business-plan

Funding Your Startup Might be Easier than You Think

by Paul Joseph December 30, 2011 Featured

The issue of raising funds for a new business is a worry that’s notorious for giving entrepreneurs sleepless nights. Often, an entrepreneur will have terrific ideas, plans, and projects, but they lack the funds to go anywhere with their ideas. This can obviously be a real setback for many people and has the potential to stop some from even trying to start a business. Below are a few sources of funds that, depending on your circumstances, you might be able to tap into. As with most things in business, each source has both advantages and disadvantages. They’ve all got their own procedures and processes as well. We won’t go into all the information you’ll need for each source, but this should, at the very least, get you thinking about the possibilities: Funding That Could be Available to You Family and Friends Although it can be a very uncomfortable thing to do, turning to friends and family when seeking funds is the first option for many entrepreneurs. Your family and friends are the people who care about you the most and will be most likely to help you out. If you are known to be trustworthy, your friends and family are much more likely to lend or give you the money that you need. Individual Private Investors When raising the required funds to finance your new business, approaching a private investor is an option that you may want to consider. These are typically people with a high net worth and will often times use their wealth as a tool to encourage young entrepreneurs who live in their community. If you are aware of any private investors in your area, taking your business idea to them just might pay off big. One example of a wealthy person who uses his wealth to encourage young people in Seattle is Bill Gates. Imagine having someone like Mr. Gates backing up you and your! Private Investment Companies Also known as “venture capitalists,” private investors are another option to try when looking for business funding. These folks are much more selective where granting funds to entrepreneurs is concerned. Venture capitalists prefer to provide you with the money that you require to start your business in exchange for a portion of the business, rather than loaning the money for interest. In these cases, they enter the picture as partners. Never forget that private investors can be very tough, and will often require that they receive a controlling interest in your company. (A 35%-60% equity stake is fairly common.) Commercial Banks Not much explanation is needed when it comes to commercial banks. It’s pretty common knowledge that they are a major source of funding for entrepreneurs. Higher interest rates and sometimes collateral are part of these funding deals. The one thing you absolutely need to get bank funding is a formal, comprehensive business plan – and a lot of patience. The approval process can take months. Government Grants In the United States and around the world, city, regional (state), and federal governments typically budget some money to encourage development of small and medium scale companies. People who qualify for this type of money will be given grants. If you are a citizen of one of these areas and are able to fulfill the necessary requirements, you very well may qualify for a government grant. The obvious advantage of a grant is that it doesn’t have to be paid back. The down-side is that the application process can involve a lot of red tape. If you’re going for a grant to fund your startup, consider hiring a grant writing specialist. Public Funding Investment bankers supply this source of funding. If your company has grown in size and you are seeking funds in order to diversify or expand, selling shares to the public could be viable option for you. There is one major draw-back with this type of funding, however. Since your business will now become a publicly traded company, you are taking a risk of losing control of your company if something should go awry. The bottom line is that lack of funds should never be an obstacle that stands between you and your dream of building a very successful company. By utilizing one or more of the options above, you have a good chance of getting your idea off the ground. And we didn’t even cover bootstrapping, which is a popular method of true entrepreneurs everywhere!  How did you fund your business?  Share your experiences in the comments below. Adam Toren is an Award Winning Author, Serial Entrepreneur and Investor. He Co-Founded YoungEntrepreneur.com along with his brother Matthew. Adam is co-author of the newly released book: Small Business, Big Vision: “Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right” and also co-author of Kidpreneurs .

Tagged as: become an entrepreneur, business, business planning, business-plan, entrepreneur, entrepreneurship, financing, funding, small-business, starting a business, startup

0 comments Read the full article →

Use This Dot-Point Easy System To Write Your Killer 2012 Business Plan

by Paul Joseph December 28, 2011 Featured

It’s that time again when the old year winds down (toodles, 2011), a new year sparkles before us full of potential, promise, and possibility (hey there, 2012), and savvy entrepreneurs are preparing their 2012 business plans . If you’ve never prepared a business plan, then this is the year I challenge you to start, no matter what stage your business is… Read the rest of this entry »

Tagged as: 2012 resolutions, business-plan, goal setting, marketing plan, small-business, young

