This is default featured slide 1 title
This is default featured slide 2 title
This is default featured slide 4 title
This is default featured slide 5 title
 

Monthly Archives: June 2016

How to Keep Your Startup Business?

At this point you’ve accomplished the basics of getting an ongoing business concern up and running.  You have a product offering that people are buying.  You are selling that product at a price that lets you make a sufficient profit to continue a business, and you are now working to increase the scale of your operation to the point where you are actually running a business rather than just working on a hobby or interesting side job.  Congratulations!  You’re probably now working 7 days a week, 12-16 hours a day, realizing on a daily basis how much you need to learn in order to have your business grow to match your dreams, and dealing with daily setbacks and obstacles.  This is probably the hardest you’ve ever worked in your life, and even though you’re loving every day, you’re not sure how you will be able to cope with this forever.

The good news is that most startups have busy periods in the beginning, and as you start to gain market share and stability your workload as the CEO, founder, sole evangelist, and creator will be eased by a staff of people who can assist and your customer base will become established so you can rely on repeat sales rather than pure hustle to keep your business going.  During those periods of pure chaos, however, here are 5 tips to keep you sane and successful:

    1. Find mentors.  Good mentors will make your dreams achievable more quickly.  The best mentors are those who have done what you are trying to accomplish before, successfully, and who are helping you for friendship or self-fulfillment reasons.  They may be formal Board of Advisor or Director members, friends, colleagues, or interested peers.  Service providers can be mentors as well, but be careful, as there is always a potential for a conflict of interest when someone is trying to sell you something and offering advice at the same time.  Ethical advisors will be able to navigate this conflict, but the world abounds with unethical people who will exploit it to their advantage. We had a local outsourced accounting firm whose CEO we invited to our Board of Advisors, and all of his advice seemed to result in his firm increasing our billings by an order of magnitude.  By the time I finally removed his firm and insourced their work, he had come close to financially devastating my firm.   The best mentors don’t need anything from you, but if you have an arrangement with them for payment in cash or stock, ensure that arrangement is clear and the advisor doesn’t have an interest in pushing you in a specific direction for their own gain.
    2. Work out.  Exercise.  Be fit.  Life is better when you work out. I know your answer, which is the same for everyone, “I can’t possibly find the time with my schedule to work out, the business will suffer!”. Quite simply, BS.  The stress you are going through is probably the highest you have experienced in your life, and if you don’t work out now, your ability to be at your best will start to fall, quickly.  I’m not saying you suddenly need to take up some time consuming pursuit that is a job in itself, like training for the Ironman, but there are so many little things that you can do during your day to start getting fit, after a couple of months of getting into a routine you’ll wonder how you functioned without doing them.  Park on the opposite side of the street and walk further to work.  Take the stairs.  Take a break at lunch and do 50 pushups, 50 situps, and 50 squats daily.  Work your way up to a solid 30-45 min of exercise daily.  On days when you wake up late and can’t possibly do 30 minutes, get 5 minutes in so you keep your momentum.
    3. Set a schedule for yourself.  Particularly if you’re still working by yourself or working out of your house, you need to have a set schedule for work and stick by it.  It’s too easy to just do whatever happens to come to you reactively, but that is not the way to build a business.  Especially if you are not good at working on a schedule, set your working time, family time, and relaxation time and stick to them.  If you deviate, get back to your schedule asap.
    4. Know your weaknesses.  If you are extremely uncomfortable dealing with customers, doing your books, or going on sales calls, whatever your weaknesses are you need to recognize them first.  Once you recognize them, you need to compensate for them.  Compensation may be that you take extra time to prepare for a sales call, rehearsing it until you’re as comfortable as you can be, take sales training or Toastmaster’s courses, take bookkeeping classes, hire somebody to do that function for you or a variety of other compensation methods, but the key is to know your weaknesses, face them, and compensate.  Often, depending upon how much effort you put into it, a weakness can become a strength.  As an example, I get extremely nervous speaking in front of large groups.  Because of this, I spend a lot of time rehearsing my topics to the point where I can brief them without slides and without any notes other than simple topic bullets.  When prepped appropriately, a speaking engagement then becomes another opportunity to excel at a new skill rather than a dreaded ordeal to be endured, and I have received many comments on how I can brief without relying heavily on aids, and how composed I look, despite my trepidation and butterflies before and during.
    5. Finally, set deadlines and goals for yourself and adhere to them.  Determine your goals for your business, write them down and give them to a trusted friend with a date set for 6 months or a year from then to review them with you.  On a daily basis, set your goals for the day and at the end of the day review them.  It’s a common trap to get immersed in the chaos of a startup and find a year later you were phenomenally busy, but never achieved the goals you originally planned.  You can revise the goals as need be, but you need to set them first to revise them later.

