Day: June 16, 2021

Categories
All Topics Business Plan

Creating a successful business plan

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A business plan will increase your chances of securing funds. A business plan tells what you plan to do and how you want to do. A good business plan not only secures funding for you, but also attracts employees and new clients. Companies that have a business plan often have higher growth rates.

Here’s why:

  • First, it’ll be hard for you to raise money from anyone without a business plan. Different types of investors, which we’ll discuss shortly, will need to see financial projections before they even consider giving you a dime.
  • This plan will also set you up for success.
  • Once you get into the daily grind of your business operations, you’ll always have your plan as a reference to remind you how to proceed.
  • You may forget some ideas a year or two down the road if you don’t have everything in writing.

Your business plan should have a clear description of your business.

  • Who are you?
  • What do you do?
  • Your basic business concept
  • Your business strategy and action plan to implement it
  • It should also include a market analysis.
  • This will discuss information and research about your competitors as well as your target market.
  • You’ll also want to outline the organizational structure of your company.
  • Have clearly defined roles for managers and other positions within your organization.

Arguably the most important part of a business plan is the financials.

  • Do your best to include financial projections for the next three to five years:
  • Make sure your projections are realistic.
  • You don’t need to turn a profit on your first day or even your first year.
  • Just try your best to accurately predict your finances.
  • This section of the business plan will help you secure funding from other sources on our list as well.
  • The key financial aspects that investors look at may include rates of return, cashing out options, IPO, chances of being acquired etc

Things to avoid in your business plan.

  • Avoid possible disclosure of confidential matters thinking that it makes you trustworthy. It could ruin your business
  • Avoid over-optimism, exaggerations or consciously including false information
  • Avoid too much detail and try to explain things in a simple language
  • Make sure that numbers add up, your data is genuine and verifiable
  • Despite the effort and thought that goes into a business plan, it isn’t perfect. There may be still a few things that you can improve or the external conditions may have changed after you created your business plan. Make room for such fluctuations and scenarios.

The Executive Summary

This is often the most crucial part of any business plan. It’s not just the summary of your total business plan; you can use it effectively to

  • Grab attention towards your best features and strong points
  • The executive summary is often the first thing that many busy investors start reading in a business plan. Please highlight the most exciting and important parts of your business or product in your summary
  • Mention milestones achieved, tie-ups and sales numbers if they can create an impact. You need not include not-so-good numbers and risk factors.
  • Include your plans and goals, briefly. Give some information about the most crucial benefit that your product or service provides to the customers and how you were able to create such a solution.

There is a lot to business plans than what I wrote here. Take the above as guidelines, not as a blueprint. It all depends on your business niche and your business goals. There are a lot of sample business plans available on the web, you can just take a look at them and start.

Categories
All Topics Funding

Funding for start-ups

Hand holding a sack of money
Hand holding a sack of money and white brick background

We admire and encourage anyone who wants to create a company. However, it’s not easy. Don’t let money stop you from pursuing your dreams. If you want to start your own business but don’t have the funding, you can still get it off the ground in a number of ways.

In fact, only half of small businesses in the United States will survive through their fifth year of operation.

  • Furthermore, just 30% of those businesses make it through ten years.
  • Based on this information, it’s clear that failure is more frequent than success when it comes to startup companies.
  • So we commend you for wanting to pursue this path.
  • While running a startup may be difficult, it’s also extremely rewarding.
  • You’ll learn a lot along the way. There are plenty of things you wish that you knew before starting company.
  • But getting your startup off the ground is the first step.
  • Like with most aspects of business, you’ll need some money to do this.
  • If you’ve never been through this process before, it may seem intimidating.
  • Not sure where to start?
  • In fact, you can get money from multiple sources.
  • We’ve outlined different ways for you to get your startup funded below.
  • We’ll let you decide which ones are best for your startup company.

