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Entrepreneurship from the ground up
Serial entrepreneur Richard Lewis has advised entrepreneurs that investing the necessary time to build their business must be first priority, as opposed to simply investing money in their business.
Lewis was part of a panel discussion on “Financing Innovation, Accessing Private Capital,” which was held at the T&T Chamber of Industry and Commerce last Wednesday, at its the Westmoorings headquarters.
Offering some tips on what entrepreneurs should not do, he said “there is no such thing as a perfect business. What happens is that we try our best to tweak whatever our ideas are, to create the perfect business. Once you have reached to a point where you are moving along then spend time on other things.”
He suggested that a service-based company should be picked as opposed to a product-based company.
“A product company involves investment other than time. It involves inventory and a whole lot of other stuff. If you want to pick a business and you have a great idea, pick a service company. A service company you (the entrepreneur) would have to put in your personal time. See if you could be successful in a service business first, because it does not require a cash investment that a product company does.”
Lewis noted that spending money should not be the first move, as many entrepreneurs typically find excuses as to why they should spend money.
“It is very normal for us entrepreneurs to want to spend money. We sometimes believe the very first thing is that you must have an office, you must have a car, you must have a marketing plan, you must have a website. All of these things cost money but, at the end of the day, the real investment that’s more beneficial than money is time.
“Time for an entrepreneur does not cost anything. If you work for someone other than yourself, it costs money, but as an individual going into business time is the only thing you should be spending and not money.”
Lewis who is general manager/director at Label House Group Ltd, said starting a business must not be done alone, but the entrepreneur should find a business partner.
“There are so many people out there who can help you, I am not saying not necessarily that they become an investor.”
He added that there are many entrepreneur groups who meet regularly and he urged entrepreneurs to network with them.
Launch Rockit’s CEO, Gerard Thomas, said early stage entrepreneurs who have not generated revenue as yet, need to focus their energies on the problem and the market.
He added that while there are other things to look at—such as the legal aspects of the business, accounting and other matters—the entrepreneur should be oriented towards solving problems in a particular market within which they desire to operate.
“Most of us come up with ideas and it is not really solving a problem. The market allows you to really expand on how many people you’re affecting and if they really willing to pay for what is being offered.
Address these two things and then you can start adjusting and strategising.”
Thomas added that too many entrepreneurs rush into their business plan without speaking to a customer to see whether the product is saleable.
Also speaking at the event was Kerwyn Valley, chief executive, KCL Capital Market Brokers Ltd. He advised entrepreneurs to ensure they have at hand all the analytics which a bank or financial institution would require in order to give financing to their venture.
Referring to what KCL looks for in a business before granting financing, Valley said the “passion” of the entrepreneur must stand out.
Nigel Romano, managing director, JMMB Bank, said credit is something that the entrepreneur brings to the bank.
“You have either marketable assets, hard assets that you can offer as collateral or, more importantly, character and pass record, showing you have done this before. The banker is not giving something for nothing.”
He added that if the entrepreneur is looking at collateral-based lending, the entrepreneur is bringing something to the bank.
“It is amazing that so many people come to you (the banker) for your money and they don’t know why you should give them that money (a loan.)”
Romano added that because banks are entrusted with the responsibility of looking after other people’s money they were “very risk averse.”
He added, “The venture capitalist on the other hand, is taking his/her money and putting it on the line.”
Romano said trust is critical for all bankers and they often ask entrepreneurs the question “who are you and what do you have to tell me about yourself?”
He urged entrepreneurs to know the financial status of the business and advised that they should not depend solely on the accountant because it is the entrepreneur’s responsibility to know the details of his or her operations.