Start Up Guide
Defining the Market
In order to write your business plan and effectively network with others, you will need to have an “elevator pitch” of your company. This means that you should be able to explain within one minute the raison d'etre for your company. The description should be compelling enough for an investor to want to continue the conversation about the opportunity.
The first step in designing your elevator pitch is to have a well-defined market. Be careful, however, not to exaggerate the size of the market or gloss over the critical details. Investors tend to laugh at academic entrepreneurs that tend to talk about a startup with a blockbuster market size of multiple billion dollars.
Products should address unmet needs, as to create a compelling argument for a potential new product. The elevator pitch must describe the unmet need, the customers and why they will be interested in purchasing the product.
In acquiring such an understanding, realistic answers to the following questions should be developed:
- What is the unmet need?
- How many people, companies, or other entities currently have this problem? In the United States? Worldwide?
- Is the incidence of the problem growing or declining? At what rate?
- How is this problem currently solved or avoided?
- Who sells products that address this problem? What are their annual sales? What is their estimated share of the market?
- What products for solving this problem are in other companies’ development pipelines?
- What are the strengths and weaknesses of existing products in this market?
- How do people make buying decisions in this market?
- Why would a buyer choose your product over the others?
Obtaining this information, however, is not easy. You should plan to devote time to do research from both primary and secondary sources. You will need to spend significant time talking with industry leaders, searching databases, etc. Fortunately, Northwestern has the advantage of having the Kellogg School of Management, one of the best schools in marketing. Kellogg has hundreds of students with the expertise to do high quality marketing research analyses. Many of these students are willing to volunteer their services in exchange for the opportunity to be part of a startup.
Ed Colgate, PhD
Professor, Mechanical Engineering
- Basics on Startups
- Tips for Northwestern Entrepreneurs
- Networking and Finding the Right Mentors
- Working with Northwestern
- When is it time to start a company?
- Steps Towards a Startup
- Building the Startup
- Defining the Market
- Identifying the Right CEO
- The Role(s) of the Founders in the Startup Company
- Identifying the Right CEO
- Disclosing Information
- Option or License for the Startup
- What to Expect with the Startup License
- Leading Sources of Frustration for the Academic Entrepreneur
- Northwestern Entrepreneurial Resources