Category: Starting Up

Startup Students: A lot of people have a Great Idea. It might be a new invention or a local service business. Unfortunately for consumers, many would be entrepreneurs are waiting for “the right time” to start their Real Business. They have plenty of reasons (excuses) for the delays. From lack of time to lack of experience, our minds have creative ways of rationalizing our fears.
Here are 7 common excuses for not starting a Real Business, along with strategies for overcoming internal fear, uncertainty and doubt (”Internal FUD”).
1. I’m too busy right now. I’ll start when I have more time.
2. After I get an MBA, I’ll be ready to start up.
3. I hate sales.
4. I’ll do some research after South Park.
5. I don’t know anything about business.
6. I don’t have startup capital.
7. Before doing anything else, I need to write a business plan.
7 Lies That Prevent Your Great Idea from becoming a Real Business [Startup Students]

Once you decided to start your own business, and after you have considered the Things to Consider before Starting a Business, the necessary next step is to write a business plan.
Why Should I Write a Business Plan?
Quite simple: you plan to dedicate a significant amount of your life time (and probably of your money) to this idea. Better make sure that you have a solid base for doing this.
I’m not saying that a business plan is a guarantee for success. I’ve seen too many brilliant business plans which turned out to be a business failure. But without a business plan, chances for failure are much higher. And there is just less at stake modeling a pricing strategy in Excel than trying it out in real life…
But that’s only one aspect. Another one which can’t be rated high enough is communication. Especially if you plan to start a business as a team, a written business plan is essential. Written means: in plain, complete sentences, as text document. While a presentation is great to get the main points across, you will be surprised about the discussions taking place when trying to convert a presentation into a full document. All of a sudden, it turns out that bullets points are interpreted differently between team members or that everybody has a different mental model of the future company.
– Write down the details.
– Write down your assumptions.
– Write down what you know about the market, your potential customers, your competitors, your revenue streams.
This helps you to identify blind spots, and get everybody in your team aligned.
Do I Need to Do the Numbers?
Short answer: Yes.
Long answer: Of course.
Why? Because you need to understand whether you can make a profit on your business model or not. To come to such a conclusion, it’s not sufficient (in my opinion) just to have a top line with revenue estimates, a bunch of monthly expense items and at the bottom line, you calculate the assumed profit or loss. What’s wrong with it? It’s hiding the business drivers which can make or break your business.
I highly recommend to go through the exercise and try to model your business, at least for main business drivers. Try to identify the relevant parameters, and build them as parameters to play with into your spreadsheet:
Just to give you an example: Assume you plan to sell your product to business customers. What do you think is the average deal size you can strike with a customer? What is the sales cycle (some industries have sales cycles well over a year, while other products you can sell at the very first contact). Do you need to visit your customer? How many visits do you think are required to close a deal? How many customers can you handle within a month? How many can a sales rep handle? Do you need to pay sales commissions? etc.
If your revenue estimation sound like “I plan to acquire one new customers a month with a sales cycle of three months, requiring 20% of my time during the acquisitin period. Additionally, I assume that every second customer becomes a repeat customer with a sales cycle of just one month, requiring 10% of my time in this period. My travel costs are about 300$ per visit, and the avarage deal is 20k”, then you are moving in the right direction.
This is just a small part of the questions you should ask yourself. Play with the parameters to judge the impact on your business model. Increasing the sales cycle (and therefore cash in) from two month to six month could kill your company if you do not have enough working capital, for example. Two additional on-site visits can severely affect your margins. Perhaps you need to reconsider your pricing? Or your sales strategy?
Get Feedback
Use your written plan to get feedback. Hand it over to people you trust, give them time to read it, and ask for feedback. Do this often. Chances are that you get a lot of questions like “Ok, you plan to do marketing. What exactly do you plan to do?” Use it to ensure that you have no blind spots in your business plan.
When Should I Present My Business Plan to Investors?
Whenever you are ready to bet your own money on it. Remember, you do not write a business plan for investors. You write it for yourself, to get a business off the ground.
Klaus Wiedemann is Founder and Managing Director of Daisho Blacksmith GmbH, a product and consulting company dedicated to support todays professional with software and methodology to sharpen their competitive edge. He blogs regularly at Not For Slaves, focusing on the working environment of the 21st century and its implications and opportunities for the individual.

