who we will be backing.

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New and unique ideas are great when they come along providing they are good ideas and workable. What normally happens is that someone comes along with an idea on how to improve and develop an existing idea, or with an idea that is based on a theme of an existing idea. If either of these scenarios applies to you, we would be interested in hearing from you; but do your homework first.

One thing you have to understand is that it is you who will be running the new company. Whilst we will back you and provide all the support and necessary requisite skills needed to make the business a success, the responsibility for managing and driving the business forward will be rest with you. Hitting sales targets and ensuring the business is profitable will rest squarely on your shoulders. This means long working days and not going home at five o'clock because you want to watch something on the television. Read the chapter on what makes a successful entrepreneur.

BUSINESS TURN AROUND

More often than not, we get approached by entrepreneurs who have invested in an internet site only to find that success on the internet is far tougher than they had envisaged. I would imagine that this applies to 99.999999% of all website owners who started out believing the internet was an information superhighway paved with gold.

Success on the internet requires major investment. It starts with professional website design (see David's chapter on website design) as most websites aren't built for the search engines. It involves search engine optimisation, all sorts of forms of internet marketing and advertising, public relations, off line advertising, linking strategies and numerous other components which are needed to create public awareness. In other words, it is not enough to just own a website. Success requires money, time, expertise and an experienced team of people each skilled in their own areas of knowledge.

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Fantastic business idea

What normally happens is that someone gets an idea, does little or no research, gets a cheap website built and then sits back and waits for something to happen. And when you do nothing, you can be sure that nothing will happen. So the website owner then starts to dabble in various aspects of the internet to try and get some traffic to their website. This normally means that they are trying to do jobs they know little or nothing about, doing tasks they would be better employing someone else to do, and not doing the things they know about where they could be making money.

So eventually, having realised that their website is not going to make them a profit and having wasted even more money flogging their dead horse, they approach us. Sometimes the situation is unsalvageable, sometimes the idea was unworkable in the first place, and sometimes we can see ways of turning the situation around and making the website into a money spinner.

If the above describes your situation and you are wondering what to do, you have a number of options open to you at this stage. You could give up and stop throwing money down the drain. Or you could employ us to sort the problems out, bearing in mind that I have already said that success on the internet requires investment. Possibly you could sell us the website or, if we are agreeable, take us on as business partners with an equity share.

A word of caution at this stage. The value of your internet business will not be based on how much you have already invested in it. The fact that you may have put your heart and soul into the business will count for nothing; its only worth will be in the possible potential to make a profit and how much it will cost to sort the problems out. (Read the chapter on buying and selling websites).

We get approached by people who own websites that have never earned them a penny who believe they have something of value simply because it cost them money to have it built in the first place. It doesn't matter what it cost or how hard you may have worked to try and make it a success - its value will lie only in someone else's belief that they can turn the business around, coupled with their view of how much it will cost to achieve this and the potential profitability.

The cost of having a website built represents just a small fraction of what you should have set aside to cover marketing, advertising, PR, search engine optimisation and all the other business areas your will need to invest in. If you started out with a cheap website and a small budget in the hope that the site would make you money, you are most likely now at rock bottom as far as your finances are concerned.

If it is your decision to now start to invest heavily in the business in order to make it a success, you need to sit down and work out exactly why you still believe in the project, what the realistic income potential really is, and how much you are prepared to invest.

If you have reached a stage where you can no longer carry on throwing money at the project and need experienced partners, then you need to have a clear and workable business plan laying out why you believe your website is worth resurrecting.

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