Conversations amongst entrepreneurs often center around the monetary value of an idea. Many entrepreneurs believe that a brilliant idea will directly lead to the creation of a genius (and profitable) company. They idolize great companies, like Apple or eBay, that are thought to have turned great ideas into powerhouse companies overnight.
Few entrepreneurs remember that ideas alone aren’t worth much at all. Unless your idea is something that no one else can replicate, it’s worth nothing until you can add the right elements.
Savvy entrepreneurs recognize this fact, so they quickly try to back their idea with smart management, paying customers, and strategic partners as early as possible in order to build value. These steps can all be done while the company is still in the formative stages – before it’s ever officially launched.
Smart management leads to better execution
There’s an old saying that the wrong idea with the right management team can at least have a chance of surviving, but the right idea with the wrong management team is altogether doomed.
That’s because the true value of an idea isn’t about the idea itself – it’s about the execution of that idea. There were lots of companies that easily replicated the idea of online auctions to compete with eBay. Do you remember them? No? Neither do I. That’s because eBay’s management team executed on a higher level than their competitors who had the exact same idea.
Unless you have a solid team to work on your idea, you’ve got nothing. Investors recognize this, which is why the strength or your management team plays a major part in their evaluation of a startup looking for funds.
However, you don’t necessarily have to hire all of the members of your management team from the get go. Many startups have secured commitments from each key member of their management team before the company actually launches. In fact, most of those folks will probably be working at their old jobs for a while even after the company launches.
Paying customers validate your idea
An idea is just an idea until you have a paying customer attached to it. Only then can it be considered a business.
In order to get to the “business” stage, you need to validate your idea with customers. This can come in many forms, from having initial conversations with potential customers to actually getting a purchase order ahead of delivery. Think about building up a “pre sales” pipeline of customers just as if you had already launched the business and were selling for real.
Anyone can discredit a simple idea, but no one can discredit paying customers. The more customers you can find, the more value you’ve created.
Strategic partners provide valuable feedback
Strategic partners can be be investors to advisory board members to key industry partners. Although investors can provide some much needed capital to launch or grow a company, the right investors also provide strategic value to your idea. In other words, they’ll help prevent costly mistakes from being made in your business.
The most ideal partner would have either launched or invested in a company that’s very similar to yours. This prior experience would teach them the ins and outs of your industry and create a rolodex of potential customers, managers, and acquiring companies.
Once potential partners see that you have a strong team and demand from customers, making the decision to partner with or invest in your company becomes much easier.
Solidifying your pitch
In reality, your idea itself is only the foundation of your company. The key building blocks of management, customers, and strategic partners are what truly build the structure.
You’ll notice that as you add each of these elements, your sales pitch will take shape and solidify. More importantly, people will start to spend less time debating the merits of your idea and more time taking interest in the value you’ve created in your company.
Bringing all three elements together is the ultimate way to generate solid traction for your company. By pulling this off, you’ll put yourself leaps and bounds ahead of other entrepreneurs in your sector.