Before Getting Started, Create a Business Plan
The Caltech/MIT Enterprise Forum is among the area’s oldest business resource organizations focusing on high tech. Launched in the mid-’80s, the Pasadena group has helped hundreds of start-ups and early phase companies navigate that industry’s ever-changing landscape, with programs and workshops covering financing, idea development, marketing and the Internet. The forum also organizes networking opportunities and hosts informal chat groups for Internet entrepreneurs. Here are the three questions most commonly asked of the group. They are answered by Nick Nichols, director of Caltech’s Industrial Relations Center, which co-sponsors the Enterprise Forum.
* Question: How can I turn my idea into a business?
Answer: Before you get started you have to ask yourself some very basic questions, such as what’s your business model--in other words, how are you going to make money. You also need to know who your customers are. It’s amazing how many people work years on a product and never get in touch with potential customers.
You need to think about these questions so you can enter the market more intelligently, without spending a lot of time and a lot of your own money.
If you don’t have a business plan, then we try to refer you to people that we know have credentials in your area that might help you focus your idea. We don’t try to give you specific advice. We try to orient you toward credible sources of information in your area.
I personally feel all entrepreneurship, like politics, is local. Private investors like to be close to the companies they are investing in.
If you do have a business plan, we might put you in one of our programs. Often we have one or two entrepreneurs giving a case presentation before a panel of experts, which is in effect a review of your business plan. The panel will comment and lend some input. You get the benefit of talking to and networking with the experts participating in the program.
A lot of business cards get passed around at these meetings. We’re trying to bring people together. We’re not trying to tell you how to do your business. We realize in an entrepreneurial sense that people get put together by networking and by all sorts of accidental connections. But if you don’t keep getting out there you’re not going to make those connections.
Q: Where can I find financing for my business?
A: We’re not a brokerage where we’re trying to put people together with financing sources. There are other entities that do that like the Los Angeles Regional Technology Alliance. But we’ll ask you for more information like do you have a business plan and where are you in that business plan development. If you have an idea, you’ve got to make it more concrete by putting it into the business plan format. You’re not going to get funding unless you have one. And you’ve got to network like mad to get that business plan to the right sources because venture capitalists get a lot of these things. There are other alternate financing media coming out, like angel networks. These are private investors that have sort of bonded together and review business plans as well. We have a lot of contacts with angel networks.
Q: Where can I find people to help me pursue my idea?
A: You need to have someone in finance, management and accounting and someone concerned with the legal side. Many people who have these skills come to the Forum and make themselves known. It’s one of these networking phenomena that’s hard to input into a database because it’s too fast-moving.
Having someone in finance is important because you need to understand how to handle your assets and manage your cash flow. You could have a very young company, so you can’t afford to hire a CFO, but you have to acquire some expertise in that area to put together a reasonable business plan. There are people looking to just ally themselves with some of these small companies on almost a pro bono basis with the expectation that if it works out it would be an opportunity for them to benefit.
In many cases, small companies also want to find a CEO because the people creating the technology want to stick to doing the fun things. You also need lawyers to represent you as an entrepreneur with finance sources or to help you with intellectual property.
If you have some invention or patentable intellectual property, you should consult somebody very early on. You also need a good accounting person, obviously. We have a number of those on our steering committee.
We’re just sort of a reflector of a lot of resources, and we hope you can follow through and customize your own management team to suit your own needs.
Caltech/MIT Enterprise Forum can be reached at (626) 395-3916 or at entfor@its.caltech.edu. The forum’s Web address is https://www.caltech.edu/~entforum.
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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.
