Page 45 - The Bootstrapper Bible

ChangeThis The entrepreneur arranges a business lunch with his friend. He extracts a promise to keep the big idea a secret, then describes his great insight: a low-cost razor-sharpening device that would work well. Heʼs got a business plan. With projections, ad slogans, a corporate mission statement, a rollout schedule, the whole thing. “Look,” he says, “there are more than five million electric razors out there. If we can sell to just ten percent of them, thatʼs five hundred thousand units! Figure a profit of four dollars a unit and weʼre rolling in dough.” Following the instructions in the business books and magazines he reads, heʼs figured out an exit strategy and already has some angels in mind to finance the business. Right there, on a handshake, they agree to a partnership. The metallurgist will invent the device and own half the company. The entrepreneur will take it from there. One month later, armed with plans, the entrepreneur heads for the best patent attorney he can find. He pays a $5,000 retainer and starts the process. Then itʼs off to find a manufacturer. Intending to be conservative, he decides to build only 10,000 devices, noting, though, that the manufacturer needs to be able to ramp up on a momentʼs notice when this thing takes off like the Chicago fire. I know what youʼre thinking. Wait, it gets worse. Doing some math, our hero realizes that he needs $40,000 to pay the manufacturer. Also, heʼll need to hire some sales reps to carry his item. And he figures that a TV commercial (which will run just once, because heʼs on a budget) will help jump-start the distribution. Suddenly, he needs $400,000. And heʼs doomed. | iss. 6.01 | i | U | X | + | h 45/103 f