February 8, 2016 overseer

HOW TO VETT YOUR NEXT BUSINESS IDEA

Entrepreneurs are people with big dreams and ambitious goals. They pour their time, energy, and resources into their business ventures in hopes of success. Unfortunately, the odds are stacked against most of them reaching their destination. Statistically, we know that most will fail within the first five years.  However, there are some people who defy the odds and somehow achieve success as serial entrepreneurs.   Are some people just born with the Midas touch?  What is it that people like Sir Richard Branson, founder of the Virgin Group, Ltd, have that gives them the ability to repeatedly strike gold in the cut-throat marketplace?

While there is no one magic bullet, there do appear to be some consistent themes.  One quality worth noting is the ability to critically vet business ideas to make sure the new venture has a fighting chance.  This takes rigorous analysis and the ability to honestly and objectively review the idea and the entrepreneur’s own ability to execute.

Clark Love, a native Mississippian, has achieved the goal that most entrepreneurs only dream about – he has successfully started a business, grown it, and sold out to a larger company. Love, a graduate of Ole Miss and Northwestern’s Kellogg School of Management, started Forest One, Inc. (later renamed Lanworth, Inc.) in 2000 at the age of 28.  Lanworth is an information technology company providing consulting services, applications development, and software to the forest products, environmental, and land management industries.  Love originally founded Lanworth with his college friend Dr. Henry Jones and grew the company to be a multi-million dollar enterprise with the main offices being in Jackson and Chicago.  In 2007, The Westervelt Company acquired Lanworth.

While Love achieved his goals for Lanworth, he has not remained idle.  His entrepreneurial drive has already rekindled as he in the process of launching several new ventures. Love’s analytical training as an engineer in college, his experience as a consultant with Accenture, and his “real world” experience with Lanworth and other startups has allowed him to develop a framework for analyzing new business opportunities.  His checklist for a new business venture includes the following requirements:

Have a Cause

The product or service offered by the business should move people.  Love added, “It doesn’t need to move everyone, just the segment of customers I plan to go after and the people I will hire.  You want a business people will put their hearts and soul into.”

Know Your First 3 Customer’s By Name

An entrepreneur should know by name the first 3 customers for the product or services the business will offer.   Many people have ideas about what will work in the marketplace yet they have never actually vetted the idea with a potential customer.  You need to know if anyone will actually buy your product or pay for your service.

Build a Recurring Revenue Model

A large majority of the revenue should be recurring so the business does not have to start from scratch each year.  Having a solid financial base of recurring revenue allows for more growth opportunities.

Be Passionate about Your Industry and Customers

Love noted, “Starting a company is incredibly hard, harder than most people realize.  Pay and economic reward are not enough – you really need to have a passion for the business and serve customers that you actually care about.”  This passion serves as the “pull through” that helps you get through the difficult times as an entrepreneur.

This checklist can serve as a useful tool in analyzing any new business opportunity.   I believe that serial entrepreneurs like Clark Love will play an integral part in Mississippi’s future in creating jobs and opportunities for Mississippians.  Hopefully, we can collectively make Mississippi, Tennessee, and the Mid-South attractive places for entrepreneurs to invest their passion and energy into creating world class businesses.

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