Create a detailed business plan:
Before you do anything else, you need to have a clear understanding of how you plan to operate your business.
A business plan will increase your chances of securing funds:
Companies that have a business plan also have higher growth rates.

Here are the main sources of your funding:

  1. Visit your local bank or an online company
  2. Seek help from friends and family
  3. Venture capitalists (VCs)
  4. Angel Investors
  5. Crowdfunding
  6. Dip into your personal savings
  7. Look for a strategic partner
  8. Try to minimize initial business costs

Conclusion

  • Starting a new business is exciting. But it’s not cheap.
  • Not everyone has enough money to get their startup company off the ground.
  • If you can’t fund your business on your own, try getting a loan or line of credit from your local bank.
  • You could always ask your friends and family for help.
  • Venture capitalists, angel investors, strategic partners, and crowdfunding platforms are also great options to consider.
  • It’s important that you always start with a strong business plan.
  • Come up with realistic financial projections.
  • This will make it easier for you to get money from investors.
  • You also need to keep all your costs as low as possible to make your funds last until you can get a steady income stream.

Follow these tips, and you’ll be on the right path toward raising money for your company.
Good luck!

Categories
All Topics Funding

Can you secure funds from your bank for your startup?

loan for startup
Businessman refuses to give a money bag. Refusal to grant loan mortgage, bad credit history. Refuses to cooperate. Economic sanctions, confiscation funds, deductions and fines. Financial difficulties

The answer is both ‘yes’ and ‘no’ depending on your business type, business model and bank’s policies.

The major points you need to understand about banks, when it comes to small businesses, are:

  • Banks are responsible for other people’s money and have several policies in place, so they avoid risk as much as possible.
  • Banks often have lengthy and stringent rules when dealing with customers
  • Banks mostly offer only loans; they rarely participate in equity or other types of financing
  • Banks look at assets and balance sheets, they don’t normally offer loans based on ideas or business plans
  • Banks try to earn a predictable and long-term income on their operations

So, by now you probably guessed if banks are the right destination for your project’s financing. If you are a more traditional business house with a long history of business success and acquired some assets and have a stable balance sheets, banks are for you.

If your business exists only in your mind and on paper, you can safely forget about banks.

There is a chance that your bank is startup friendly and is participating in some sort of funding programs as part of some economic drive, but they are more likely to entertain a brick and mortar business that is likely to acquire a few physical assets, rather than backing a company involved in creation of a digital product or service. And you get only a loan, not equity. Check it out with your bank’s representative about the financing options that they have for your kind of business.

Sometimes, if a small personal loan is enough for you to get started with your startup, then you can consider it if the interest is not too high. As investors, banks enter only after your business has shown some traction and stability. But there is some chance that you may still get financed by a bank based on your industry and your product. It is always better if you check with your bank first.

Follow these simple steps; it only takes a day or two to find out if your bank has something to offer you. It’s a lot better than chasing angel investors or VCs.

  • Go to the banks you use for your personal banking needs or explore an online company.
  • I recommend starting with your local bank (if you use one) because you already have a relationship with those companies.
  • Set up an appointment with a loan officer.
  • Show up to your meeting prepared.
  • Dress professionally. Bring your business plan.
  • Explain to the loan officer how much money you need and what it will be used for.
  • Depending on your situation, you may qualify for loans for certain aspects of your business, such as equipment.
  • If the bank denies your small business loan application, you could also try to get a personal line of credit from that institution, or from an online company.
  • You can use that line of credit to fund your initial business expenses.
  • Don’t quit after your first appointment.
  • You could try other banks and financial institutions if your first stop is unsuccessful.

Don’t get disappointed if you didn’t find any help from banks. Banks are more oriented towards consumers and assets, and definitely not the best places to look for financing your startup. Also, banks don’t understand newer technologies or business models. So, don’t really worry about the outcome with banks, there are several other options for financing your startup.

