How can entrepreneurs take advantage the economic recovery from the recession? Christopher Lynch, vice president of economic development at the Irvine (CA) Chamber of Commerce
and creator of the annual Irvine Entrepreneur Forum,
says there are six areas that can jump-start entrepreneurs' leverage of the recovery:
- Get a good start on the recovery. By mid-2012, the recovery will be far enough along that riskier ventures will able to get easier funding. Lynch advises entrepreneurs to prepare by making new contacts, solidifying business models and creating potential business relationships. "Look into entrepreneurial or business workshops, such as what we provide at the Irvine Chamber of Commerce and the Irvine Entrepreneur Forum. An economic recovery is a good time to capitalize on the optimistic mood of investors and put your business out there in front of the right people. So make sure to perfect a quick elevator pitch and consolidate all your financial information."
- Take advantage of opportunities. It is important for entrepreneurs and start-up businesses to pay close attention to the opportunities and general attitude toward investing during a recovering economy. The fact that investors are becoming more willing and open-minded toward investing is a good place to start. This means money is starting to flow back into venture capital and other investment options. People are looking for new places to put their cash and every entrepreneur should take advantage of the opportunities by getting their innovation out there to potential investor groups.
- Consider the entrepreneurial landscape for 2011. Successful investors try to anticipate the future of business growth and need to have foresight as to where the demand will come from. They will look for new ideas and industry innovation, from major corporations that have shifted to doing research and development internally, to looking for acquisition of new technologies. A start-up business will have to fulfill a demand, and the fewer number of options out there will result in a greater demand. Coming out of a conservative past few years, it is advantageous to position your business more as a necessity for 2011 and not as a luxury.
- Consider the hot industries for 2011. While some of the strongest markets of 2010 are going to get stronger, there is still more room for growth. For example, the hottest industries of 2015 probably won't revolve around the same leading companies of 2010. In 2005, we weren't looking at Facebook, Twitter or digital streaming entertainment by Netflix. For the most part people were just getting into MySpace and still renting DVD movies at Blockbuster. I suspect the leading companies in 2015 will likewise surprise us since we might just be hearing about them now.
- Know what investors look for in a startup. Investor groups will be looking for businesses that have a proven business model, a potential for financial growth, and a strong management team to support the company.Some investors may be intrigued by companies that fall within current trends, but that is not always the case. They will want to see that your product or service not only fits a market, but also stands out among the competition. When it comes to the business model, make sure to do your research as well. Without proper market research, a unique selling proposition, and a solid marketing plan, investors will be wary in investing in your idea. Investors will only be comfortable putting their money into a business that is poised to succeed.
- Know what investor groups want to avoid in a time of recovery. Despite how much money is out there, any type of risky, unproven, business propositions are still a gamble that investors most likely won't be willing to take. Be proactive and take advantage of the recovery by considering what you can do to move your concept along. If you're a riskier venture or unproven technology company, the next few years will be about positioning. Riskier ventures are those that require a significant amount of investment before experiencing a significant amount of return. For the most part investors will be shying away from companies that are too risky, and looking at ones with a lot of "sweat equity" already invested in them, and ones that fit into their business model.