How do I get money for my business idea?
Archives: Daily Issues
Issue #2569
- WEALTHY: How to get money for your business idea (Michael Masterson)
- HEALTHY: Vision loss is NOT inevitable (Shane Ellison)
- WISE: Buddha on taking action
ALSO IN THIS ISSUE:
- My beef with the WSJ (Suzanne Richardson)
- Get your e-mail newsletter going today! (Paul Lawrence)
- It’s Good to Know… 3 medical myths
- Add "periphery" to your vocabulary
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"An idea that is developed and put into action is more important than an idea that exists only as an idea."
Buddha
The First Step to Getting Funding for Your Business
One of the most commonly asked questions we get at ETR from would-be entrepreneurs is: "How do I get money for my business idea?"
We’ve answered it before, but it’s worth answering again because the question keeps coming. Let’s start with a bit of harsh truth: It isn’t easy.
You may have heard the expression that if you build a better mousetrap the world will beat a path to your door. That implies that there is always lots of money looking around for good ideas.
In fact, money rarely chases after ideas. Most of the time, money chases money.
Take the business ETR is in: information publishing. Not a week goes by when we don’t hear a proposition from someone who has a "brilliant" idea for a publication. It might be a new investment newsletter or a magazine about retirement or a website on health and fitness. "I can’t tell you what the idea is," they usually say, "but when you hear it you will realize how special it is and you’ll be happy to fund it."
Sometimes people want us to sign non-disclosure agreements. Apparently they fear that we will "steal their idea" and not pay them for it.
In my 25+ years of listening to publishing ideas, I have signed only two or three such agreements. And they were done years ago, before I really understood what I was doing. Nowadays, I don’t sign them. Not because I want to steal the idea, but because I know there is a 99.9 percent chance that (a) I won’t like it or (b) I will already be working on something similar.
That second situation is quite common. When one person comes up with a clever idea, it’s very likely that other people – often people employed by companies I consult with – have come up with it too.
The reason for these "coincidences" is easy to understand if you’ve read Malcolm Gladwell’s The Tipping Point. Brand-new ideas seldom come to the market sprung from the thigh of Zeus. Usually, they have been percolating around the market’s periphery for years. Gradually, they reform themselves until one particular application of the idea catches fire.
Since the economy began to collapse in the middle of 2008, for example, every smart person in the investment advisory business has been busy thinking about new ways to make money in 2009. These individual thinkers have been talking to one another and making comments in e-letters and blogs. One specific idea spurs another. And, eventually, there’s an outpouring of similar ideas. So far, I’ve seen a half-dozen new products related to income-oriented investment advisories. And another half-dozen for products that focus on short selling.
The people coming up with these ideas are not stealing from one another. They are individually mulling over the same problems. It’s a sort of collective consciousness that results in so many similar ideas, only a handful of which will go on to make money.
And that gets us to the main reason why I don’t sign non-disclosure agreements. Because I know that ideas themselves are not so important. What matters is the way they are articulated.
In How to Get Rich, Felix Dennis puts it like this:
"It really does not matter who gives birth to any particular idea. This is borne out by the law relating to patents and inventions. You cannot patent an idea. You can only patent your own method for implementing an idea. …Ray Kroc did not invent the idea of fast food. …There were thousands of ‘fast food’ outlets in the USA at the time. …His genius was merely to recognize this fact and implement a simple five-point plan: Standardize the food and prices, franchise the outlets, produce the food swiftly in clean surroundings, offer value for money, and market the whole shebang relentlessly."
Yes, you need more than an idea to attract money. You need some unique selling proposition and, if possible, proof that the idea will work. You can have both things if – before looking for money – you build yourself a working model.
Let’s look at a few examples that define the difference between an idea and a working model.
Idea: a newsletter on short selling
Working Model: an e-letter that has been published for six months and has 100 paid subscribers
Idea: a retail jewelry store
Working Model: an operating business that has sold jewelry at flea markets profitably for a year
Idea: a musical comedy about Enron
Working Model: a script that has been performed to rave reviews at local theaters
The difference between an idea and a working model is significant – especially to a potential investor. The difference is two-fold:
- Ideas tend to be generalized, whereas working models are specific.
- Ideas are unproven, but working models show the potential for profits.
So that is the first and most important thing to do once you’ve come up with a "great" business idea. Turn it into a working model.
You don’t need to spend much money doing that if you are clever. By taking advantage of the Internet and using direct-marketing techniques, almost any business can be tested without a huge investment.
Almost any. Not every. You can’t create an inexpensive working model of a three-wheeled car, for example. Nor can you test out a new kind of luxury hotel idea on the cheap. But capital-intensive business ideas like those are best left to the larger businesses that occupy already dominant industries. For ordinary entrepreneurs, the good ideas are those that can be modeled cheaply.
Once you have a working model, you have a much better chance of getting the money you want. But where do you look? Check back in this space next Monday for the answer.
[Ed Note: If you don't want to worry about funding, you CAN start a business with just a few bucks, in your spare time. Learn how you can get all the details to do so - including how to set up a website, how to create products, low-cost marketing strategies, and much more - right here.
As a special thank you to our best customers, Michael has started a new VIP service in which he gives insider business-building advice usually reserved for his private clients - a twice-weekly newsletter called Ready Fire Aim: The Michael Masterson Dispatch. If you have bought an ETR product or attended a conference and are not receiving Ready Fire Aim, please let us know by sending an e-mail to Michael@ETRfeedback.com.]
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The Wall Street Journal Gets It Wrong
It’s one of the most respected business journals in the world. But it can still be dead wrong. For instance…
"The Secrets of Marketing in a Web 2.0 World," announced the front page of The Wall Street Journal business section. Sounded promising, so I took a gander. What I found left me scratching my head:
"Many marketers have been trained to bludgeon consumers with advertising – to sell, sell, sell anytime and anywhere consumers can be found. In an online community, it pays to resist that temptation."