Categories
All Topics Outsourcing

Outsourcing – risks and obstacles – 2

programmer outsource
Programmer Outsource Developer Team coding technologies Website design. Mobile Application Software, Cyber space concept.

In the previous article, we discussed trust, quality and cost. In this part, we will dive into more serious risks that can affect your outsourcing strategy.

Finding the right people to outsource:  While doing a comparative study of providers from various regions and outsourcing platforms, may give you a fairly good idea of the market and its price mechanisms… there is no guarantee that you will end up recruiting the right outsourcing agency or freelancer. Choosing from a lot of options and weighing different criteria is still a difficult task. You may seek advice from your fellow entrepreneurs or your account manager at the outsourcing platform. Here are a few tips

  • Narrow down the skill sets and experience to your exact requirements
  • Check if the freelancer is available as per your schedule
  • Check the project completion rate, feedback and reviews. Many freelancers are in the habit of leaving small projects in the middle in favour of a big project.
  • Check if the agency or freelancer is resorting under-pricing or over-pricing
  • Is the freelancer trying to sell other services to you?

Control :   You can control things at your end, but controlling the other end is not possible most of the time. If your company relies on proprietary technologies and intellectual property, you better not to outsource your precious development work or data. This is really important if your product is purely a digital one. The best thing you can do is to divide the task into several sub-tasks and get them done by different agencies. But this requires some extra managerial and technical skills from your part. Or you can try to forge a partnership with your technology developer. In most cases, this is not such a big issue and is easily manageable.

Communication: It is the most important part of any successful project. Not only the project details need to be thoroughly understood by both parties, but also the required prototypes are developed in order to avoid failures. If both parties speak the same language and have the same understanding about the requirements, it is an ideal situation. But it is not always possible. The idea behind outsourcing is to obtain the best possible service at the lowest possible price, so you will have to work with agencies from different regions. In such cases, it is always a good idea to engage with a translator while dealing with agencies speaking other languages and establish a common terminology to make sure that nothing is lost in the translation. Similarly, for culture related issues, you can give some good examples of your culture and seek similar information from the other end. This is particularly important to know about working hours and holidays that the freelancer or agency observes.

If all this seems a bit intimidating to you, seek help from your fellow entrepreneurs or forums. These are not any regular issues that happen with every entrepreneur. These are only occasional problems that surface when you didn’t put enough thought. You just need to be aware of these risks and have a plan in place to deal if such situations arise.

Categories
All Topics Outsourcing

Outsourcing – risks and obstacles – 1

Customer services
Customer services answer call

Outsourcing, by nature is a low-risk and high reward transaction, only if you planned it after a careful thought and investigation. It’s a low risk one because you can always test with a small order and seek samples before you outsource to a vendor. If you are using well known outsourcing and product sourcing platforms, you can look at reviews and ratings before you can recruit your partner. Companies have varying experiences from their outsourcing endeavours, ranging from dreary disappointments to outstanding success. You may be inclined to believe what you wanted to hear, but here are the few factors that you can use to refine your decision to outsource or not

Trust: Like any other business transaction or relation, trust is a major factor when you want to outsource. The outsourcing agency may be highly competent, but if you cannot create an environment of trust and mutual respect, you may not be going too far with your partner. This applies to your agency partner as well, if they couldn’t win your trust, you better look at alternatives. Trust is beyond signed agreements, because you and your outsourcing agency are operating from different geographical areas under different regulatory authorities. It’s very important to talk to your partners and find out if they are what you are really needed. If yes, try to understand them better and find out how you can create a good relationship with them.

Quality:  Quality is often the most discussed part in the outsourcing business, because this is something that comes into picture only after you have commissioned a project got some output. Many times, quality is hard to define. It could be because you have an idea, but don’t have the vocabulary to describe your idea. You feel it, but you can’t define it. Even if you define, it is possible that you are unable to convey it to the other party, or it is lost in the translation. This is where you need to list out similar products and write down your ideas to the last detail. It is your responsibility that the developer at the other end is able to understand what you are trying to say. Some outsourcing projects fail simply because everybody seems to have understood what they need to do as per their last conversation, but no one cared to put down their thoughts and imagery on to a paper and shared it to the other party to confirm if it is what they really meant!

