Start Up (Expensive) Business Model

[James11111]

Hi All,

I wanted some advise and would appreciate any comments or feedback. I hope you all understand that as I am in the "idea phase" and for this reason, I do not want to give too much away about the Business Model. Apologise but I am sure / hope you understand.

So basically I have an idea to automate and create a large (and complex) automated machine such as a very large vending machine (or self service device). Challenge, I understand a business model of this kind (and maybe scale) requires high capital (approx. 500k as a minimum) and highly expertise knowledge (which is arguable the reason for the huge capital and I am probably underestimating this cost as I lack the expertise in creating a system of this kind).

As most other working professionals, I do not have the funds (and admittedly the courage) to develop a business of this scale. When (and occasionally) I do look into this project, I can clearly see a big challenge at startup, however can see a long term feasibility/demand for this. I feel that if I did go forward with the business idea, I would have to split into different phases including pre-launch (including detailed analysis and creating a robust business model), obtaining an investor (or partnering up with a company that can create a self service device - is that possible?), creating the system, hopefully patenting or protecting the device/design (although I feel at this point the business would benefit from a first mover advantage - if it was not possible to legally protect the business model) and then finally launching the product or service. Is this the right way to go about it or should I do something different? I definitely see the demand for this idea, but the initial high cost (and combination of developing an automated/self service device seems very daunting). I have had this idea for about 6 months and still feel that it is viable, despite the high initial cost).

I understand that with high risk there is high reward, but since graduating from university a couple years ago, I am now very close to securing my first home (whichever was not easy) and therefore can see this venture as something that was a great idea but I never acted upon. Please also note I have a secure and comfortable job in the city, which annoyingly reduces my motivation to pursue such an expensive business idea.

Any help and constructive feedback would be welcome.

Regards,
James.

 

[James11111]

Any help or advice would be much appreciated.

 

[Adam.Vause]

Hi James, 2 years ago i started my own business it was hard work and I had to sacrifice everything including my house to fund the business. Any business for it to work requires commitment and plenty of hard work. If you truly believe in it then you will achieve it.

I think the first thing is put together your business plan. It sounds like you will need an investor to get things moving. Any potential investor will require commitment from yourself both physically and financially.

Things to look at would be who would by your product? setup a focus group. contact those you think would be interested and pitch the idea. This will be invaluable to an investor if there is interest in the product..

Once you have interest you could work towards a prototype to demonstrate to potential investors.

You could also look at getting a startup loan from startuploans.co.uk.

If you think the idea will go places then don't give up. Just remember you only get out what you put in.

 

[Billmccallum]

Having the idea is the easy bit, but ideally you need to produce a prototype to be able to demonstrate that it can work.

 

[J4m3s@Finanscapes]

I'm afraid I'm with Bill on this one - I think you'll struggle. Your best bet might be to create your design and patent it then try to sell the patent to a business with the resources to build and market it. That way you can avoid some of the major costs but still get value from your idea.

Once your design is saleable you could potentially then go for funding (you'll have something to show investors then), but you'd be in direct competition with some hefty players in a market that won't care about supporting smaller businesses.

 

[The Byre]

Daft vending machine ideas are pitched at me on a regular basis. Glo-Sticks at festivals, umbrellas and macs at railway stations, sex-toys at discos, you name it and someone out there is trying to put it into a machine.

The problem with all these ideas is that the investor is being asked to back a system that doesn't really quite work yet and he/she is being asked to stump up £500k (or sometimes just £50k) for the final development.

The problem for all these people is that there are vending machines out there already that can sell anything from cans of coke to sandwiches and it would be easy to package an umbrella or a glo-stick, pet hamster, whatever, into an existing machine. It's just that the impulse-buy market for glo-sticks, umbrellas, macs, dildos and hamsters is just too small to both with.

 

[zestvending]

Hi, There is a UK company that designs and builds vending machines in Sheffield called Darenth. The owner Mark is always open to new ideas and is great to work with. For this type of project you really need to go down this avenue.

Hope this helps

 

[jeremy49]

The problem with all these ideas is that the investor is being asked to back a system that doesn't really quite work yet and he/she is being asked to stump up £500k (or sometimes just £50k) for the final development.

Like all startups, you have a great idea, but not a viable business model yet. So most people will borrow money or put all their life savings in and try to workout a business model along the way. After all if they build a great product, it will sell and make money.

This is a myth, there are many great products that have been killed by an inferior product. Hence most people fail by building the product first and not the business.

There is a process you can follow using very little money and time, that at the end of it, you will learn if you have a viable business model or not. If you do, start to think about building a minimal demonstrable product. If you don't have a valid business model, move on to the next idea.

It will save you much heart ache, money and time if you follow it. May I suggest you read these two books in this order, before you take your idea any further:

The Lean Startup by Eric Ries

Running Lean by ASh Maurya