Writing in Business Leader Magazine, Damon Bonser, a serial entrepreneur and co-founder of the British Design Fund, considers best practice prior to approaching investors for your business. The British Design Fund is an investment fund for UK product design and manufacturing start-ups.
Damon has also been a part of the Design Council SPARK programme for product start-ups and Accelerator Academy, a tech incubator for software start-ups, on a mentor basis.
Damon has over 10 years of experience in building, running and selling international businesses within the consumer product and retail sector and his full article follows.
Things to consider before you source funding
Knowing your competitors is a simple, but extremely important first step. It can’t be overstated how important this step is. Without carrying out a proper competitor analysis, the chances of failing at the first point of contact with your customer is greatly increased. It is also advisable to go offline and do some “real” world market research. Walk the shops and tradeshows.
With knowing your competitors also comes knowing your audience. When it comes to designing a product or service, most often get caught up in their passion for the idea, resulting in becoming disconnected from who is ultimately going to buy the product or use the service. By getting the best understanding of your customer possible, you will be able to clarify your design parameters, helping you to identify what features are adding value and which are just adding costs.
Ideally get out and take photos of people and shoppers – within reason and where permitted – if your product is for retailers. If your product is for non-retail corporations, search LinkedIn for those who would be part of your target audience, use their profiles to build up an image of your customer base.
Once you have the foundations of your audience, surround each profile with call outs that highlight what makes these people tick, what problems they may have that you can solve, what jobs they do, how they spend their free time. No matter how big or small, any nugget of information about your customer is useful. And it’s great to think out of the box as well. You are ultimately trying to make an abstract concept – your customer – into a real person with wants and needs.
Ensure you have spent as much time as you can immersing yourself in your market: talk to consumers, talk to buyers, plot out simple pricing matrixes to summarise the price points in your market and look for the gaps that you can exploit. It’s also important to look into the legal side of business, ensuring you are not in danger of infringing upon any existing IP. To do this, you can carry out a patent search and check that your brand and trademarks are unique to yourself, and not similar to others in the market.
What types of funding are there?
Deciding how best to finance your product start-up business is gradually getting more and more complicated. As alternative forms of funding are becoming more readily available, start-ups have many more options available to them than they did ten years ago, including:
How do you know which to use?
This often depends on which stage in the development process you are at, for example:
1) Innovation: The ideas stage
This is the best time to apply for an award, as there are a number of specific targeted awards that offer businesses exposure and future funding. For award-winners, program leaders would walk you through the next steps, the initial stages and help you start to think commercially. A good example of this for a product-led business would be Design Council’s SPARK Programme.
2) Planning and implementation: The business plan stage
Once you’ve completed collating competitor analyses, carried out market research and determined prices, it will be easier to know how much funding you’ll require. The harder part tends to be finding somewhere to source it, which for this stage is where crowdfunding kicks in. Sites such as Kickstarter or Indiegogo are a useful tool. If your ideas are that little bit further along, and you’re looking for more specific funding with some business advice, the next stage is for you.
3) Development: The prototype stage
Once ideas have been tested, markets have been analysed and it’s a stage where both funding and business advice are required, the help of business angels can be enlisted. These tend to be real people to champion and guide your business as well as fund it and act as advisors with vested interests: an obvious choice for those who prefer the people-centric approach over advice from institutions.
Similarly if advice and funding aren’t enough, and a source of funding with longevity is the aim, specific funding institutions may well be the option to go for. British Design Fund offer funding for product development start-ups in exchange for shares in the business whilst also providing commercial guidance and sector expertise to deliver your product and grow your business.