First of all thank you to everybody for my previous questions on this site, you inspire me to think about problems differently.
My father and I had a great idea for a web based startup, we have inside sources to the industry so we could build a viable product on a shoestring budget, in a fairly reasonable time. We are also guaranteed the one customer, while small, could be the great kick off point we need.
Before we actively pursue this we started to do some in depth market analysis and turned up results that we weren't expecting. The consumer demand for a similar system was far greater than we anticipated, which isn't in and of itself bad. What is bad that in evaluating the competition we were highly discouraged at what we found.
While we can only find the one company, they are big, they have been established in this market for years. Their site is professional, their masthead notes some highly experienced executives with an impressive resume of successful small businesses, and they have noted some big names in VC. Further, their array of products around this need not only far exceed anything we dreamed possible, they seem to be executed flawlessly and in areas that we have virtually no technical expertise in.
In other words, they are bigger, wiser, smarter, presentable and have deeper pocket books than us. If the two of us were at the bar, he would go home with the hottest girl in the place hours before the bar closes.
Which leads me to what I think MIGHT be our strength... I may be smaller, younger, not as smart and not presentable (at least yet), but there is always the less desirable woman at the bar at closing time looking around for the guy to settle with. I feel that we can be that guy :)
Their product is filled with so much awesome that it must be prohibitively expensive, we are smaller and leaner and we could be profitable with far less revenue I am sure. Maybe we can undercut the bigger guy with a cheaper product geared towards the customer that doesn't have a big budget or is happy with "good enough", much like the guaranteed customer that already expressed interest to me.
My father is not convinced and I think he wants to bail. He is funding this venture completely so I don't want him to do this if he isn't 100%, and I certainly don't want to fail with his money.
In your opinion, is it worth going on? Is our business plan sound? I don't want to abandon this because we have some advantages that come around infrequently.
Without seeing both your and your competitors products it is difficulty to advise however your reasoning to continue is sound if:
But to be sure I would get a price/feature comparison completed against your competitor (you can do this yourself). I would then try and talk about your product/concept with actual customers to gauge if they see the value in what you are offering.
If your competitor has several products, regardless of how big they are, you only need one product that is "better" than any of their products (easier said than done). Better could mean price, quality, features etc. If you have that one product that is considerably better, then it is an issue of marketing.
Also, there are plenty of companies who stick logos of their customers up on their site; don't be intimidated. (smart) Large companies will always look around at several options before deciding on a purchase, you just need a bit of slick marketing and a decent presentation when you get invited in and you are just as valid as any other business.
As you mentioned, you don't want to fail with your Father's money, this is always going to be a risk no matter how good you think you are. So you will still need to decide for yourself if it is worthwhile.
You also ask if your business plan is sound, I can't see your business plan. I think that is exactly what you need to work on producing. Identify how your product is better, how you are going to market it, how much risk there is, how much you need to make in order for it to be viable and how many items you need to sell to get there and in how much time.
Once you have all those "hows" figured out and you personally think its worthwhile then start working like mad to making things happen. Then once you have made progress and it looks like a viable business then start talking to your Father about financing. Nobody serious here would go to an investor with an "idea" and without a solid business plan and without some ground work to turning that idea into something that exists outside of your head.
If you believe in it, and you think it is worth the risk then you need to start doing the hard yards yourself to show others that you believe it will work.