My company has developed and proven a new technology platform. We are debt-free and looking for "synergistic" companies to help us move forward with marketing, networking, or even acquisition. It's a hard road for a small company to travel; do you have any guidance? —J.N., Fort Lauderdale, Fla.
You are indeed at a difficult crossroads, where the future of your business venture could go in several directions: An acquisition or merger with an established company, licensing of your technology, or taking it to market on your own.
Of course, you should always register copyrights to any software coding you have developed, as well as filing patents for new technology. "If you have not explored intellectual property protection for your technology, you should consult with an intellectual property attorney right away," says Rod Underhill, an attorney, author, and startup consultant in San Diego.
Once you have legal protection, your must introduce your company and your concept to the world. How? By networking, getting referrals, looking for mentors, and generally forming close business relationships. Start asking some of the people you get to know to serve on your advisory board, Underhill says, looking for individuals "who can provide you with the in-depth advice needed to captain your company."
What's the Competition?
Next, do some market research, suggests Jordana Jaffe, founder of Embarkability, a New York City business that works with young female entrepreneurs. "Find out what other, similar products are on the market. How are they being positioned? Are the founders marketing them, or has [the business] been acquired?" she says. "The success of your company depends on the relationships you make, and you don't have to pay for any of them."
Until your product is being sold and generating significant revenue, it's something of a misnomer to call it "proven"—even if you have demonstrated that it works. "Interest in a new, key technology is based on the actual income generated by the technology, or in some cases, what the acquiring party might think it might earn via the technology once purchased," Underhill says.
It is possible that a company would purchase your product based on speculative valuation (with no tangible earnings data), but it's not very likely, he says. If you get an offer, you should certainly consider it, but don't restrict your activity to that arena. And don't forget that your product could be eclipsed by a competitor very unexpectedly, he says.
The Power of Referrals
Mike Michalowicz, founder of behavioral marketing company Obsidian Launch in Boonton, N.J., recommends that you get a client or two on board—give away your product if you must—and then work on expanding your business using a referral strategy. "Have a meeting with your first clients and ask them what vendors they depend on for their business. You'll get a couple of names, and then you'll have qualified referrals, companies that have a common client with you, which is big," he says.
Rather than approaching those referrals to ask for business, explain that you want to learn about what they do and refer opportunities to them. "Position yourself so you can refer clients to each other," he says.
As you move down the road as a startup entrepreneur, take stock of your efforts occasionally and evaluate what is and isn't working. "You want to keep all options open, but if you spread yourself too thin, you'll be ineffective," Michalowicz says. Once a quarter, analyze what you're doing to promote your product as well as what is working and what is not. "Narrow it down so you amplify the activities that are getting you results and delete or vary the activities that are not," he says. Good luck!