Get Fund for Your Business

Contrary to popular belief, business plans do not generate business financing.True, there are many kinds of financing options that require a business plan, but nobody invests in a business plan.

Investors need a business plan as a document that communicates ideas and information, but they invest in a company, in a product, and in people.

Small business financing myths:

  • Venture capital is a growing opportunity for funding businesses. Actually, venture capital financing is very rare. I’ll explain more later, but assume that only a very few high-growth plans with high-power management teams are venture opportunities.
  • Bank loans are the most likely option for funding a new business. Actually, banks don’t finance business start-ups. I’ll have more on that later, too. Banks aren’t supposed to invest depositors’ money in new businesses.
  • Business plans sell investors. Actually, they don’t—a well-written and convincing business plan (and pitch) can sell investors on your business idea, but you’re also going to have convince those investors that you are worth investing in. When it comes to investment, it’s as much about whether you’re the right person to run your business as it is about the viability of your business idea.

I’m not saying you shouldn’t have a business plan. You should. Your business plan is an essential piece of the funding puzzle, explaining exactly how much money you need, and where it’s going to go, and how long it will take you to earn it back. Everyone you talk to is going to expect to see your business plan.

But, depending on what kind of business you have and what your market opportunities are, you should tailor your funding search and your approach. Don’t waste your time looking for the wrong kind of financing.

Where to look for money

The process of looking for money must match the needs of the company. Where you look for money, and how you look for money, depends on your company and the kind of money you need. There is an enormous difference, for example, between a high-growth internet-related company looking for second-round venture funding and a local retail store looking to finance a second location.

In the following sections of this article, I’ll talk more specifically about six different types of investment and lending available, to help you get your business funded.

1. Venture capital

The business of venture capital is frequently misunderstood. Many start-up companies resent venture capital companies for failing to invest in new ventures or risky ventures. People talk about venture capitalists as sharks—because of their supposedly predatory business practices, or sheep—because they supposedly think like a flock, all wanting the same kinds of deals.

This is not the case. The venture capital business is just that—a business. The people we call venture capitalists are business people who are charged with investing other people’s money. They have a professional responsibility to reduce risk as much as possible. They should not take more risk than is absolutely necessary to produce the risk/return ratios that the sources of their capital ask of them.

Venture capital shouldn’t be thought of as a source of funding for any but a very few exceptional startup businesses. Venture capital can’t afford to invest in startups unless there is a rare combination of product opportunity, market opportunity, and proven management. A venture capital investment has to have a reasonable chance of producing a tenfold increase in business value within three years. It needs to focus on newer products and markets that can reasonably project increasing sales by huge multiples over a short period of time. It needs to work with proven managers who have dealt with successful start-ups in the past.

If you are a potential venture capital investment, you probably know it already. You have management team members who have been through that already. You can convince yourself and a room full of intelligent people that your company can grow ten times over in three years.

If you have to ask whether your new company is a possible venture capital opportunity, it probably isn’t. People in new growth industries, multimedia communications, biotechnology, or the far reaches of high-technology products, generally know about venture capital and venture capital opportunities.

If you are looking for names and addresses of venture capitalists, start with the internet.

2. “Sort-of” venture capital: Angels and others

Venture capital is not the only source of investment for start-up businesses or small businesses. Many companies are financed by smaller investors in what is called “private placement.” For example, in some areas there are groups of potential investors who meet occasionally to hear proposals. There are also wealthy individuals who occasionally invest in new companies. In the lore of business start-ups, groups of investors are often referred to as “doctors and dentists,” and individual investors are often called “angels.” Many entrepreneurs turn to friends and family for investment.

Your next question of course is how to find the “doctors, dentists, and angels” that might want to invest in your business. Some government agencies, business development centers, business incubators, and similar organizations that will be tied into the investment communities in your area. Turn first to the local Small Business Development Center (SBDC), which is most likely associated with your local community college.

Turn first to the local Small Business Development Center (SBDC), which is most likely associated with your local community college.

Important: Be careful dealing with anyone who offers to help you find financing as a service for money. These are shark-infested waters. I am aware of some legitimate providers of business plan consulting, but legitimate providers are harder to find than the sharks.

3. Commercial lenders

Banks are even less likely than venture capitalists to invest in, or loan money to, startup businesses. They are, however, the most likely source of financing for most small businesses.

