What's more important? Having Sufficient Capital or Getting to Market First?

[Scat in the Hat]

Say you want to embark on a new business venture in an area where you will be the first one of it's kind to open. You have enough funds to open up and get the ball rolling, maybe cover operating expenses for maybe six months before crashing and burning if things don't work out.

Other option is you wait it out about a year or so to accumulate the funds needed to be in a more comfortable spot where you can ride things out for say a year or longer without being profitable.

Option A gives almost no wiggle room for error Option B allows for some error but also risk not being first to market.

Discuss?

[EukerVoorn]

With all the things I set up in the past I always went for option A. I just took it slowly, step by step, start small. I never created a business plan to take it to the bank to ask for a credit. Because I believe good ideas don't need credit and really original ideas don't get credit anyway because bank people are stupid and if it doesn't already exist they don't know what to think of it.

[KLAN]

Beeing the first in the market is the winning card. Always.
It gives you amazing advantages on the future competition: accordingly the kind of business it gives you the chance to choose the best position or niche in that specific market, it gives you the time to develop the know-how required giving you the time advantage on competitors who enter in the future, it gives you the chance to rise entry barriers against competitors, it gives you the chanche to focus on resources and to develop patents that ensure you other advantages.
If the problem is the lack of money (investment capital) you have the options to borrow it from banks and from all other financial institution (too many to list them here) otherwise you can seek for a venture capitalist to invest in your project but who will ask for a % of corporate management.
You can do it in two different times: at the start-up or when you will see your capital is no longer enough and depending on time it will influence all the conditions you could get the capital.

[Barry-xlovecam]

If in the United States incorporate as a "C" corporation if you intend to seek VC financing -- venture capitalists requite this as it is needed for IPO offerings.

Apart from that, can you realistically be self-sustaining in six months?

Sounds like optimistic thinking to me for a new business idea surviving.

[CurrentlySober]

neither. its the love of scat

[KLAN]

Originally Posted by Barry-xlovecam

If in the United States incorporate as a "C" corporation if you intend to seek VC financing -- venture capitalists requite this as it is needed for IPO offerings.

Apart from that, can you realistically be self-sustaining in six months?

Sounds like optimistic thinking to me for a new business idea surviving.

I think that if he has a good idea for a business he shouldn't risk to lose it. If he waits too much and a company come out with the same idea then is crap!
A lot of great companies started in this way: with good idea and no funds. But this is just if he thinks his idea is good and if he trusts on it a lot.

[slapass]

How do you know you will lose first mover advantage if you don't act now? Lack of capital is the number one reason small businesses close.

[zuffa]

Trust me on this one... First to market is nice .. lack of capital kills.... enough capital and you can turn even a poor product / service into a money maker .. even if there is competition.

[KLAN]

Originally Posted by slapass

How do you know you will lose first mover advantage if you don't act now? Lack of capital is the number one reason small businesses close.

I said there is the risk to lose it. I do not know if he will lose it for sure.
Btw there are plenty of financing sources out there. Think about how many ppl started from an idea, working in their garage and now those idea are huge companies. They didn't have the money to start up the industry so they borrow them.
It's the basics of emerging business borrowing capitals for new ideas. For example if it wasn't for borrowed capitals we coulnd't have mac now, or the mesh-ups, google etc..
No one of them waited until get enough capital from their own allowances.

[Trend]

Originally Posted by KLAN

Think about how many ppl started from an idea, working in their garage and now those idea are huge companies.

It's a small percentage actually.

According to the SBA roughly 80% of startups fail. ( Although there are some issues with how they arrive at that figure )

Intuit Says:



But the information I find most intriguing comes from Insight Venture Capital & the National Venture Capital Association

- 45% of VC backed companies fail
- Of the 55% of VC backed companies that don't fail 12% become significant companies.


My Small yet meaningful successes happen often... Huge successes are possible, but rare.

[Sly]

I would look for market research on the topic, but if I recall correctly from what I've read... starting doesn't matter near as much as capitalization.

[Scat in the Hat]

Originally Posted by slapass

How do you know you will lose first mover advantage if you don't act now? Lack of capital is the number one reason small businesses close.

I don't know for sure, but it's a possibility.

[gideongallery]

Originally Posted by KLAN

Beeing the first in the market is the winning card. Always.

tell that to netscape.