The downside of it is that quality is expensive in most cases. You can’t expect top quality output at the meagre prices you are willing to pay, even with outsourcing. So, you have to find a reasonable trade-off between what you pay and the quality you are expecting

Cost:  Cost is the obvious reason why many choose outsourcing.  The direct cost benefits produce the real value only if the desired business goals are achieved. If projects ran for a long-time or the desired output is not produced, your outsourcing is not generating you the value. There are a lot of factors you can take into consideration. Do a comparative study of service providers from different regions. Look at their price variations and guess what the defining factors for their pricing are. Mostly it’s the experience, expertise, success rate, in-demand skills and communication skills that determine the price of a service. The origin of service is also a huge factor, because freelancers from some countries come at a cheap price because of their living standards. You have to compare the skills of freelancers from different regions and see the variations in their hourly wages to choose the right talent at the desired price.

In the next part, we will discuss about some more risks…

Categories
All Topics Outsourcing

Benefits of outsourcing

programmer outsource
Programmer Outsource Developer Team coding technologies Website design. Mobile Application Software, Cyber space concept.

While cost reduction is an obvious benefit, it should not be the primary concern to you as an entrepreneur. Many startups suffer from lack of resources for various business functions and skills gap. An entrepreneur needs to look at filling those gaps with talent from outside agencies for a limited time during the growth period. Let’s look some benefits of outsourcing

Talent from anywhere: You can find talented freelancers that can do any business related work. Several peripheral tasks such as graphic designing, branding kits, digital marketing, website development etc can be outsourced. Hiring permanent staff for such short term or one-time work doesn’t make any sense. You need to analyse the remaining functions related to your core business and create a plan about what can be outsourced, when and where to outsource. Among the ongoing business activities, you can probably outsource the marketing, bookkeeping, accounting, support etc. This strategy lets you concentrate on your core business and activities. You need to carefully weigh your options such as training some of your staff, hiring new staff and outsourcing.

Simple and Flexible: Outsourcing is quite simple and flexible once you got to know about how it works and where you need to look for outsourcing partners. There are neither long term commitments nor huge orders that could prove to be a burden. Remember not to get into long-term relations with any outsourcing agency. Always break your work into smaller and manageable tasks and commission work only when required. You need to be agile and fast while defining your priorities. When it is required to scale, you can depend on your experience with one vendor to start with a new vendor. This way you can have a good number of suppliers ready to help you grow, and you can negotiate better and better.

Low-risk: There is no better method than outsourcing if you want to test your ideas or build something to see if it works or not. If you want to gather data via surveys, or need data for research, want to build an MVP, build a prototype, or check if there is a technology to support your ideas or product testing, taking help from freelancers will save you a lot of cost while giving immediate results to you. You can discard your ideas without the need to invest a lot into them. As a startup you can relate to this quite well.

Fresh perspectives: sometimes, you may even get useful insights which you never knew before, from your outsourcing agency, if you choose the right one.   Agencies that did a lot of similar projects may have a few things to share with you, which could enhance your product offering or improve your business processes.

Outsourcing models: There are several methods of outsourcing, and you can negotiate for the one that is most convenient to you. Some examples are setting up, offshore development centre, hiring entire remote teams, hiring on hourly or monthly basis, profit sharing basis, joint ventures, on project basis etc. There is every chance to minimize your risk to the lowest possible level while attracting the best talent to your business. You need to be aware that labour laws differ from country to country, and you have to stay away from such complications by negotiating for the best hiring model with your outsourcing agency.

As you can see the aim of outsourcing should be accessing the best talent, reducing costs, minimizing your risks and concentrating on your core business. You should plan your outsourcing activity accordingly.