Startup entrepreneurs and small business owners are too quick to criticize banks for failing to finance new businesses. Banks are not supposed to invest in businesses, and are strictly limited in this respect by federal banking laws. The government prevents banks from investment in businesses because society, in general, doesn’t want banks taking savings from depositors and investing in risky business ventures; obviously when (and if) those business ventures fail, bank depositors’ money is at risk. Would you want your bank to invest in new businesses (other than your own, of course)?

Furthermore, banks should not loan money to startup companies either, for many of the same reasons. Federal regulators want banks to keep money safe, in very conservative loans backed by solid collateral. Startup businesses are not safe enough for bank regulators and they don’t have enough collateral.

Why then do I say that banks are the most likely source of small business financing? Because small business owners borrow from banks. A business that has been around for a few years generates enough stability and assets to serve as collateral. Banks commonly make loans to small businesses backed by the company’s inventory or accounts receivable. Normally there are formulas that determine how much can be loaned, depending on how much is in inventory and in accounts receivable.

A great deal of small business financing is accomplished through bank loans based on the business owner’s personal collateral, such as home ownership. Some would say that home equity is the greatest source of small business financing.

4. The Small Business Administration (SBA)

The SBA makes loans to small businesses and even to startup businesses. SBA loans are almost always applied for and administered by local banks. You normally deal with a local bank throughout the process.

For startup loans, the SBA will normally require that at least one third of the required capital be supplied by the new business owner. Furthermore, the rest of the amount must be guaranteed by reasonable business or personal assets.

The SBA works with “certified lenders,” which are banks. It takes a certified lender as little as one week to get approval from the SBA. If your own bank isn’t a certified lender, you should ask your banker to recommend a local bank that is.

5. Other lenders

Aside from standard bank loans, an established small business can also turn to accounts receivable specialists to borrow against its accounts receivables.

The most common accounts receivable financing is used to support cash flow when working capital is hung up in accounts receivable. For example, if your business sells to distributors that take 60 days to pay, and the outstanding invoices waiting for payment (but not late) come to $100,000, your company can probably borrow more than $50,000. Interest rates and fees may be relatively high, but this is still often a good source of small business financing. In most cases, the lender doesn’t take the risk of payment—if your customer doesn’t pay you, you have to pay the money back anyhow. These lenders will often review your debtors, and choose to finance some or all of the invoices outstanding.

Another related business practice is called factoring. So-called factors actually purchase obligations, so if a customer owes you $100,000 you can sell the related paperwork to the factor for some percentage of the total amount. In this case, the factor takes the risk of payment, so discounts are obviously quite steep. Ask your banker for additional information about factoring.

6. Friends and family funding

If I could make only one point with budding entrepreneurs, it would be that you should know what money you need, and understand that it is at risk. Don’t bet money you can’t afford to lose. Know how much you are betting.

I’ll always remember a talk I had with a man who had spent 15 years trying to make his sailboat manufacturing business work, achieving not much more than aging and more debt. “If I can tell you only one thing,” he said, “it is that you should never take money from friends and family. If you do, then you can never get out. Businesses sometimes fail, and you need to be able to close it down and walk away. I wasn’t able to do that.”

The story points out why the U.S. government securities laws discourage getting business investments from people who aren’t wealthy, sophisticated investors. They don’t fully understand how much risk there is. If your parents, siblings, good friends, cousins, and in-laws will invest in your business, they have paid you an enormous compliment. Please, in that case, make sure that you understand how easily this money can be lost, and that you make them understand as well.

Although you don’t want to rule out starting your company with investments from friends and family, don’t ignore some of the disadvantages. Go into this relationship with your eyes wide open.

Maybe, your idea and your situation is a better fit for crowdfunding—that is, creating a profile and pitching your business idea or product on a site like Kickstarter. In fact, this method of raising money has become so popular that here are dozens of crowdfunding sites to choose from, all offering different terms and benefits.

Words of warning

Don’t take private placement, angels, friends and family as good sources of investment capital just because they are described here or taken seriously in some other source of information. Some investors are a good source of capital, and some aren’t. These less established sources of investment should be handled with extreme caution.

Never, never spend somebody else’s money without first doing the legal work properly. Have the papers done by professionals, and make sure they’re signed.

Never, never spend money that has been promised but not delivered. Often companies get investment commitments and contract for expenses, and then the investment falls through. Avoid turning to friends and family for investment. The worst possible time to not have the support of friends and family is when your business is in trouble. You risk losing friends, family, and your business at the same time.

Submitting a plan

The information you submit to investors depends a great deal on what your objective is. Sometimes you’ll submit a complete business plan, sometimes a summary memo. In most cases, even if you submit a short summary, you have to have the complete business plan ready to go as soon as the investors or lenders ask for it. If you’re looking for lease financing, receivables, or a bank loan, you’ll want to submit a loan support document to the lender.

