For those thinking about launching or already have launched a business, here are some things to keep in mind.
(TNS) -- Starting a business from scratch is never easy.
The 43North business plan competition last month - which featured 11 promising finalists – highlighted some of the challenges that startups face.
1. Beware of copycats. Toronto startup CleanSlate thinks it has found a solution to a big problem: How to prevent germ-infested smartphones from contaminating hospitals with hard-to-kill superbugs. CleanSlate’s device uses ultraviolet light to kill almost all of the bacteria on electronic devices within 30 seconds. To start off, CleanSlate plans to sell its devices directly, but hopes to link up with bigger hospital device and supply partners after a year or two, once its system has proven itself.
43North judge Gary Vaynerchuk worried that CleanSlate, which won $500,000, might be vulnerable to copycats.
“The reality is that somebody who’s in the ecosystem is going to be the fast follower who eats everybody up,” he said.
“That’s what usually blows up tech startups of this nature,” said Vaynerchuk. “I’m more worried about companies that have been doing products in hospitals for 20, 40 or 60 years.”
2. Plan with your wallet, not your heart. Israeli startup Voiceitt had one of the most promising products among the finalists – an app that can help people with serious speech problems make their unintelligible words understandable.
“Our mission at Voiceitt is to give a voice to the voiceless,” said CEO Danny Weissberg. “Our first and foremost commitment is to the people who need this solution.”
Its plan to sell its Talkitt app directly to consumers for $20 a month fell flat with the contest’s judges, who saw the potential for a bigger – and faster – ramp-up if the company focused on selling to other medical businesses instead of consumers.
The judges awarded Voiceitt $500,000, and hoped the company would come along to their way of thinking. “I think, with a little more coaching, they may go that way,” said judge Sandy Miller.
3. Business and science may not mix. The judges were impressed with University at Buffalo professors Glenna Bett and Randall Rasmusson and the drug-screening technology they developed to detect whether a new drug could have dangerous side effects that disrupt electrical activity in the heart and cause heart attacks.
Detecting those problems early in the drug development process could save millions of dollars by flagging drug candidates with this fatal flaw early on.
“We saw lots of potential for that company,” Miller said of the $500,000 winner. “That would be a really good one to watch and keep track of.”
Even so, judge Michael Lazerow said the company needs more business savvy.
“I have a lot of confidence in the science of this. I have less confidence in you on the business side,” he said. “Who on your team is going to grow the business?”
4. The power of social media. Finding customers can be tough, especially when your market is targeting thousands upon thousands of small businesses across the country.
That was judge Andrew Kau’s big concern about the Virginia-based startup’s Web-based way for independent contractors to save for their taxes via payroll deduction.
ACe Caldwell, the CEO of the $500,000 winner and contest runner-up, said he plans to use Twitter and Facebook to reach customers. He also plans to focus on search engine optimization, so Painless1099 shows up high in the results when consumers do a search for something like “how does a freelancer handle taxes?”
5. Be different. Corey Rosenfield and his partners at Qoints want to gather a mass of digital marketing data and use it to help companies measure what works – and what doesn’t – in digital marketing campaigns.
But Qoints’ plan was met only with skepticism from the marketing experts among 43North’s judges, who awarded the company $250,000.
“I was looking for ‘We did this, and then this campaign took off,” Lazerow said. “I would encourage you guys to establish your market position, because I wouldn’t buy it now.”
Vaynerchuk was equally skeptical. “You’ve demonstrated zero differentiation from the marketplace,” he said.
“Walmart won’t share data with Kraft, and vice versa,” he said. “The thought of two nice boys coming along and collecting all of this data from these Fortune 500 companies so they can turn around and sell it back” is hard to grasp.
6. Be first, be fast. Joe Neiman thinks ACV Auctions has a better way for car dealers to sell their unwanted used vehicles – through 20-minute online auctions conducted on smartphones.
The company has sold 650 cars in the Buffalo market that way over the last four months, and Neiman said the company will use its $1 million grand prize to roll out the online auctions in 10 new markets.
Time is of the essence, because while ACV Auctions is the first in the field, it needs to cement its position before copycats come out.
“That’s going to be tough for you – to prevent somebody from coming in an copying this,” Miller said.
Two 43North judges, hedge fund manager Daniel Lewis and Lazerow said they would invest in ACV on their own.
“Disruptive is sort of an overused term, but they’ve identified this opportunity where they can be disruptive and have a very compelling opportunity,” Miller said.
7. Sexy doesn’t pay the bills. Buffalo sports data tracker CoachMePlus has built a stable of 50 clients, including pro sports and major college teams. But the real money will come from convincing high schools, small colleges and even youth sports teams to pay for a scaled down version of its performance tracking systems.
And that won’t be easy. “Sexy NFL, but it’s not a business. The other stuff isn’t sexy, but it’s going to be very hard to crack,” Lazerow said.
Kevin Dawidowicz, the president of the $250,000 winner, said the sex appeal of the pro sports clients can win over smaller customers. “If I want to sell all of the high schools in Columbus, Ohio, all I have to say is ‘Columbus Blue Jackets’ and they all line up.”
8. Is it a product or a feature? Israeli startup GetGemz says its PayKey system makes sending money from one person to another easy through social media services, like Facebook Messenger and Snapchat.
But Kau told the $250,000 winner there’s a difference between a stand-alone product and a feature that can easily be added to other platforms.
9. To test or not to test. Disease Diagnostic Group’s inexpensive test can detect malaria even before someone displays symptoms – an important feature since its cheaper to treat infected people before symptoms show up.
“By going after the asymptomatic market, you’re going to be treating people all the time. I don’t see how that’s a viable business model,” Kau said of the $500,000 winner.
10. Don’t dawdle. Plum.io’s founders have been working on the $250,000 winner’s job applicant matching system for nearly four years. Vaynerchuk was concerned by that pace, saying startups need to be nimble and move quickly. “Speed of execution gives you the leverage,” he said.
11. Think big. UmaBioseed won $500,000 for its enzyme-based seed coatings. But Vaynerchuk was taken aback by the firm’s plan to seek another $1 million in funding in 2017. He thought the company should aim for more capital as it grows.
©2015 The Buffalo News (Buffalo, N.Y.) Distributed by Tribune Content Agency, LLC.
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