Two things about this directive struck me as horribly off.
1. You should never have to "resist [the] temptation" to market.
As MaryEllen has said, time and again, "Don’t be afraid to sell." If you’re offering something worthwhile to your prospects – and if you’re not, what are you doing? – you should want to market it to the high heavens.
2. You should never be using advertising as a bludgeon. The authors of that WSJ article claim that Web 2.0 – blogs, online communities, wikis, and social networking sites – is all about relationship building. Not about marketing.
News flash: There should be no difference between what you think of as "marketing" and what you think of as "relationship building." Essentially, they are one and the same. Good marketing – no matter where or how you’re doing it – is about building a relationship. Every time you speak to a customer, every time you write an article, every time you post a comment on a blog, every time you answer a question on a forum – it’s all marketing, because it all reflects back on your business and its ability to fulfill your customers’ needs.
Marketing your products – and doing so in a way that builds a relationship with your customers – should always be a top priority. No matter what you’re doing, or where you’re doing it, you should be giving your prospective customers a reason to trust you… a reason to do business with you… a reason to think of you when they have a need or desire.
[Ed. Note: To get a jump-start on your marketing, pick up a copy of Amazon's best-selling book Changing the Channel. Inside, marketing masters Michael Masterson and MaryEllen Tribby reveal 12 proven, highly effective marketing strategies that you can apply to your business.]
Quick Tip: A New Tool for Aspiring Online Marketers
Now, there’s a very easy way to get your online newsletter started. Yahoo has a component called "group publishing" that allows you to start your own e-list and publish to that list whenever you want. For free. It’s so user-friendly that even someone with very little technical knowledge (like me) can set it up without any assistance. All you do is go to Yahoo and click on the "groups" link. It’s self-explanatory from there.
With this tool, I began to publish an e-newsletter for screenwriters to promote my screenwriting consulting business. Within the first month, this led to $5,000 in consulting fees, so it really paid off for me. The downside is that all of your messages will include ads from competitors – and you don’t earn anything from them. (That’s how Yahoo makes money with this service. Its software matches pay-per-click ads in its system to your content.) Nevertheless, if you want to start an e-newsletter and don’t want to commit any capital, this is a way to do it.
[Ed. Note: Once you have a list of people who are interested in what you have to say, you can start making money. Learn how to build your list, market to it, and much more with a membership in ETR's Internet Money Club. Our experts will walk you step-by-step through the entire process of setting up an Internet business. Get the details here.
Paul Lawrence is a successful Internet entrepreneur who specializes in low-cost ways to market on the Internet. Get more information on his Cheapskate Internet Marketing Program here.]
Preserve Eyesight, Stop Failing Vision Now
By Shane "The People’s Chemist" Ellison
Each of us comes equipped with an amazing pair of optical wonders. Even the Hubble telescope, which looks far out into distant galaxies, pales in comparison to the technology of the eye.
For many, vision fails as they get older. But despite what you may have been led to believe, this is not an inevitable part of aging.
Whether it’s the result of macular degeneration, cataracts, or glaucoma, vision loss is usually the result of not having enough "dye in your eye." This "dye" not only helps you interpret the world around you, it also contains vitally important antioxidants that protect visual anatomy.
Just as there are many different colors of crayons, there are different types of eye dyes. These pigments fall into a chemical category known as xanthophylls – and cannot be preserved without proper nutrition.
You must get xanthophylls from your diet. Fortunately, food sources of xanthophylls are easy to find. Just load up on eggs, kale, spinach, turnip greens, collard greens, romaine lettuce, broccoli, zucchini, corn, garden peas, Brussels sprouts, and liver.
[Ed. Note: Shane Ellison is a two-time recipient of the prestigious Howard Hughes Medical Institute Research Grant for his research in biochemistry and physiology, and is a best-selling author. He holds a master's degree in organic chemistry and has firsthand experience in drug design. Get the benefit of his knowledge and insight with his no-BS practical guide to living young naturally without dangerous, prescription drugs.
For more natural ways to stay healthy and live longer, sign up for ETR's free natural health newsletter.]
It’s Good to Know: 3 Medical Myths
There are plenty of old wives’ tales about health that make the rounds. But in many cases, this age-old "wisdom" is just plain incorrect. Here are a few examples:
• Myth: Plants and cut flowers absorb life-giving oxygen from the air in an enclosed space, so they should never be put in a sickroom.
Truth: Plants do absorb a very small amount of oxygen at night, but they give off 10 times as much during the day. Which means they actually make the environment healthier for the patient.
• Myth: Shaving causes hair to grow back thicker and darker.
Truth: Sorry, bald guys, it doesn’t work.
• Myth: Suicide rates increase during the holidays.
Truth: No scientific study of suicides, including an examination of 35 years of U.S. medical records, has ever backed this up.
(Source: The New York Times and Snopes.com)
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Word to the Wise: Periphery
A "periphery" (puh-RIF-uh-ree) – from the Greek for "circumference" – is the external boundary of a surface or area. We also use the word to refer to the relatively minor, irrelevant, or superficial aspects of something.
Example (as used by Michael Masterson today): "Brand-new ideas seldom come to the market sprung from the thigh of Zeus. Usually, they have been percolating around the market’s periphery for years."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Copyright ETR, LLC, 2009
Great Caesar’s Ghost, man! It’s ‘brow’ not ‘thigh’ of Zeus. Like Athena…
A New Tool for Aspiring Online Marketers?
I went to Yahoo Groups and could not find “group publishing”.
Is the article just referring to the normal Yahoo Group feature of sending a message to everyone on the list or is it something new?
Please clarify.