Time, Money and Talent
Your business will succeed or fail based on the resources you have or can obtain. Resources include skills/abilities from the team you assemble, money (your and other people’s (OPM)), and time (the time it takes to reach your goals, develop your idea, build your business, get the first sales, etc.).
All resources eventually flow back to cash. How much cash do you have to pay people, buy materials, rent needed space, etc.? So a key aspect of developing your business and product ideas is to determine:
- What resources do you need
- When do you need them
- How much will those resources cost
- What return (cash) will they generate and when
Equity and Debt Sources
So your financial resource needs come in two primary categories: equity (ownership) and debt (borrowed money). Your access to resources beyond your funds and skills is dependent upon developing your business Concept, identifying your market opportunity, quantifying your resource sources and uses, and developing a cohesive, understandable, compelling business story.
Whether you are seeking investors or lenders (banks, etc.), you have to persuade them that your idea will work. You also need them to know you have done your homework and can articulate the problem/solution set you are pursuing. They want to be convinced of your capability to pursue the Opportunity and the viability (size) of the Opportunity. The more homework you do to validate your concept, define the opportunity and quantify the resources needed to capitalize (profit) the more credible you become.
Credibility – The Key to Other People’s Money
The ability to access OPM (other people’s money) through investors or debt agreements comes down to the confidence the decision-makers who control those funding sources have in you and your team. These funding gatekeepers may be using their own money or funds entrusted to them, so they need information that convinces them that you have done your homework. One of the most critical elements in their decision is your Entity (or Business) Model. (See the Entity page of this website for more information.)
Resources you may need:
- Office/production space
- Computers and related equipment
- Contractors, Consultants, and Advisors – tax, accounting, legal, marketing, etc.
- The website, email, and domain
- Meeting space,
- Office and computer supplies
- Travel: Hotels, mileage, parking/tolls, meals, etc.
- Memberships, Dues, and Subscriptions
- Payroll services, wages, taxes, etc.
- Property taxes
- Sales and Use taxes
- Specialized equipment
- Marketing materials
- Conference fees
- Sponsorship fees
- Tradeshow/Event Displays
- Business insurance: general, inland marine, umbrella, product, workers compensation, business disruption, etc.
- Working capital
The Business Entity Helps Determine Resource Access
As you define your Entity model, you should map your processes and make a note of the specific resources you will need. Then hit the internet and look for the cost and alternatives for those items. Again, the more detail you can identify and quantify, the greater your chance of success – in the business and in getting the funding you need.
One of the biggest mistakes businesses make is underestimating the cost of getting started and the on-going costs (working capital). Under-capitalizing your business can put you out of business, even with a great Concept, the right Opportunity, and the best Entity model.
 See this website for information on the Viability, Capability, Credibility, and Visibility components of business