Perseverance

One of my college professors described one of my fellow students as a person who made his own luck. I always wondered what he meant by that. But I think that it was a case of the kid knowing what he wanted and going after it. He had perseverance.

That's a trait that entrepreneurs have to have. They must believe in themselves and their goal. They don't give up. The Wall Street Journal just ran an article on perseverance and personal health. There's a link in my sidebar. Take a look.

Like American Idol for Entrepreneurs

This week I felt as if I were on American Idol. No, not as a contestant, as a judge. I was on a panel of three critics listening to three-minute pitches from entrepreneurs. The panel's job was to help the entrepreneurs get ready to pitch their requests for funding to over 100 investors at the upcoming Crossroads Venture Fair.

I had a yellow grading sheet for each presenter. I had to grade the contestants on specific criteria. Amazingly, most of the presenters never got to some of the points. They mostly got hung up on giving their credentials, describing how great their product or service was or going into the need in the marketplace. Two presenters completely lost me as they dove into the technical aspects of their inventions, complete with diagrams that made no sense.

The judges had to tell these entrepreneurs how to improve their presentations. What amazed me was how they looked so eager to hang on every word we said. Sometimes I thought I sounded like Simon, telling people that I couldn't understand what their business was.

But some of the ideas for new businesses were really good. I hope that the entrepreneurs learned from the experience and will do well at Crossroads.

Here is a rundown of the point we had to grade on:
Product/service - what do you do?
Market - what's the size of the market?
Competitive Analysis - Is the product unique?
Finance -- how will you make money?
Management - Do you have the talent to meet your goals?
Funding -- what do you need? how will you use it?

Crossroads is run by the Connecticut Venture Group. http://www.crossroads-cvg.org/

Crossroads Venture Fair - April 29-30, 2008

The Crossroads Venture Fair is coming up -- April 29-30 in Stamford, Connecticut. Now is the time to sign up for a chance to present at the fair, the largest venture event in the Northeast. I was a judge for last year's fair. We had to turn down half the companies that applied to exhibit and present. Let me give you some tips for when you fill out the forms:,

• Use full sentences that make sense.
• Ask someone else to read over your responses before you send them in.
• Make sure you answer the questions asked.

To sign up for a chance to present, go to:
http://www.cvg.org/entrepreneurzone.asp.

You'll see that there are many categories. Fill out the form for your business's stage:

2008 Connecticut Venture Group Funding Applications:

PRE-SEED and SEED STAGE Funding Application (R&D or Proof-of-Concept Phase)
Apply here if your product, technology or service requires funding for further development or testing, patent protection, or you require assistance to complete a comprehensive business plan, or other resources before you are ready to start up.START-UP Funding Application (Ready to Launch)

Apply here if you have a business plan, a proven concept or product, a management team identified, and are ready to start up.EARLY STAGE and EXPANSION STAGE Application (Sales < $5,000,000)

Apply here if you have started up and have annual sales under $500,000 [EARLY STAGE], or sales are over $500,000 but lest than $5,000,000 [EXPANSION STAGE].LATE STAGE Companies (Sales > $5,000,000)
Apply here if you have annual sales of at least $5,000,000.

Financial Projections

One reason I haven't posted for over week is because I've been building a financial model. As I've tried out different scenarios, I've been reminded that a model's robustness (or flexibility) comes from the formulas and the assumptions. Having a flexible model that can show you the outcomes of different assumptions is crucial.

Here are some tips for building a model in Excel:

1. Write down your assumptions on a separate worksheet or in Word.
2. Develop formulas and links that carry through all the sections of your workbook.
3. Do your homework -- research the marketplace to understand volumes, prices, costs, etc.
4. Divide your workbook by worksheets (using the tabs at the bottom of the page):

• One summary sheet that is the profit and loss statement
• A Revenue sheet that has all the revenue, cost of goods sold and gross profit assumptions -- metrics, sources, prices, quantities, growth rates, etc.
• An Expenses sheet that has all of your overhead expenses.
• A Capital Expenditures Sheet
• A Depreciation Schedule.

5. Make sure you construct your formulas to carry from page to page. That way, if you change a revenue assumption, it shows up on the profit and loss sheet. This makes it easier to try out different scenarios.

I'll write more about financial statements later.

Please post questions or send me comments -- upstartwyn@gmail.com

Focus Your Pitch -- Lessons From Pitchers

The single most common mistake entrepreneurs make is not focusing. To pique the interest of an investor or to be successful, you must focus. My recent work with one entrepreneur reminded me of this point. He sees his company as doing too many things. That was clear in his recent pitch to an angel investor.

That's why David Brooks's column, "Pitching with Purpose," in The New York Times earlier this week was so interesting to me. It was about great baseball pitchers and great pitching. http://www.nytimes.com/2008/04/01/opinion/01brooks.html?ex=1364788800&en=782ad8a401682876&ei=5124&partner=permalink&exprod=permalink

To be a great pitcher, you have to ignore everything around you and clear your mind. You just have to focus on executing the pitch you want to throw. The article is worth reading simply because it has lessons for life -- and lessons for entrepreneurs. Remember that Amazon started out as an online store for books. The company only branched out later.

Entrepreneurs -- focus your pitch!

Homeboy Industries

Last week The New York Times ran an article about Homeboy Industries in Los Angeles. Homeboy was started by a Jesuit priest who wanted to help kids get out of gangs. He wanted to help them learn how to work and earn money, rather than killing and getting killed through gang activity. These kids are now making Tee-shirts and baking bread. They sell their wares and learn about being successful. I love this idea of seeding capitalism. I love that these kids are learning how to be self sufficient and participate in the American Dream.

My son, who goes to USC, says that Homeboy sells its food on the campus as part of the campus farmers market. That's great because USC is very close to gangland neighborhoods.

When I had a government grant to counsel low income people on how to start businesses, one of the organizations I had an alliance with believed that the same entrepreneurial spirit and skills that inner city drug dealers have could be re-channelled into selling legal products and services. Homeboy seems to be doing just that. I hope more organizations like this pop up and are successful.

http://www.homeboy-industries.org/father_gregg.php