A vivid story, told with passion and enthusiasm is crucial to obtaining needed upfront financing. As with other small business start ups the entrepreneur relies on numerous sources including family, friends, personal savings and credit. However, high tech start ups often need a large amount of funding just to get started. One estimate is that a high tech business needs from $50,000 to $500,000 just to get through the first six months and that’s the founders drawing no salary. Forrester research estimates that the total cost to get a business up and running on the internet ranges from $2 million to $40 million. One typical source of first fund is through angel financing. Angels are wealthy individuals, typically with business experience and contacts, who believe in the idea for the start up and are wiling to invest their personal funds to help the business get started. This first round of financing is extremely important. It can enable the entrepreneur to quit another job to devote time to building a foundation for the company, filing for necessary permits or patents hiring technical consultants marketing to new product or service and so forth. Significantly angels also provide advice and assistance as the entrepreneur is developing the company. The entrepreneur wants angels who can make business contacts, help find talented employees and serve as all round advisors.
Building and Testing the product or service:
Once an entrepreneur has up front financing, it is time to build and test the product. This stage may include hiring employees and consultants buying or building the technological infrastructure and perhaps securing office space or other needed facilities. Start ups should also begin securing top flight legal and financial assistance. The time to begin working with lawyers and bankers is early in the process not after the company runs into trouble needs specific legal or financial advice, or is ready to go public. Most experts agree, however that the most critical hires in the early phases of the company are the technology experts, such as engineers, scientists, or computer systems architects who can bring the entrepreneur’s dream to life. An indispensable part of this stage is making sure the idea and the basic technology to support it actually work.
Reliability is crucial in the world of high technology. The entrepreneur has to find out as early as possible whether the product idea will work, through feasibility studies, testing, and demonstrations. Thanks to extensive testing, Brett Galloway’s Airespace company that makes switches and other gear for wireless local area networks, pulled in more than double the revenue he expected in the first three months. One key to Airespaces’s success is the simplicity of the products. They mesh well with existing wired networks and customers don’t have to be technical experts to use them.
Launching the company:
The launch phase is when the company’s produce and services are officially made available to the public. Marketing is the most important focus at this stage of development. High tech start ups cannot afford to take years to build a brand, they have to make a name for themselves virtually overnight? A catchy logo and visually appealing company materials are important in creating the look of the company. The name if not yet selected, should be chosen with care or modified to give the company a distinctive personality that sticks in the mind if customers. For example Ad.com a Website devoted to answering questions about anything, revised its brand name to Ask Jeeves, which proved to be a stroke of marketing genius. Hiring competent public relations firms at this stage can help to create a buzz about the new company in the business community which helps attract future investors as well as get the word out to customers.
Source: New Era Management