0 comments Read the full article →

Make Sure Your Great Idea Includes a Business Model

by Paul Joseph November 18, 2011 Featured

For survival, the objective of every business should be to bring in revenues which exceed their costs. Even non-profits have to do this to cover overhead costs, unless they rely totally on donations. Yet I continue to see business plans, or even talk to founders, and can’t find the specifics of the business model anywhere. As Guy Kawasaki says in his book “ The Art of the Start ,” if you can’t describe your business model in ten words or less, you don’t have a business model. Avoid whatever business jargon is currently hip, like strategic, mission-critical, world-class, synergistic, first-mover, or scalable. Try something like, “the product costs $X, and we sell it for $Y.” Guy also says and I agree that the smart approach is to copy somebody else.  You can innovate in technology, markets, and customers, but inventing a new business model is a bad bet.  Try to relate your business model to one that’s already successful and understood.  Here is a summary of a half-dozen of the most common models: Facebook model. This is the most often attempted and failed business model today on the Internet – all the services are free, and you make money off the online advertising.  This model only works once you have exceeded about one million page-views per month, and spent maybe $50 million to get there. eCommerce model. This was one of the first Internet business models, per Amazon.com, and still a popular one today. It’s the electronic version of a catalog and shopping cart, and today rarely involves any stock of product. Products are usually drop-shipped directly by the manufacturer. Shopkeeper model. This is the most traditional and successful approach in use for centuries. It implies setting up a store in a location where potential customers are likely to be, with products and services on display, being sold at some multiple of cost to cover the overhead and realize a profit. Bricks-and-clicks model. This is a hybrid of the shopkeeper and eCommerce models, in which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-and-mortar, as well as bricks, clicks and flips, with flips referring to catalogs. It’s great for big companies like Wal-Mart, but I don’t recommend it for startups. Razor-and-blades model. This one has been around for many years now, and is sometimes called the “bait and hook model” or the “tied products model”.  The premise is offering a basic product at a very low cost, often at a loss (the “bait”), then charging compensatory recurring amounts for refills or associated products or services (the “hook”). I’m sure you can think of many examples. Subscription or licensing model. Here a customer must pay a contracted price to have access to the product or service on a periodic basis (monthly, yearly, or seasonal). The model works online, offline, through magazines, newspapers, and television. The advantage is recurring revenue without finding new customers. There are many more, with descriptive names like the auction model, direct sales model, value-added reseller model, multi-level marketing model, and the freemium model. Take a look at Wikipedia if you want more details. The point I am making is – pick one and provide specifics in your business plan. Define clearly who is your customer, what will the customer pay for, how much will he pay, and how much do you expect it to cost for that revenue. Then as investors, we can argue other equally important parts of the model, like how big is the opportunity, how fast it’s growing, and who are the competitors. Don’t let your business plan be tossed before you are in the game. What are the ten words that define your business model? Martin Zwilling is the founder and chief executive officer of Startup Professionals, a company that provides products and services to startup founders and small business owners. Check out his daily blog at http://blog.startupprofessionals.com Read more about Marty here .

Tagged as: become an entrepreneur, business, business planning, business-plan, entrepreneur, entrepreneurship

0 comments Read the full article →

Your Executive Summary Needs to Grab Investors

by Paul Joseph October 14, 2011 Featured

Modern investors love to first read a two-page summary of your business plan, formatted like a glossy marketing collateral sheet, with text well laid out in columns and sidebars, and a couple of relevant graphics. This one had better grab their attention, or they won’t look further. You may have already found several articles, web pages, or books about writing the perfect executive summary. They all offer a list of requirements that might take 50 pages to address, but of course they ask you to write concisely. Take a look at my website for the Sample Executive Summary , which shows what can be done in one page (both sides). Before you start, remember that the goal of the executive summary is to provide a printed version of your best elevator pitch, to provide a positive first impression to the reader. Think of it as a selling effort, not an attempt to fully describe your startup. Here are the key components: 1. The problem and your solution. These are your hooks, and they better be covered in the first paragraph. State your value proposition, and what specifically you are offering to whom. Skip the acronyms, history of the company, and the disruptive technology behind your solution. 2. Market size and growth opportunity. Investors are looking for a large and growing market. Spend a few sentences providing the basic market segmentation, size, growth and dynamics – how many people or companies, how many dollars, how fast the growth, and what is driving the segment. Skip the comment that you are conservatively estimating your penetration at 1%. 3. Your competitive advantage. Identify your sustainable competitive advantage, like unique benefits, cost savings, or industry ties. Don’t kill your credibility by saying you have no competition. At minimum, you compete with the way things get done currently. Most likely, the investor has already seen multiple plans with similar solutions. 4. Business model. Who is your customer, what is the price, and how much does it cost you to build one? Do you now have real customers, are just starting development. Outline your sales and marketing strategy (direct marketing, sales channel, viral marketing, and lead generation). Identify key quantities, such as customers, licenses, units, and margin. 5. Executive team. Remember that investors fund people, more than ideas. Why is your team uniquely qualified to win, and what have they done before? Explain why the background of each team member fits, by naming roles and names of relevant companies. Include outside advisors if they have relevant experience. 6. Financial projections and funding. You need to show your summary revenue and expense projections for three to five years. Investors need to know the amount of funding you are asking for now, and what they get. The request should generally be the minimum amount of cash you need to reach the next major milestone in your plan. The above outline need not be applied rigidly or religiously. There is no magic that fits all startups, but make sure you touch in each key issue. You need to think through what points are most important in your particular case, and capitalize on your strengths. Key points skipped are red flags, and investor first impressions will go negative. A final important element is not even in the executive summary, it is the paragraph you use in the email that introduces your company and has the executive summary attached. Less is more here, so include the grabber, show your passion and commitment, and be sure and ask for something (like a follow-on meeting or specific feedback). That’s your metric to see if you have their attention. Martin Zwilling is the founder and chief executive officer of Startup Professionals, a company that provides products and services to start-up founders and small business owners. Check out his daily blog at http://blog.startupprofessionals.com . Read more about Marty here .

