Lost Job Start Business

If you had the option of placing a bet either before the race starts or half way through it, what would you choose? Obviously, you would choose to place the bet half way through. You can see how each horse is running and determine who to bet on based on the most up to date, and more importantly, relevant information.

See, that’s what Venture Capitalists and Business Angels do. It’s important for entrepreneurs to understand this. There are too many start-up ideas to invest in. By “sitting on the fence” and watching which start-ups are performing well and getting traction, investors are gathering the information required to make a diligent investment for themselves, or in the case of Venture Capital, for the VC fund.

Once you realize this, you can begin to focus all your power on getting traction. When you sit back and think about it, nothing else really matters. Traction tells the investor quite a lot about your business. It answers a great deal of questions.

1. It proves that there is market.
2. If you are making sales it shows that people are prepared to pay for your product.
3. It shows that you can manage and develop a business.
4. It is a good base for your future projections.
5. It’s the best form of market research.

The truth is that external funding is to scale, and not to start-up. When you get traction it helps investors to gauge how much you can scale from that point. Investors should be experts in your industry sector and therefore should know how early stage traction relates to scalability.

All the market research and strategic planning in the world doesn’t mean squat without traction. As a start-up entrepreneur your time is limited. You must focus on the activities that further your cause the most. You can’t do everything according to the business strategy and market research text books. You must prioritize.

On to the big question. How do you get traction?

I believe that there is no set way to achieve this. Different businesses will have different paths to traction. However, the important thing to is constantly evolve your approach by testing and measuring. Establish a point of reference by implementing your best guess and then refine it incrementally. Seek the early adopters (the Internet is a great way to find them) and listen to what they have to say. Just remember that being right is a process.