From idea to working business model

Filed in archive Entrepreneurship on April 12, 2008

Tim Berry's post "Does investment make the venture?" can also remind us of another major difference between the bootstrapped business and the business that receives outside funding.

That's the difference between a working business model bringing in regular revenue and a business idea with a great business plan but requiring investment dollars in order to either realize that potential or fizzle out on the launch pad.

In his post, Tim refers in turn to an article at Forbes.com by Melanie Lindner entitled "Is your great idea a real business?"

The article suggests it's the interest of an outside investor that legitimizes the garden variety business idea elevating it to the next level.

"You won't really know whether you have a business opportunity until you try to get funding," says Charles Holloway, director of the Center for Entrepreneurial Studies at the Stanford Graduate School of Business.

Of course, there's no telling whether the interest of investors will translate into a successful business or not.

Bootstrappers would argue there's a better measure of the success of a product or service, whether customers rather than investors can be found to pay for it.

An Inc.com profile on bootstrap guru Greg Gianforte puts it this way:

In other words, bootstrapping clears away the clutter and makes you focus single-mindedly on the customer, which is what any smart entrepreneur needs to do anyway. It compels you to be creative, and it's an acid test for figuring out whether you've got a real business or just a plausible-sounding business plan.

Which description best characterizes your business?

Photo Credit: John Rivers, MorgueFile