Tagged as: become an entrepreneur, business, business-plan, entrepreneur, entrepreneurship, financing, funding, startup

0 comments Read the full article →

Sharing too much of your Business Plan?

by Paul Joseph October 3, 2011 Featured

Yesterday, I attended an event organized by StartX, Stanford’s accelerator program for startups by Stanford founders and came away much impressed by the quality of engineering talent and innovation concentrated on one campus. When I was researching some of these enterprises-of-tomorrow, I was struck by how secure their ideas and strategic information was, despite just having shared it with an auditorium full of people. This is certainly a culture and skill that will help Indian entrepreneurs and student startups share and learn to accelerate their growth. In a world where ideas and brands are increasing in importance (ref: Google acquires Motorola: http://tcrn.ch/niFYRE and Paying for domain names : http://bit.ly/fDTm0B ), no matter what your scale, it’s worthwhile to think about how you are protecting your enterprise. 1. Who else is out there? Depending on the nature of your business, find out who else is similar to you using any combination of the many tools available to you. If you are a product company (or planning to become one), work with a lawyer or legal service-outsourcing firm towards a global Intellectual Property search to identify what’s already out there and the implications on your own business. If you are building brands, look for trademarks and copyrights within your stated industry and first ensure you are not in violation while filing for protection yourself. For web-based companies, best practice would be to have consistent and unique names across key domains (like .in and .com) – this has proven to be more valuable in the long run than owning a more preferred name on a less common domain. 2. Document *everything*. And store securely If you are in the startup stage or working on setting up R&D to expand your product suite, this applies to you. Firstly, build end-to-end prototypes instead of pieces of a solution. This will not only help you roll out solutions at scale but also protect your idea better since it’s complete. Secondly, document the prototype process extensively with as much rigor as possible – actual steps, results, observations, diagrams, people involved, and all of these with timestamps. Store the information securely and you can potentially use it as insurance in a future when our glorious country injects some efficiencies in its judicial system. Till then, this will at least enhance your design through iterative learning! 3. Ask for non-disclosure There are many levels to non-disclosure. It could be as simple as agreeing with your colleagues before hand on how to present your idea without revealing core IP, or asking for a signed NDA (Non Disclosure Agreement). If you are meeting a VC or any kind of active investor, ask for an NDA. (Also get references on the people you are meeting if you are planning to share a ot of information with them!) Investors trade in information and networks, so they will use the knowledge you share with them in whatever context it is useful. Make it clear beforehand what your expectations are – do not assume it is understood. 4. Share, but Smartly Look at your pitch again. There are three parts to it –1.context 2.solution 3.impact. You should share as much of the context and impact as you need to convince your audience that your solution is very very important. Most entrepreneurs spend large amounts of time describing the solution which not only is less important in that first pitch to a stranger, but also gets you onto the dangerous territory of perhaps sharing too much of the mechanics. You do not have to get into the details of how the solution till work other than in very select situations – for e.g. when you are meeting a client/investor. In those cases, you must convince the audience of the feasibility of your solution without sharing its process in entirety. Make it difficult for your pitch to propagate – ask for non-disclosure, don’t email easily shareable documents and try to answer as many critical questions in person or over the phone as possible. Always lay down the boundary of what information you strongly feel is sacred and must be inviolate. It’s important that this information not be necessary to visualize the impact. Last but not the least, get some advice from lawyers and mentors on your specific situation. And next time you share your plans, you will leave an impressed audience dying to know more about HOW you are planning to execute and greatly interested in that second meeting you wanted.   About the Author Sandhya Hegde is currently studying at the Stanford Graduate School of Business in California. Before this, she worked with Sequoia Capital, as a part of their investment team in India and US, covering businesses in consumer, financial services, technology, media, mobile, education and healthcare. An engineer at heart, she is an IIT Bombay graduate with a degree in Electronics and is a financial advisor on the board of two tech start-ups. You may also like to read: How to Pitch a Business Idea “Validating your business plan is vital” – Roundtable with Sramana Mitra at NASSCOM Product Conclave and Expo 2010 Genesis2010 : Social Entrepreneurship Business Plan Competition : March 31

