KNOW YOUR CUSTOMERS, AND NEVER DEVALUE YOURSELF
Kowork on Saturday hosted the Dallas Startup Week session, “Show Me the Money: Funding or Investors for Your Business, When and How,” that gave entrepreneurs strong advice on how to fund their new businesses.
The panel was composed of successful Dallasites in the fashion and investment industries: Wendi McGowan-Ellis of Wendistry, a whimsical hand-painted handbag company; Ari Rastegar, CEO of Rastegar Capital, a private investment firm; Tahir Hussain, angel investor and managing partner and CEO of Collide Village; and Bobby Katoli, co-founder and managing member at MassCatalyst, a company connecting investors and entrepreneurs.
The panel offered eight powerful tips for funding your business.
Don’t start production until you know what your customers want
McGowan-Ellis said she paid roughly $30,000 on advertising and public relations for her custom handbag line, and even more on stocking products, all before she had quantified a market value or gathered a passionate customer base.
She had to put her business on pause for five years before she felt capable of relaunching it — and the second time, spent only $7,000 on all supplies and materials to get started.
“Start small, start lean, and get feedback.”
“Start small, start lean, and get feedback,” McGowan-Ellis said. “You should take money and orders before you make your products.”
To know what they want, continue to revisit and revise your product
“After your first customer interaction, your plan will be down the drain,” Tahir said.
Every decision from then on will be data-driven, with evidence to validate plans and value. Tahir said the vast majority of entrepreneurs he coaches fail to demonstrate their value hypotheses.
“Go meet with customers,” he said. “Buy them a coffee. Bring 10 to 15 hypotheses or product ideas and ask them what they want and like. It’s so much cheaper than hiring developers or analysts.”
Before anything else, make sure you truly believe in yourself
In fact, Rastegar said that to be certain that you have a good concept, be willing to invest your own money.
“What drives investor capital is enthusiasm.”
– Ari Rastegar
“The first step to building wealth is savings,” Rastegar said. “What drives investor capital is enthusiasm. When people can see the sparkle in your eyes, they want to be a part of your idea.”
There is no “right” time to reach out to investors, he said. You should start doing so whenever you believe in your idea.
Asking friends, family for money holds you to the highest standard and inspires success
“If you’re not willing to have friends or family invest in you, it tells us as investors that you don’t believe in yourself,” Rastegar said.
And be sure to honor those relationships. “At the end of the day we can make money back … it comes, it goes … But relationships, you can never get back,” Rastegar said.
The fear of letting down people you love the most gives you extra drive, he said. Those people will hold you accountable to your dreams and goals.
To get funding, your product or service needs to fill a market void and add value to investors, customers
“The product itself is not the point,” Rastegar said. “The point is that whatever you’re doing, you’re doing it better than anyone else.”
Don’t be afraid to change business plans — there’s no one right way to be an entrepreneur
“Success teaches you nothing,” Rastegar said. “Failure teaches you everything.”
Business plans that have too many variables never work; simple is best.
He said fashion icon Coco Chanel didn’t have a plan — she just created what she loved. McGowan-Ellis didn’t have a specific plan, either. Rather, she started by defining her ideal customer in detail so that she could tailor her product perfectly to the targeted market.
She also frequently revisits her goals and checks her progress. Once a month, she checks her profits, her social media stats, user interactions, and other feedback, then uses the data to see how she has progressed or how she could improve.
All panelists agreed that business plans that have too many variables never work; simple is best.
Never devalue yourself
McGowan-Ellis said that she was unhappy with the original wholesale price of her bags, so after deliberating, raised it.
The No. 1 one factor of success? Grit.
“Don’t ignore that extra slice of artistic value you bring to the table,” she said. After all, the whole is greater than the sum of the parts; as an entrepreneur, you should be adding unique value that only you can create.
The No. 1 one factor of success? Grit. Grit is a combination of perseverance and tenacity.
“You, the entrepreneur, make your business happen,” Rastegar said. “Go out and show that attitude, that relentless grit.”
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