When the search has provided you with a list of useful names, you can print your Summary Memo or loan support documents and send a copy to each of the investors, along with a brief cover letter.

Know More About Instagram for Businesses

Instagram for BusinessesInstagram has over 500 million monthly active users, less competition and a more engaged audience than other social media giants like Facebook or Twitter. This presents businesses with an opportunity to market their products to a more targeted and interested audience without spending an enormous amount of money on paid advertising. Whether your strategy needs an update or you’re a newcomer to this social media network, you’ll find these tips on how to use Instagram for business useful.

Instagram for business tips

1. Show what you do in a creative way

Focus on the solution you provide, not the products you sell. On Instagram, it’s essential to add value to your customers and look pretty while you do it. Never underestimate the fact that your most important asset (and downfall) on this social media network is visual content.

If your business is service-oriented, focus on showcasing the process behind providing the service. Show your company culture, share your mission with the world, or simply share some tips and how-to’s.

It’s possible to upload photos, short videos (similar to gifs) and videos up to one minute in length. The newest addition, Instagram Stories, is a video collage that consists of images and videos that can be edited with text, colour and the sort. Instagram stories are available exclusively on mobile and are live only for 24-hours (though this can be refreshed, if you choose to keep them for longer.

2. Create a winning profile

As a company, you probably do a whole lot of things and offer even more solutions. Don’t get too caught up in fitting all of that in 150 characters. Focus on your most important USP or your next big thing – be it an event, promotion or product launch.

Great example of an Instagram Bio by Content Marketing Institute.

Since the only clickable link is in your Bio section (right under your name), make a habit of updating it frequently. It’s a shame that most brands use it only to link to their website, but it could do so much more. Think, driving event registrations, app downloads or even purchases.

Instagram has also launched their Instagram Business profiles and paid advertising. The Business profile adds a phone number to your bio and gives access to extensive analytics data. This feature is currently only available in USA, New Zealand and Australia – the rest of just have to wait.

3. Take them behind-the-scenes

Customers have a natural curiosity about where their products come from, and you can use Instagram to show them their whole lifecycle. This is especially relevant for companies that sell environmentally friendly or FairTrade products. Source images to demonstrate how products are made – from the base material, production and distribution.

 If nothing comes to mind, you can share something that everyone has – sketches, notes and filled white boards or blackboards. Every business
has brainstormed ideas, it’s up to you to take a pretty picture and upload it to Instagram.

4. Expand your reach with #hashtags

Use hashtags to expand your reach. These can be campaign specific or general – all that’s important is that they are relevant. Make sure to also set up your main company hashtag (#yourbrandname), and use it sparingly across Instagram (Twitter is good too). This makes it easier for people to find content related to you as well as your main account.

It’s best practice to use between five to ten hashtags, despite the fact that the maximum you can add is 30 per Instagram post. Use your own, campaign specific hashtags as well as the more popular hashtags to increase the discoverability of your content. For example, try adding hashtags like #instagood (used is 300 million posts), or #tbt (Throwback Thursday), and don’t forget about industry specific ones. If you are in IT, the hashtag #IT or #tech will do just fine.

5. Collaborate and @mention others

Instagram is one of the strongest social media channels for highlighting collaborators and sharing customer success stories. Even if you don’t officially partner with a non-profit organisation, you can give to charity or fundraise a couple of times a year. It’s all good as long as the cause aligns with your brand values and mission.

Another technique involves use ‘shout-outs’. An unpaid shout-out is when you partner with another brand that has roughly the same number of followers as you, to promote each other to your audiences and benefit from increased exposure.

The paid shout-out is for those with a bigger budget. This involves paying a brand (or influencer) with a much larger following to promote your product or service. This is a great way to gain a large number of new followers quickly,
providing that you create a strong call to action.

6. Build Anticipation

Keeping your customers interested is an essential part of any effective marketing campaign. Reward your loyal followers with exclusive content. Let them be the first to know about new products, services or events. Create teaser photos that satisfy curiosity, build anticipation for your new releases, office openings or stores. This kind of preview makes your Instagram followers feel special and keeps them coming back for more insider information.

7. Analyze your success and build on it

Without taking a step back and analyzing what worked and didn’t, marketing becomes a guessing game. The truth is, you can read all the articles in the world about the best practises and publishing times, but you will only find out what works for your business through testing and measuring results.

Social media management tools can help, though. You can use them not only to schedule your campaigns in advance, but also use social media analytics to measure their success. Make sure to regularly measure your follower count, engagement and clicks, all to refine and improve your Instagram strategy.