Ready to Launch Your Start-Up? Answer these Essential Questions

Entrepreneurs must ask themselves a series of essential questions to determine whether value exists in their business ideas, said Susan Hapak, ’89, adjunct associate professor of entrepreneurship.

Hapak was among GSB faculty who spoke during the Hapak Alumni Entrepreneurship Seminar at Gleacher Center in Chicago in July. Sponsored by faculty member Susan Hapak, ’89, and the  Polsky Center for Entrepreneurship, the three-day seminar drew more than 100 alumni entrepreneurs — and aspiring entrepreneurs — who heard GSB faculty share their expertise on how to identify and evaluate business opportunities, finance the business, and manage the operation.

“When we’re talking about a strategy model, we’re not talking about a description of the business,” Hapak said. “Great strategic thinkers are able to synthesize information very quickly, then ask insightful questions to help them decide if it has value. They have this framework of patterns in the back of their minds that helps them boil down a complex deal into very basic things.”

For example, “The strategy of  ‘Image Marketing’ is where the fundamental idea of a business is marketing an image, whether whatever you’re going to produce or sell is cheaper than, better than, or different from anybody else,” she said.

“We used to call ‘Directed Search” the ‘Information Network’ model. This is a business that is fundamentally bringing buyers and sellers together, such as the stock market or e-Bay. You’re not selling anything more than that connection or information through that connection.”

The most important information on a financial statement for a start-up is revenue or sales, Hapak said. “In terms of pitching your deal, you need to support your revenue projections every which way you can,” she said. Typically, entrepreneurs use a variety of ways, including the buildup method, the market share approach, and comparables, Hapak said. “A buildup method for a retail store might be the average price per item times the number of items sold per hour, multiplied by the number of hours per day the business is open to customers, multiplied by the number of days per year the business is open,” she said. “Think carefully about your revenue claims. As an entrepreneur, be conservative and be able to say, ‘Hey, we can make this target.’”

Hapak advised participants to set goals for themselves, network with other seminar attendees, and to bet on themselves. “Don’t wait until you decide to go entrepreneurial to figure out boring stuff like how you get a commercial loan, what a commercial lease looks like, or what is business insurance and how much does it cost,” she said. “You’ll be amazed at how well you will do if you bet on yourselves. What’s the worse thing that’s going to happen? You screw up and lose a lot of money. Then you go get a real job and pay it back.”

Hapak, who graduated from the GSB’s Weekend MBA Program, worked as a consultant but wanted to try her hand at entrepreneurship. In 1992, she quit her job and, after several years of searching for the right deal, purchased a small manufacturing company, which she is still running 15 years later. She chose to sponsor the seminar to support other alumni who — like herself — are thinking of becoming entrepreneurs. “When you’re in the work place and you’re thinking about taking the leap, that’s when you can use the help,” she said. “A huge part of getting going is betting on yourself and having the confidence to start.”

The seminar will be offered again to alumni next summer.