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Startup Funding

Posted on June 8, 2011 by admin

To have enough money to start; I have a small amount

Answer:

The absolute best source of money is customers.

The more time you spend with your customers the more you will understand their needs and what they will pay for. If you provide a product or service people want to buy, you have instant cash flow and a proven business model.

A proven business model that has cash flow, and maybe even profits, is a lot easier to fund than an unproven idea.

If you don’t have enough existing capital to provide the initial product or service, then invest in market research—talking to and surveying customers—to document and prove market demand.

Proven market demand with survey results, web site tracking data, signed letters of intent or provisional purchase orders is a lot easier to fund than an unproven idea.

Some basics on funding:

If you don’t take in any external money and retain 100% of the company it’s called “bootstrapping.” Bootstrapping is a very viable option for many business models.

The biggest downside to bootstrapping is that it is extremely challenging to win a big market opportunity unless you take in external money.

The reality of bootstrapping is that it is very hard to build a business through profits alone, even in the best of times.

Most businesses need to take in external funding at some point in their life.

There are two basic types of external funding:

Non-Dilutive
Dilutive

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Work at home – full time parent

Posted on June 8, 2011 by admin

I’m a full-time mother at home and very much wanted to start my own business at home were I can support my daughter and still be there.

Answer:

Starting a business while parenting a young child. One very important factor to evaluate when considering starting a business is your personal life chapter. Starting and growing a business requires a tremendous amount of passion, commitment, time and energy. It is, truly, not for the faint of heart or for those who cannot commit most of their time and energy to the endeavor in the beginning phases. Getting a business up and running can easily consume the vast majority of your waking hours for months and months, if not years and years. Balancing that reality with the time and energy demands of a young child is a formula that often adds up to doing neither thing well. It’s very easy to neglegt both the business and the child in an effort to spread yourself between each. Both a young child and a young business are needy, self-centered creatures that are essentially black holes for your personal time and energy: they will take whatever you’ve got and more. While both children and businesses can be tremendously rewarding, they both require sustained investments of high levels of focus, time and energy to be have positive outcomes.

In addition to the time and energy demands of starting a business there is the economic reality. In 2009 the median income for a woman working full time in the U.S. was $36,278 (source: U.S. Census Bureau http://www.census.gov/newsroom/releases/archives/income_wealth/cb10-144.html ). The economic reality of starting a business, especially one that you could run alone from your home while simultaneously caring for a young child, is that you would be very, very hard pressed to generate $36,278 in after-tax profit even after a year or two of operation. For the overwhelming majority of businesses it takes time to get to a point of profitability. In many cases, it can be months or years before you see your first penny of profit. Evaluate the ideas you have for a home-based business and do some basic economic calculations: Sales – cost of goods sold – cost of operations – cost of sales & maketing (advertising, etc.) – financing costs (interest on credit cards or loans) = profit. Do you have any ideas that can realistically come close to $36,278 annually? Can they come close to that while simultaneously raising a young child?

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The Short Story on Pitches

Posted on June 6, 2011 by admin

The short story on pitches is:

1. The purpose of the pitch is to get the next meeting. This rule applies to everything from a 30 second elevator pitch to a one hour VC pitch. Note that the purpose is NOT to tell the entire story, especially about your technology, what you built and how it works.

2. The most important things to talk about in a B2B business model pitch, in priority order:

a. Relevant and target market size (see stage 1 at Idea to Exit)

b. Market pain you are solving

c. Sustainability of that pain (will the pain be around long enough for the company to grow into and be viable over the company’s life cycle)

d. Level of that pain (who, specifically, is in pain, e.g. CEO, CxO, VP, director, manager, users)

e. Price they will pay to solve that pain

f. Recurring revenue aspects of that price

g. Sales model (type [direct, channel, etc.], sales cycle, signing authority, # of functions you need to sell to, e.g. finance, CMO, IT, etc.)

h. Distribution channel(s)

i. Barriers to (competitive) entry (Intellectual Property (IP) rights (patents), proprietary sales/distribution channels, etc.)

j. Everything else, especially the technology, what you built and how it works

Note that what you know the most about, have the most passion for, etc., is down at the bottom.

This is why most pitches fail.

Most startup guys come in and spend 99% of their time on their tech, what they built, how they built it and demoing what they built. That is, in the end, the least important thing when you are pitching.

The most important thing is the pain you are solving, the scale of that pain, the sustainability of that pain and who owns that pain.

The impact on pitching and funding are:

Large scale market (.5 – >billion dollar scale) = VC
Medium scale market (several hundred million) = Angel & Super Angel
Small scale market (<several hundred million) = bootstrap, Friends & Family

You can cover points a – f in less than 90 seconds. That’s enough time for an elevator pitch.

