By Karen E. Klein Q: I am a former scientist and university professor who has formed a company to commercialize two patented ideas and one prepatented idea. We already have built and tested one alpha and one beta prototype, which show excellent results. The U.S. market for our products is currently $250 million annually, and I think we could capture a 25% market share. Unfortunately, I have little in the way of available funds to move forward. Any suggestion on where I go from here? -- M.F., Cleveland.
A: It sounds like you're off to a good start. You have the knowledge, legal protection in the form of patents, and the preliminary technical work to prove and demonstrate your concept. At this point, what you lack -- and what you most definitely need -- are (a) business knowledge and experience and (b) financing.
There are several ways to go about getting both. The quickest and easiest method would be to hook up with a partner who has both business expertise (someone with a background in technical-type businesses -- as opposed to, say, retail -- would be ideal), and access to funding sources. It's not easy to find such a person, however, and even more difficult to find one who is a good fit with you personally, who is available, trustworthy, and willing to collaborate with you. Still, it's a possibility worth thinking through.
IGNORANCE ISN'T BLISS. It's not hard to find a consultant who would evaluate your business prospects for a fee, help locate funding, and give advice on what you need to learn about business. Ask friends, acquaintances, and colleagues for referrals. If you can locate a professional consultant who sees the potential value in what you are doing, he or she might just be farsighted enough to reduce or delay fees in exchange for the longer-term prospect of working with your growing company in return for a delayed paycheck, either in equity or commission.
Finally, you could go it alone: a frugal method certainly, but one which will require you to spend considerable time and effort learning about business -- time that you might better put to research while you let someone else handle the business side of things.
Too often, individuals who are experts in their own fields get good ideas and make the mistake of thinking they can absorb entrepreneurial principles in a snap. They rush in where angels fear to tread, put their savings on the line, and, all too soon, see their dreams torn apart by economic realities. Starting your own business requires a lot of know-how, and the experience is fraught with pitfalls that one has to know about ahead of time in order to avoid.
BACK TO SCHOOL. Fortunately, there are wonderful resources available for those who want to learn business: community college and university programs that focus on teaching entrepreneurship in a real-world atmosphere, government-funded courses online (check out the SBA's Web site,) and in local Small Business Development Centers, private classes on business planning and startups, industry-sponsored seminars and workshops, and many fine "how to" books combining business theory with practical examples and advice.
You mention that you're a former university professor, so a logical place to start might be for you to visit your old place of employment, talk to some trusted former colleagues about what you're hoping to do (don't give too many details if you are worried about potential competitors), and ask them to introduce you to faculty members in the business department who could advise you further.
If you get to the right professor -- someone with experience in entrepreneurship -- he or she might know of and suggest angel investors (wealthy individuals who invest "seed money" in new companies) or be part of a group that scouts promising tech companies for venture capitalists -- professional investors who put money and talent into startup ventures with the hope of reaping a large return on investment when the company's products hit the market.
WATCH YOUR STEP. Whichever avenue you decide to follow, it is important to educate yourself about business and that you hire experienced professionals to help you -- accountants and lawyers who specialize in small-business development. It's also likely that you will need to invest any available funds you have personally, and hit up your friends and family for loans to get off the ground.
Even in promising companies, outside investors like to see that the founders have put their own money on the line and have successfully raised money from their local circle of contacts. Do some homework, surf the Internet for relevant articles and course materials, and proceed cautiously. Remember, you can have the neatest idea in the world, but if you are ignorant of the best way to implement and protect it, expect nothing but wasted effort and disappointment. Good luck!
Have a question about your business? Ask our small-business experts. Send us an e-mail at Smart Answers, or write to Smart Answers, BW Online, 45th Floor, 1221 Avenue of the Americas, New York, N.Y. 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally. Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.