Tagged as: business ideas/plan, business pitch, business-ideas, business-plan, Featured, resources, sandhya hegde

0 comments Read the full article →

Finding Investors – 5 Steps for Success

by Paul Joseph July 19, 2011 Featured

So you have this fantastic startup idea, and you’re committed to making it work, but you don’t have the funds it will take to get it off the ground. The simple solution is to find investors. It’s simple, but not easy. In fact, only about 5% of all startups receive any kind of outside funding. And it’s not that they’re the only ones who want it. You can bet there’s a big chunk of the other 95% that would accept funding if they only knew how to get it. While there’s a lot to be said for bootstrapping a business, it’s not possible for all business models. If you need a prototype or some technology designed, for instance, you’ll need funds to make that happen. And investors can add more than just money to your new company. If you do it right, you’ll find an investor with experience and connections that can help you not only launch but catapult your new business. So, how do you find investors? Here are five steps to help you get funded: 1. Create a business plan. Even if you’re not considering outside money for your startup, some sort of business plan is a must. It doesn’t have to be elaborate or formal as an internal document, but if you want to get funded, it’s got to be complete and appealing. Whether you use an app-based template or hire a business plan writer, get this piece done – and done right – before even thinking about talking with potential investors. 2. Gauge your timing. You want to start looking for investors when you’re ready, rather than when you really need the money. If you wait too long and are now at the point where you need funds or you’ll have to close up shop, your desperation will naturally come across in your presentation to potential investors. So, as part of your business plan, figure out when you’ll need money, and then get ready and seek out investors well before that point. 3. Determine who you’re looking for. Although it might feel as though the investors are the ones with all the power, and you’re hoping they’ll pick you, it’s important that you’re selective in picking them too. Figure out what you really want in an investor. You might want to stick with people close to your area, for example, so they’ll be more readily available. More importantly, you want someone who will bring more to the table than just money. Their connections and expertise might be even more valuable. 4. Be ready to negotiate. Once you find a suitable investor for your startup, expect there to be a negotiation, and be prepared for it. Don’t lay all your cards out at once, and know they won’t either. Well before you even begin looking for investors, know what you’re willing to compromise and which terms you consider deal-breakers. Being prepared is vital to a successful negotiation. 5. Avoid common mistakes. Once you get a meeting with an investor, steer clear of these common missteps: Keep your ego in check. Confidence is a good thing, but overconfidence and cockiness will turn an investor off fast. In addition to making a good investment, they want to do business with someone they’ll enjoy working with. Avoid using industry jargon. Don’t assume your potential investor knows what you’re talking about when you start spouting off technical terms and industry buzz words. They won’t be impressed. They’ll more likely be annoyed. Don’t say you don’t have competition. Even if you’ve got what you believe to be a one-of-a-kind product or service, saying you have no competition makes you sound naïve. Everyone has competition. Stay away from fantasy scenarios. You might have figured out that all you need to do is capture 1% of the market to have a billion dollar company, but the investor doesn’t care about that. They want to know how you plan to capture that 1%. Obviously a single post can’t give you everything you should know about getting investors, but the five steps outlined above are a good guide for getting your startup funded and doing it right. Have you received financing for a startup? What other steps are important? Share with us in the comments!

Tagged as: business, business-plan, funding, power, startup

0 comments Read the full article →

Startup School : A Session on Business Plan and Product Development for Entrepreneurs in Kerala

by Paul Joseph April 27, 2011 Featured

A Session on Business Plan and Product Development for Entrepreneurs The program: Understanding business: financials, marketing, team, competition, assumptions Designing your new venture and the product/service Matrices to track performance Group work and one to one mentoring (Visit Yourstory.in for full news, other content, and much more!)

Tagged as: business, business-plan, content, entrepreneurs, frontpage, group, other-content, visit-yourstory-in

0 comments Read the full article →

Genesis 2011, the social entrepreneurship B-plan competition from IIT Madras

by Paul Joseph March 10, 2011 Featured

The Siva Group and C-TIDES, the entrepreneurship cell of IIT Madras, Chennai are putting together Genesis 2011, a social entrepreneurship business plan competition. Genesis is designed to be an opportunity for people who have a number of ideas with an interest in creating social impact. (Visit Yourstory.in for full news, other content, and much more!)

Tagged as: business-plan, chennai, content, frontpage, visit-yourstory-in

0 comments Read the full article →