Remember, all you want them to do is follow you off the elevator. The point of the pitch is to get the next meeting.

“The Show’s Over, Now What” Part 2: A Post-Event Checklist

Posted on April 20, 2011 by Stephanie Hackney

Post-Event Checklist:

Overall Event Goals-Did we reach, exceed or miss our goals?

Sales

Yes-final numbers:

What contributed to the success?

What else can we do to further improve our numbers at future events?

No-final numbers:

What contributed to the shortcoming*?

How will we make improvements before our next event?

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“The Show’s Over, Now What?” Part 1: Time to Reflect

Posted on April 19, 2011 by Stephanie Hackney

When we last left our marketing heroes and heroines they were wrapping up activities at their latest trade show. Now they’re back home and ready to capitalize on all they’ve done, created, learned, collected and committed to. So, where does one begin?

Brand-Building

Let’s start with the primary mission of any marketing effort: building one’s brand. By setting goals around one’s branding efforts prior to participating in events, it’s possible to track the effectiveness of one’s efforts, to see what worked and what didn’t. So, what were your branding goals? Did you set up metrics by which you would be able to measure success or failure? How did you do? What could you have done better and what will you attempt to do next time? How did your event efforts tie into your overall marketing strategy?

Perhaps you announced a contest prior to the event. If so, what was the impact? How many participants did you have? How many of them are new followers or customers vs. previously loyal followers or customers? How many people did the newbies or loyalists tell, and how many of those became followers or customers? Were you able to convert the new followers into buyers as a result of the contest? What have you put in place to track the new leads and their sources from future programs? What’s your process for welcoming additional newbies and converting them? What’s your process for staying in touch with your current and future followers and/or customers, those you worked so diligently to attract? How will you encourage and assist them in spreading the word about your amazing offering? How will you track the success of such efforts?

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Step Right Up – It’s Show Time!

Posted on April 18, 2011 by Stephanie Hackney

Picture this: you approach the trade show booth of a company you’ve never heard of. The design is amazing, the color combinations are fabulous and the collection is unique. You’re intrigued and can’t wait to learn about this newcomer. Just as you step onto their carpeting, you’re stopped dead in your tracks – a stack of half empty pizza boxes, a pile of napkins and sweating drink cups are occupying a table situated smack dab in the middle of the booth. What’s your first impression?

No, this is not a made-up scenario. This is an actual experience I had at a recent trade show.

Now, I’m sure someone out there is responding with, “Well, the staff needs to eat.” I agree. But, your booth is not the place for chowing down!

As a former corporate event manager and owner of an event management company I might be just a bit more critical than most attendees, but I can assure you the scene I encountered shouted, “Unprofessional!” to most everyone who visited that booth. And, it was enough to turn me away, without having learned about the company or its products.

As a result of my experience, and because I prefer to give the benefit of the doubt to those who might be new to exhibiting, I want to share my “rules of engagement” when exhibiting at trade shows, conferences and other events where you are competing for attendees’ valuable dollars.

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Motorcycle Instincts and Startups

Posted on March 9, 2011 by admin

There was a good post today on the Fortune blog titled “Motorcycle Instincts and Startups” here: http://finance.fortune.cnn.com/2011/03/04/motorcycle-instincts-and-start-ups/

I think the post is a good read and draws useful parallels for a few aspects of motorcycling and startups.

I’ve been riding motorcycles for over 40 years both on and off road and on six continents through most of 43 countries.

I’ve personally started about a half dozen businesses (depending on how you count them) and been part of starting dozens more.

You could say this topic resonates with me.

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Questions for the Next Gig

Posted on February 11, 2011 by admin

I was asked to provide career coaching feedback on a new employment opportunity, so I worked up these questions. These questions are equally applicable to a startup or other business opportunity, with suitable modifications around manager / company / product or services .

Ask the questions before you become emotionally invested in the opportunity. Once you get past that line, your emotional investment will color or skew your perceptions to the point you will not be able to be objective about the answers.

Use as many objective, fact-based data points as possible, and keep a log or spreadsheet that rates and weights the answers.

Questions #1 – #3 are absolute show stoppers.

It can be possible to overcome #4 if you can see a clear path to obtaining the necessary skills, etc. Most entrepreneurs get to where they end up by answering “Yes, I can do that,” to every challenge and figuring it out as they go along. That approach does not disqualify you for opportunities, but you need to be honest about how that changes your risk profile.

The answers will never come back all positive, but the goal is to have the majority of the answers to questions 5-11 come back positive. Some negative responses, such as those around customers, products and services, etc., may provide leverage points for negotiations.

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