3.

Prototype Stage

– product development continues, significant expenses are incurred, but no product revenues generated

Organization: Informal

Management:  Entrepreneurial

Technology: Prototype

Funding Stage: Seed

pp.

Problem

Solution

Action

3.1

Growth Risk:

• Company expansion requires professional business experience,  expertise and skills

• Bringing project into a new environment

• Meeting milestones and keeping in mind clear target dates

• Work is proceeding according to plan

• Changes in the company necessary for production and field testing of your product prototype

• Avoid the 10 deadly small business mistakes; learn 9 secrets to boost your small business performance

• Make a Strength - Weaknesses - Opportunities - Threats (SWOT) analysis

• Before launching the whole show, launch a little piece of it

• Convene a focus group to test the product, build a prototype and watch it perform, conduct a regional or local rollout of a service. Such an exercise reveals the true economics of the business and can help enormously in determining how much money the new venture actually requires and in what stages.

• Set the direction and stay the course

• Explore the opportunities to set up your pilot plant in an enabling environment (business incubator, S&T park, etc.)

• Use external professional advice

• Hire new people and train them

• Check and update your business plan and business concept

• Prepare for developing a flexible and responsive value chain at your company and business process management system (BPMS)

3.2

Technology Risk:

• Bringing technology into a new environment from prototype to the pilot stage

• Not developing meaningful, unique product attributes

• Translating the product functional specifications to the internal workings (design specifications)

• Going for a simple, not perfect solution. The main objective is to get market feedback and adjust your business plan accordingly

• Prepare a feasibility study

• Design your new product and make a prototype

• Be faithful to the product functional specifications

• Start developing production processes and relationships with suppliers and customers

• Test, evaluate and improve your technology

• Develop an intellectual property strategy

• Make a value analysis

3.3

Marketability Risk:

• Lack of identity and brand awareness

• Market response to the product is below expectations

• Competitors respond more fiercely than expected

Selling is not about content. It is about finding a "fit". Revise both your product values and your marketing strategy.

• Define who your customers are and how they make decisions about buying products or services; to what degree your product and marketing plans fit into their purchasing behavior

• Develop commercialization and market entry strategy

• Beta-test and test market your product or service; identify the price at what you could sell it

• Correct your product development and marketing strategy based on the feedback received

• Make a sales forecast

3.4

Financial Risk:

No product revenue generated yet though significant expenses incurred and more cash required for working prototype development 

• Raise new or additional seed capital for product development and initial marketing

• Identify possible sources of seed capital: bootstrapping, business angels, venture capital funds, development funds

• Study investment opportunity selection criteria of different types of investors

• Introduce your project to prospective investors

• Select type of finance you require and develop your fund raising strategy

To raise venture capital you need:

• Key management team

• Initial market study

• Cash-flow forecast

• Milestone chart

• Business plan

• Project presentation

• Exit strategy for investors

3.5

Team & Management Risk:

• Over-response to opportunities can lead to fragmentation and burn-out

• Difficult to find a substitution in case one of venture leaders leaves the company

• Resisting development of structure, processes and controls

• Continuous evaluation

• Delegating to gain control

• Change from reactive to proactive style

• Development of an effective motivation system for the entrepreneurial team

• Employ modern venture management approaches

• Hire multi-talented people with your values

• Move with speed leaving details for later

• Start developing processes

• Develop plans for the future

• Begin to build structure and controls

• Develop effective compensation program for your team members; study the opportunity of sharing company ownership with them

• Delegate roles/responsibilities

• Track key indicators