Strangely enough, acid testing is no longer synonymous with testing the level of pH to determine acids and bases. The phrase “acid testing” is now associated with entrepreneurs, and it refers to what is required for a deal to get funded. There are multiple factors in the entrepreneurial acid test, but the most important are team, market, technology, customers, connections, and finance.
Team: Every successful team is “cohesive.” Without the ability to work together, the long and difficult process of starting up a company will be more complicated and will be at a greater risk of failure, especially over time.
Market: The most important thing entrepreneurs need to know about the market is positioning. Though timing is also a large factor, it is essential that entrepreneurs know specifically where they stand in relation to what else is in the market.
Technology: Regarding technology, entrepreneurs must create a barrier to entry. For example, a patent will prohibit another entrepreneur, business, or company from taking your idea and profiting from it.
Customers: Obviously, customers are not going to know about a product that does not exist yet. Therefore, it is up to entrepreneurs to find their “potential and future customers.”
Connections: It has been said that who you know is almost as important, if not more important, than what you know. Entrepreneurs should take advantage of seminars, associations, and lectures offered to them. You never know what connections you can make today that will benefit you tomorrow.
Finance: No one will invest in a company that does not have a break even analysis. Make sure that you do your homework before you meet with an investor.
Essentially, entrepreneurs need to have the perfect team, excellent timing, and a complete understanding of their position in the market. With these three factors established, entrepreneurs will find themselves on the right track.
See Henry Wong’s lesson on the acid test for entrepreneurs. He’ll break down each factor in the acid test, and give entrepreneurs tips that will guarantee funding below: