Posts Tagged hurdle
Hurdle – Bureaucracy in this country too much … go elsewhere
One of the best ways to further explain about Hurdles (see yesterday’s post) is to provide an example.
I was at a meeting today of the Texas-Israel Chamber of Commerce at the University of Texas at Dallas. There were several speakers and a very interesting mix of entrepreneurial companies, investors, and other interested parties.
One of the speakers, Shekar Rao, commented about a key hurdle to medical technology companies: getting the products adopted in the US. The insurance companies are not interested, and doctors, without the interest of the insurance companies and a “code” to pay for the new item, will not adopt it. How does one develop something and keep the company in cash flow. Rao suggested to go first outside the US because one will find doctors in Mexico and Europe that are much more open to new ways to save people’s lives and money. Rao did point out that one does not compromise anything in the life-saving ability of the new item or procedure but use this as proof that it works. Going elsehwere first will allow for the much longer time for something to get adopted in the US and keeps the company in cash flow while at the same time saving people’s lives (and money).
As another example, when discussing with an investor, the answer should be concisely:
The hurdle here was getting the product accepted in spite of a large infrastructure barrier in the US (doctors and insurance companies). The solution is to market in other countries first allowing time for acceptance through the bureaucracy. Using international chambers of commerce you can get contacts and open doors to these other markets.
Visit Texas-Israel Chamber of Commerce to learn more about this particular chamber.
What are the hurdles facing the business?
Do you really understand the hurdles facing the business?
Everyone talks about managing the hurdles of the business. How will you deal with the hurdles? Do you have enough working capital to overcome the hurdles?
The first question should be: do you know what the hurdles are for your business?
There are the day-to-day issues: how do I get this project done, or this product out the door?
There are the every-business issues (what every business faces): How do I handle payroll, how do make a contract, and how do I sell?
Then, there are the business issues unique to your business:
How do I sell enough products to make a profit?
How do I get into my market?
How do I beat my competition?
How do I keep my costs down, and my quality and service level to expectations?
Each business and industry has a unique set of hurdles. Part of the planning process is to understand those hurdles and how to overcome them. You put that in the planning process and discuss it in your business plan. When the investor asks you about those hurdles you are prepared to discuss them.
For example you are a book publishing company. How will you get shelf space in the major bookstore chains like Borders and Barnes & Noble? How will you drive people to buy your books on Amazon? How will you select books and pay authors to create the content so that you have bestsellers?
These are not “everyday” or “every month” type questions that face every business. You should know the big hurdles and be able to discuss how you deal with them. Overcoming the hurdles is also what makes your business unique (or special). The way the business overcomes the hurdle can be its biggest selling point.
Investors want to know if you know the big hurdles, how you will overcome them, and therefore what makes you the more likely candidate for investment than someone else.