Starting a business is fun. Planning a business is not as fun. So how do you take your fresh idea and turn it into a viable business without sacrificing your enthusiasm in the process? Here are some ways to get started now.

Plan well, but plan quickly.

You know you need a business plan. (You do know that, don’t you?) You also know that business plans are long, scary, and mind-numbingly boring. They tend to take a lot of time, time which you might not have.

The most important part of your business plan is your SWOT analysis.

This is where you identify your Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis is your new best friend. Run one on your business, on yourself, on your business partners, and on your competition. Figure out what’s helping you and what’s hurting you. Do not fall into the trap of shoving your head into the sand and thinking you have no weaknesses. Think about this. Write it down.

Since this is for your own use and doesn’t have to be prettied up for a banker’s benefit, there’s no reason this should take more than a day.
Identify your Unique Selling Proposition.

Once you know your own strengths and your competitors’ weaknesses, you can figure out what makes you different from them. This is your Unique Selling Proposition, or USP. It will be the driving force behind your marketing campaign.

What makes you unique does not have to be something earth-shattering. You don’t need to redesign the wheel. It could be as simple as actually listing your prices on your website, or offering 24 hour a day phone support. The only requirement is that it has to be something your customers actually care about. Pretty packaging on your plumbing parts is not a USP. Same-day delivery might be.

How are you going to market this thing?

You’ve identified your USP. Now you’re going to have to let people know about it. Sounds obvious? Apparently it isn’t. How many times have you been actively trying to spend your hard-earned money on a product or service, and all the companies looked the same? These companies are lazy marketers. They are telling you about all the fancy gizmos that every other competitor has, too.

You need to take your USP and beat your potential customers over the head with it. They should know why you’re different than The Other Guy before hiring you even crosses their minds. Do not make them think. Make your USP the most readily available piece of information to your customers. If you do that, the details of your marketing plan don’t matter as much. Since the thing that makes you better than your competition is now wildly obvious, whether you advertise in Text Link Ads or AdSense is just not a big deal.

Figure out your funding.

Unless your competition is Coca-Cola, the amount of money you have to start with is actually pretty unimportant. What is important is that you know how much you have, and that you allocate it wisely. Whether you have $500 or $5 million to start with, spend the most you can get away with on marketing. You need to get people to buy your product or service. Once they do, you can spend all the money you want on a new fax machine or 30-inch monitor or thicker stationery.

Start sooner rather than later.

There is a point, generally a lot earlier than most people think, when you have to stop thinking and start doing. It’s easy to sit back and ruminate on the absolute perfect way to launch your business. What’s hard is understanding that a not-bad business launched in a not-bad way makes a lot more money than an amazing business not launched at all because circumstances are not perfect. Make your service good, make it easy to buy from you, hang your shingle and prepare for a crazy ride.

About the Author

Naomi Dunford writes for IttyBiz, a blog for entrepreneurs, freelancers, and other work-from-home types. Come by for marketing tips, small business advice, and the occasional very bad joke.

BusinessKnowHow: Thousands of new home businesses start in North America every day, many of which never see their fifth anniversary.
With a 90 percent failure rate in the first five years, most hopeful entrepreneurs wind up feeling discouraged and beaten, thinking they don’t have what it takes to make their dream of home business come true.
One of the biggest reasons home businesses fail is because the new entrepreneur not only lacks the required marketing and sales skills, but chooses a business with a tremendous learning curve.
The energy, time and financial commitment required is significant because everything is new and undeveloped. Overwhelm and confusion set in, mistakes accumulate, frustration grows and finances dwindle as you work your way through the steep learning process.
If you are new to or considering a home business, you can flatten the learning curve and start generating income immediately by beginning with something you are already good to great at.
How to Turn Your Start-Up into an Instant Cash Cow [BusinessKnowHow]

Quite often, when I talk to potential founders, I hear them say: “I have an idea. I guess, now I need a business plan.” Yes, right.

