I am often approached by entrepreneurs who want me to consult with them on their large visions of change that their skills and (to be developed) technologies can create. This is the spirit of entrepreneuring in its most original, and often lovely, form.
Still, the bond of reality must come to bear at some point, and I am often the bearer of that bond. So, I want to share here the initial questions we would address in the first couple of days of meetings together.
What life do you want? This means your life, your lifestyle, your financial condition, your partnering with someone in the business and/or at home, and so on. This is not a question about the business or vision you want to build. The venture should be built to support the life you want, or you will not sustain its long-term development.
What financial condition and life stage are you in? How much capital do you have to live on in your usual manner, to send the kids to college, to retire on, to be safe with? How much capital do you have to commit, (that is, to risk and possibly lose) to this new venture? How much reliable access do you have to outside capital in any form – friends and family, grants, angels, venture capitalists, debt collateral, and so on.
If the above answers lead you to build a venture, how should you begin so as to create a viable pathway to your larger vision? How many years ahead of the market (and its acceptance) is your vision? What part do you build first? How does the first part you build create the credibility and funding for the next part? What corporate structure is best suited to such a venture and its capitalization and effective outreach? What strategic alliances and capital might be available? And so on. This is a kind of venture roadmap which addresses capabilities, time to build, capital to build, time to market, time to ROI, and other issues. It informs and is informed by the issues of lifestyle and financial conditions already noted.
I try not to talk my clients out of their visions and dreams, although that does happen sometimes, and they are grateful for it. One told me, “That’s the best consulting money I ever spent – I could have risked everything without knowing those elements that will doom this idea.”
This kind of early risk-assessment of a new venture leads the entrepreneur to build what can be built as the stepping stone to building the larger vision. I told a client once, “This is a marvelous, large and needed vision. It is 10 years ahead of its time, needs $30M – $50M to just launch, and requires you to change the behavior of three major industries. You have just short of $1M in capital. So, take this vision, and come back to me with a single mosaic of that larger picture, a mosaic that would be critical to the first steps toward the vision, something we can build on the capital we have. And we will build that.” (and we did).
Often those with such large visions are first time entrepreneurs. Serial entrepreneurs know more clearly what it takes to build even a small idea. I point out that the mosaic will be the first business we build together, and then there can be another and another, and the entrepreneur will learn more about a company-building with each venture, while creating the larger vision step by step.
I also use this risk-assessment with established ventures that need to re-position their target markets, their international expansion, their response to new competition, or their new pricing configurations. And with my clients when they have exercised a successful exit and have new wealth, but still want to build the next new thing. The lifestyle issues are included only if the client has changed his or her life stage, wealth status or needs. My clients and I also use this risk-assessment during downturns to find their adjacent markets and new models for sustainable profitability.
I always think it is wise to stop for a couple of days and ask all the questions that should be asked, before venturing into new territories.