- Form initial core entrepreneurial team ... see: Entrepreneur, Entrepreneurship, Teamwork, Start-up
- Identify problems or opportunities ... see: Opportunity, Problems, Tools, Trends
- Screen problems or opportunities ... see: Opportunity, Problems
- Generate potential solutions ... see: Problems, Solutions
- Define the value proposition ... see: Business Model, Value
- Create a business venture hypothesis ... see: Hypothesis
- Test, validate, and refine the venture hypothesis ... see: Validation
- Develop a business venture plan ... see: Business Plan, Planning
- Acquire needed resources ... see: Finance
- Launch the venture ... see: Launch
How to start a new business venture ...
Business Plan Guidelines ...
Here's an outline for a business plan. A typical "first round" investor-grade business plan is usually about 20 - 25 pages plus separate appendices. There are many possible outlines for a business plan ... the following is a recommended guideline. Remember, the purpose of a business plan is to mitigate risk ... you are selling your concept here and need to show the reader that you know your stuff!
A. Cover Page ... Company name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...
B. Executive Summary ... independent one page document ... the exact same executive summary that you used to entice the prospective investor or corporate executive to want to read this plan. What is this venture about? Where is the market? What is the innovation and competitive advantage? Who is on the venture team? Why is this a good venture concept (ie, financial projections, et al)? When are the key development milestones? How will this venture come to fruition?
C. Table of Contents ... one page.
D. Opportunity ... tell a story here! Engage the reader! What is the hook, the story, the "grabber"? Two to four pages.
- Problem / Opportunity: The problem your venture will solve, the significance of the problem, the opportunity this offers your venture, quality of the opportunity, growth potential ...
- Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
- Customers and Target Markets: Target market characteristics, size, why this market is the best for your venture, market validation research ...
- Innovation: What does this venture do that is new and better?
F. Goals and Strategies ... critical and key information as appropriate to your venture ... three to five pages.
- Goals, vision, mission.
- Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, competitive validation, how your venture will position itself to meet the competition, ...
- Business Model: How your venture will earn a profit, expected margins, sources of recurring revenue ...
- Organization: Management team, relevant domain knowledge of the team, commitment, advisers, directors, management to be added, culture, talent ...
- Product Development Strategies
- Marketing and Sales Strategies: Pricing strategies, distribution model, partnering, promotional strategies ...
- Technology Strategies: Technology, product development ...
- Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ...
- Intellectual Property and Legal Issues Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
- Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ...
- Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...
H. Funding Proposal ... independent one or two page document.
- Resource Requirements: Short summary of financial projections; total investment funding and resources being sought, use of funds in 4 or 5 general categories, any unusual use of funds, return on investment to investors and entrepreneurs, harvest strategy ...
- Call to Action: What do you want the reader to do ... join your team, invest, meet with you to learn more ... ?
J. List of Available Appendices ... Variety of support information ... resumes, detailed financial statements, product data sheet, marketing brochure, research data, technology information,detailed competitive analysis, etc.
Business Venture Plan Presentation Guidelines ...
Here's an outline for a typical business concept presentation. These types of presentations are usually about 15 minutes for the formal presentation, 10 minutes or more for an "interactive discussion."
A. Opening and Introductions (see 1 below for content suggestions)
B. Problem/Customer/Solution Opportunity Story (crafted to fit the venture ... see 2, 3, 4 below for content suggestions)
C. Competition, Environment, Innovation, Competitive Advantage, Differentiation (crafted to fit the venture ... see 5, 6, 7 below for content suggestions)
D. Earn, Work, Team, et al, as appropriate to the venture (crafted to fit the venture ... see 8, 9, 10, 11, 12, 13, 14, 15 below for content suggestions)
E. Financial Projections (crafted to fit the venture ... see 16 below for content suggestions)
F. Funding Proposal, Summary, and Call to Action (crafted to fit the venture ... see 17 and 18 below for content suggestions)
G. Closing and Interactive Discussion (see 19 and 20 below for content suggestions)
Detailed elements of the presentation include ...
- Opening Billboard Slide: Company name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...
- Problem / Opportunity: The problem your venture will solve, the significance of the problem, the opportunity this offers your venture, quality of the opportunity, growth potential ...
- Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
- Customers and Target Markets: Target market characteristics, size, why this market is the best for the venture, market validation research ...
- Environment and Context: Industry overview, research results and analysis, major competitors, benchmark ventures, timeliness, regulations ...
- Innovation: what the venture does that is new and better
- Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, differentiation, competitive validation, how the venture will position itself to meet/beat the competition, ...
- Business Model: How the venture will earn a profit, expected margins, sources of recurring revenue ...
- Marketing and Sales Strategies: Pricing strategies, distribution model, partnering, promotional strategies ...
- Technology Strategies: Technology, product development ...
- Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ...
- Intellectual Property and Legal Issues Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
- Organization: Management team, relevant domain knowledge of the team, commitment, advisers, directors, management to be added, culture, talent ...
- Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ...
- Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...
- Financial Projections: Key assumptions, historical financial statements, pro forma statements, return on investment ...
- Funding Proposal: Total investment funding and resources being sought, use of funds in 4 or 5 general categories, any unusual use of funds, return of cash to investors and entrepreneurs, harvest strategy ...
- Summary: Vision; mission; goals; a brief who, what, where, when, why, and how of the venture ...
- Closing Billboard Slide: Company name, company location, contact information ...
- Variety of support slides keyed to most-likely-to-be-asked questions
Tip: Keep in mind WHO is your audience. WHO are you trying to impress. It's usually NOT everyone in the room, rather it's the decision makers ... the boss, the investor, the president of the company with which you are trying to form a collaborative partnership.
Tips for Web Start-ups ...
From Evan Williams ...
[Thanks to John Wharton for the link.]