But before jumping straight into such an exercise (which most people by far underestimate in terms of time and effort required), there are a couple of completely non-business questions to be answered. Whenever you have trouble answer them, make sure to get them resolved before continuing, as they have a huge impact on any business plan:

Why do I want to do this at all?

A lot of aspiring founders are stumbling on that one already. To make a living? To get rich? To improve the world? To become famous? Just out of curiosity to see whether it would work? To earn some money on the side?

This question alone has some implications for your business plan: the aggressiveness of the plan, or the underlying business model (it’s not that difficult to make a living out of a one-person consulting business, but probably it will not make you extremely rich).

What price I am willing to pay?

Everything in life comes attached with a price tag, although not necessarily a monetary one. The price one has to pay while founding a business can be high. Reduced spare time, long working hours even on weekends, reduced time available for friends and family, financial uncertainty. The higher the price you are willing to pay, the better your chances are for succeeding.

What do my family and friends think about it?

This question has two aspects:

– What do they think about the business idea?

This gives you a first feedback from the market, at least on a high level (at least if you plan to have some kind of consumer business in mind). If all your friends and family tell you “Founding a travel agency selling trips to Mars is stupid” – you should at least evaluate their feedback. If they just don’t understand your business because it is some highly advanced biotech concept, you should seek feedback from people more familiar with the particular area you plan to start your business.

– What do they think about the fact that I want to start a business?

This is an important fact as you will need at least their understanding or – even better- their support in the upcoming months or years. It can be quite annoying when you hear every time you meet friends things like “Did I tell you already the story of the guy who went bankrupt when trying to start a business?”

Honest feedback is important, but it is much better to receive it with a “You can do it” rather with a “You are doomed” attitude.

How much risk can I bear?

This highly depends on your current circumstances and your financial resources. If you are single, just out of university and little monthly running cost, you probably can take a higher risk than somebody who has to earn money to support a family of five. But if the later has already made a fortune, the situation might be just the other way around…

Can I do it alone or not?

In general, I highly recommend to not start a business alone (unless you plan just a one-person consulting business). But whenever your idea gets more complex and goes beyond freelancing, sharing the burden with enhances the chances for a successfully start. If – you partner with the right person.

Do I partner with the right people?

I always say that starting a business with one (or more) partners is like marriage without a separation of property: You stick together for a major part of your time, a “divorce” is not easy and is usually painful. So, make sure you team with the right people.
Some criterias are:

– Although tempting at the beginning, partnering with friends is not always the best idea. Friendship can make you blind for some important aspects to consider.

– Diversity of skills: Does your team has all the necessary skills you require? Business, marketing, technical skill, whatever is required. Chances are that your friends have similar skills if you know them from studying or former work.

– Same level of risk tolerance and same motivation: Make sure the people you partner with share both your willingness and ability to share risk( e.g. live of from savings for some time) and the same motivation. If one of you wants to build the next Google, while the other juts wants to do something next to his regular job, a major clash is just a question of time.

What are my No-Go criteria?

My last (and probably most important) advice is to clearly define No-Go criteria even before you start, and make sure that everybody on the team subscribes to them. This could be a deadline for a agreed business plan, for getting funding, for a technical proof of concept. Not every idea is as bright as it seems at the beginning. More often than not, founders find out during business planning that their concept does not support a company, has too little room for growth or faces high technical risks. Have the courage to pull the plug early on. When you willing to do that, based on clear criteria, you can be sure you continue building your business on a good foundation.

Klaus Wiedemann is Founder and Managing Director of Daisho Blacksmith GmbH, a product and consulting company dedicated to support todays professional with software and methodology to sharpen their competitive edge. He blogs regularly at Not For Slaves, focusing on the working environment of the 21st century and its implications and opportunities for the individual.