Ok, many people want to launch their own venture, but the reality of entrepreneurship is that the idea may be lacking, or the founder may simply not be up to par.
So, the question is, how do you evaluate if your venture has legs, and if it does, whether you have what it takes to be a founder?
Well, in this article, we look at these important questions and provide a Free Assessment Tool, so you can find out the truth.
Here goes…
Why Founders Matter?
The founder of a venture is the driving force behind the company; a great product or service will fail to reach escape velocity with a poorly selected founder.
Founders heavily influence the success of a business, and there are several qualities that are absolutely essential for founders.
Remember, a founder is usually building something from scratch. This is a very specific skill set and the difficulty level should not be underestimated.
Some business people make terrible founders because they are more process-driven. They may be great at nurturing an established business, but not so great at establishing something from scratch.
These types make great managers, but often are not good founders. It’s important to understand the distinction.
A good founder cannot be uncovered by simply looking at their personality or sales methodology.
Founders will need to get scrappy and get down into the weeds of the business to get things moving and make early sales.
Most importantly, they will need to make progress without losing the trust of customers and of the marketplace. Good founders need to be good at building relationships, not just building the numbers.
After all, in order to grow the business from zero, it will be essential to bring along valued customers, contacts and connections along the journey.
If the founder fails to build those connections and does not bring them along, progress could be extremely slow or non-existent.
Having to source brand new customers is extremely time-consuming and costs money. Building relationships and repeat business is not only more effective, but it may be crucial in the early stages.
Qualities of a Good Founder
Knowledge
A good founder has an understanding of the industry, the customers and the practical elements of delivering the product or service.
Read this article on how to sell:
Motivation
Launching a new venture is extremely hard. A good founder will need to be resilient and have the motivation to continue even during uncertain times. Personal and business sacrifices may be required.
Risk tolerance
This is where many slip up. A good founder needs to have a tolerance for risk. By risk, we don’t mean the capacity to throw caution to the wind.
A good founder needs to be able to weather unexpected expenses, delayed income or long periods of time without profitability.
A founder who is risk-averse is unlikely to do well in a ‘starting from scratch’ scenario.
Leadership
A good founder needs to be able to effectively recruit people, followers, customers, and build relationships. Negotiation skills and networking ability will be essential.
Read this article on how to become a better leader:
Adaptability
A good founder will also need to be adaptable to change. Customer feedback may show that the original idea will not work without adjustment. Initial assumptions may be proved incorrect.
A good founder should not be afraid to pivot based on new conclusive data.
Founder Business Fit
A good founder will fit the opportunity. The founder’s abilities, goals and objectives should be aligned with the business.
If the founder is lacking in certain areas, does the founder have a plan to make up gaps?
How to Evaluate Your Business Viability?
Things to consider when evaluating your business idea:
1. Problem and Value
Your business will need to solve a genuine problem, and most importantly, will customers be prepared to pay for it?
2. Market demand and size
Your business idea will need sufficient market demand to thrive. How many potential customers are there? Is the market large enough to sustain the business?
3. Target customers
Who are the target customers? Do you understand their needs? How do they currently address their problems?
4. Competition and differentiation
Who are the main competitors in the market place? You will need to understand direct and indirect competitors. Can competitors easily copy your idea? Why would customers choose you over the competition?
5. Financial viability and profitability
Are the start-up costs feasible? What prices are customers willing to pay? How many sales are required to break even?
Can the business eventually generate enough profit to justify the risk?
6. Operational feasibility
What equipment and resources are needed? Can the product or service be delivered reliably?
7. Marketing and customer acquisition
This is a big one. How will customers discover the business? How much will it cost to acquire each customer? Will you be able to attract new customers at a cost your business can afford?
8. Legal
What licences and registrations are required to run the business legally? Is the business able to operate legally by complying with required regulations?
9. Funding
Can the business sustain itself during slow periods? How long before customers begin paying? Where will funding come from?
Will the business be able to survive until cash flow becomes reliable?
10. Risks
What could make the business fail? Are market conditions changing? Is there a contingency plan in place if market conditions change unexpectedly?
11. Growth Potential
Is the business able to scale and grow without costs increasing at the same rate? Can the business grow effectively without losing out on quality or profitability?
12. Founder Fit
Does the founder have the skills, knowledge and experience? Does the founder have the resilience and motivation to succeed?
Final Thoughts
Many people wish they could go in on their own and launch their own venture.
However, it’s important to understand that entrepreneurship is not easy. Before taking the plunge, it would be wise to evaluate if your venture is likely to succeed.
It may also be prudent to evaluate if you possess the right qualities to be a founder of a new business.
Remember, a founder needs to be able to build from scratch, which is an entirely different skill set from simply managing or growing an existing business.
Savvy entrepreneurs will carefully evaluate their skills to ensure they have the required knowledge, resilience, motivation, risk tolerance, leadership and adaptability skills.
They will also need to evaluate carefully if the business itself has the required market demand, realistic financial viability and growth potential.
Using the tool provided in this article could help with the evaluation process and set you on your exciting journey to success.
Good luck!
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