[epitome]

It can be a double edged sword if someone with more money sees what you're doing and wants in. There really is no right answer without more details.

[KLAN]

Originally Posted by gideongallery

tell that to netscape.

............... good point . I have to correct myself.

[KLAN]

Originally Posted by Trend

It's a small percentage actually.

According to the SBA roughly 80% of startups fail. ( Although there are some issues with how they arrive at that figure )

Intuit Says:



But the information I find most intriguing comes from Insight Venture Capital & the National Venture Capital Association

- 45% of VC backed companies fail
- Of the 55% of VC backed companies that don't fail 12% become significant companies.


My Small yet meaningful successes happen often... Huge successes are possible, but rare.

Good post. That's a good source to get info from.
I live in Italy and here data on VC backed companies are different but this site will be interessant.

[GTS Mark]

If u build it they will come ;-)

[raymor]

You have to get the capital whether you're first to market or not.
The only competition to Clonebox costs roughly a hundred times as much, so we were first to market with a reasonably priced solution. I'm not a multi-millionaire only because we lacked the capital to promote it properly.

[Adam X]

You need traffic. You can have the best idea in the world but if you don't have eyeballs
and wallets looking at it...

As for options A and B you mention.. 6 months of funding is a good start.
The first few months are critical especially in adult nowadays.
Funded well enough, following thru on a good biz plan.. your chances of success are much better.

[EddyTheDog]

Interesting question - I went for B but it was a difficult decision.

I would probably go for 'A' if asked again.

Or would I?

Stop confusing me!

[EddyTheDog]

OK - I got it -I was sitting on loo and it came to me....

Underfunded startup or what would be a rich 'clone' site...

Underfunded startup for sure.

I think

[Scat in the Hat]

Originally Posted by Adam X

You need traffic. You can have the best idea in the world but if you don't have eyeballs
and wallets looking at it...

As for options A and B you mention.. 6 months of funding is a good start.
The first few months are critical especially in adult nowadays.
Funded well enough, following thru on a good biz plan.. your chances of success are much better.

It's actually not an adult project.

[KLAN]

Originally Posted by Scat in the Hat

It's actually not an adult project.

and I guess it is not mainly correlated to internet.
Do not miss the chance to be the first on market but do not run out of capital otherwise you will lose the advantages you got being the first. As gideongallery bring back up Netscape's example that means that being the first requires a constant work and costant improvement that cannot achieved without enough capital.
Check all types of financing sources.

[Scat in the Hat]

Originally Posted by KLAN

and I guess it is not mainly correlated to internet.
Do not miss the chance to be the first on market but do not run out of capital otherwise you will lose the advantages you got being the first. As gideongallery bring back up Netscape's example that means that being the first requires a constant work and costant improvement that cannot achieved without enough capital.
Check all types of financing sources.

It's not really an "online business", but of course will utilize the internet for certain aspects of it.

Not really an original business idea anyways, actually quite common in most places, however where I plan on setting up shop it has not been done yet and there appears to be a need for it.

It just seems weird that it has not been done yet in this market. Unless I'm really missing something it almost seems like money is being left on the table.

[MediaGuy]

Fuck wiggle room - if you're good for six months, go for it!

Just make the time to work it - don't just unveil and then go play golf. Seen too many of those...

:D

[CurrentlySober]

Originally Posted by EddyTheDog

OK - I got it -I was sitting on loo....

Please post more detail about your toilet time experience! Were you satisfied? Did you take pics? Sinkers or floaters? So much missing detail...

[Bladewire]

1) BELIEVE IN YOUR IDEA

2) Waiting 360 days to feel more comfortable financially gives 360 more days for competition to take your place.

3) According to below it's already been done, is quite common in most places and you think there's a need for it in your specific place. Be assured that the closest successful franchise or "whatever" has already done their research on where to expand and for reasons unknown to you have chosen not to expand in your area. Which brings me to #4

4) If you don't know enough then hire someone who does.

Originally Posted by Scat in the Hat

It's not really an "online business", but of course will utilize the internet for certain aspects of it.

Not really an original business idea anyways, actually quite common in most places, however where I plan on setting up shop it has not been done yet and there appears to be a need for it.

It just seems weird that it has not been done yet in this market. Unless I'm really missing something it almost seems like money is being left on the table.