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Business dreams are fun, but they don't change the world or make you any money if you can't turn them into a reality. Many aspiring entrepreneurs are stuck in the idea stage, and only a few have the discipline and the insight to move on to the execution phase. There is no magic formula for building a good business, but I've seen enough successful ventures to pick out some common elements.
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In fact, as an angel investor, I find that many of the questions in the due-diligence process give me real insight into the maturity of a startup. I offer these same questions to you as a self-assessment of your own progress and ability to transform your idea into a business:
1. Has your vision attracted smart people to you?
A vision that you alone believe in won't make a business. It's really about clarity of communication to others. You need the right team to build and grow a business, and your first challenge is to show you can build a team, with effective continuous written and verbal communication.
2. Have you defined a focused strategy and plan to get there?
If you strategy and plan are not clear even to you, or constituents don't seem to get it quickly, you can bet that potential customers also won't get it. Strategies need no more than three elements, and plans that are written down are more easily understood and more likely executable.
3. What level of stakeholder commitment do you have?
The first and biggest stakeholder is you, the entrepreneur. Is this a spare-time-only effort that you have been working on for five years, or do you have real skin in the game? Investors expect to see a personal commitment, as well as team members, other investors or even customers.
4. Is this a win-win opportunity for all the principals?
Business ideas that win only at the expense of the customer, or investors or partners, will fail in the long run. With the best dreams, customers get great value as your business makes money. Pyramid schemes and work-at-home scams sound good in the marketing pitch, but nobody wins.
5. Does your dream include automated and repeatable processes?
We all know artists and consultants who bring great value, but their businesses won't scale, since they can't clone the founder, and can't use tools to automate the process. Highly manual processes can't be easily automated and measured, and tend to be very expensive.
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6. Are you able to show a "sense of urgency," not a "sense of emergency"?
Succeeding in business is all about keeping the focus on important things, rather than the crisis of the day. Good entrepreneurs are able to manage priorities, keep them to a small number and communicate effectively to all constituents to maintain commitment and momentum.
7. Do you promote a culture of teamwork, mentoring, and training?
It all starts with attracting and hiring the best people, and nurturing these individuals with support and ongoing growth opportunities. Too many entrepreneurs assume that everyone knows what needs to be done, and everyone is self-motivated and committed to the same dream.
8. Can anyone see a pattern of team actions and results?
Some entrepreneurs remain a "one-person show," even with good team members around them. The entrepreneur has to assign and delegate the right actions, motivate real results and hold people accountable. At the same time, leaders need to be "hands-on," not merely observers.
9. Are there adequate milestones and measurements in place?
Execution is achieving a series of small milestones, not just one big final success. Along the way, you can't achieve what you don't measure. I look for a focus on a few drivers, rather than a long list of deliverables. Things change rapidly in a startup, so strategy reviews are a must.
10. Do team members get rewarded for the right things?
Some entrepreneurs, by habit, are too focused on hours worked, rather than results. In all work environments, you get what you pay for. The best entrepreneurs set high standards for performance, but are quick to celebrate results with rewards, recognition and advancement.
If a potential investor doesn't see enough of these attributes, it doesn't mean your business efforts will fail, but it may indicate that your dream is still in the idea stage or early seed stage. More work is needed to transform it into a business. Otherwise you are likely to hear from investors and other constituents the dreaded "come back when you have more traction."
Related: 6 Ways to Build a Happy Startup Culture the Scrappy Way