#1: Be Narrow
Focus on the smallest possible problem you could solve that would potentially be useful. Most companies start out trying to do too many things, which makes life difficult and turns you into a me-too. Focusing on a small niche has so many advantages: With much less work, you can be the best at what you do. Small things, like a microscopic world, almost always turn out to be bigger than you think when you zoom in. You can much more easily position and market yourself when more focused. And when it comes to partnering, or being acquired, there's less chance for conflict. This is all so logical and, yet, there's a resistance to focusing. I think it comes from a fear of being trivial. Just remember: If you get to be #1 in your category, but your category is too small, then you can broaden your scope—and you can do so with leverage.
#2: Be Different
Ideas are in the air. There are lots of people thinking about—and probably working on—the same thing you are. And one of them is Google. Deal with it. How? First of all, realize that no sufficiently interesting space will be limited to one player. In a sense, competition actually is good—especially to legitimize new markets. Second, see #1—the specialist will almost always kick the generalist's ass. Third, consider doing something that's not so cutting edge. Many highly successful companies—the aforementioned big G being one—have thrived by taking on areas that everyone thought were done and redoing them right. Also? Get a good, non-generic name. Easier said than done, granted. But the most common mistake in naming is trying to be too descriptive, which leads to lots of hard-to-distinguish names. How many blogging companies have "blog" in their name, RSS companies "feed," or podcasting companies "pod" or "cast"? Rarely are they the ones that stand out.
#3: Be Casual
We're moving into what I call the era of the "Casual Web" (and casual content creation). This is much bigger than the hobbyist web or the professional web. Why? Because people have lives. And now, people with lives also have broadband. If you want to hit the really big home runs, create services that fit in with—and, indeed, help—people's everyday lives without requiring lots of commitment or identity change. Flickr enables personal publishing among millions of folks who would never consider themselves personal publishers—they're just sharing pictures with friends and family, a casual activity. Casual games are huge. Skype enables casual conversations.
#4: Be Picky
Another perennial business rule, and it applies to everything you do: features, employees, investors, partners, press opportunities. Startups are often too eager to accept people or ideas into their world. You can almost always afford to wait if something doesn't feel just right, and false negatives are usually better than false positives. One of Google's biggest strengths—and sources of frustration for outsiders—was their willingness to say no to opportunities, easy money, potential employees, and deals.
#5: Be User-Centric
User experience is everything. It always has been, but it's still undervalued and under-invested in. If you don't know user-centered design, study it. Hire people who know it. Obsess over it. Live and breathe it. Get your whole company on board. Better to iterate a hundred times to get the right feature right than to add a hundred more. The point of Ajax is that it can make a site more responsive, not that it's sexy. Tags can make things easier to find and classify, but maybe not in your application. The point of an API is so developers can add value for users, not to impress the geeks. Don't get sidetracked by technologies or the blog-worthiness of your next feature. Always focus on the user and all will be well.
#6: Be Self-Centered
Great products almost always come from someone scratching their own itch. Create something you want to exist in the world. Be a user of your own product. Hire people who are users of your product. Make it better based on your own desires. (But don't trick yourself into thinking you are your user, when it comes to usability.) Another aspect of this is to not get seduced into doing deals with big companies at the expense or your users or at the expense of making your product better. When you're small and they're big, it's hard to say no, but see #4.
#7: Be Greedy
It's always good to have options. One of the best ways to do that is to have income. While it's true that traffic is now again actually worth something, the give-everything-away-and-make-it-up-on-volume strategy stamps an expiration date on your company's ass. In other words, design something to charge for into your product and start taking money within 6 months (and do it with PayPal). Done right, charging money can actually accelerate growth, not impede it, because then you have something to fuel marketing costs with. More importantly, having money coming in the door puts you in a much more powerful position when it comes to your next round of funding or acquisition talks. In fact, consider whether you need to have a free version at all. The TypePad approach—taking the high-end position in the market—makes for a great business model in the right market. Less support. Less scalability concerns. Less abuse. And much higher margins.
#8: Be Tiny
It's standard web startup wisdom by now that with the substantially lower costs to starting something on the web, the difficulty of IPOs, and the willingness of the big guys to shell out for small teams doing innovative stuff, the most likely end game if you're successful is acquisition. Acquisitions are much easier if they're small. And small acquisitions are possible if valuations are kept low from the get go. And keeping valuations low is possible because it doesn't cost much to start something anymore (especially if you keep the scope narrow). Besides the obvious techniques, one way to do this is to use turnkey services to lower your overhead—Administaff, ServerBeach, web apps, maybe even Elance.
#9: Be Agile
You know that old saw about a plane flying from California to Hawaii being off course 99% of the time—but constantly correcting? The same is true of successful startups—except they may start out heading toward Alaska. Many dot-com bubble companies that died could have eventually been successful had they been able to adjust and change their plans instead of running as fast as they could until they burned out, based on their initial assumptions. Pyra was started to build a project-management app, not Blogger. Flickr's company was building a game. Ebay was going to sell auction software. Initial assumptions are almost always wrong. That's why the waterfall approach to building software is obsolete in favor agile techniques. The same philosophy should be applied to building a company.
#10: Be Balanced
What is a startup without bleary-eyed, junk-food-fueled, balls-to-the-wall days and sleepless, caffeine-fueled, relationship-stressing nights? Answer?: A lot more enjoyable place to work. Yes, high levels of commitment are crucial. And yes, crunch times come and sometimes require an inordinate, painful, apologies-to-the-SO amount of work. But it can't be all the time. Nature requires balance for health—as do the bodies and minds who work for you and, without which, your company will be worthless. There is no better way to maintain balance and lower your stress that I've found than David Allen's GTD process. Learn it. Live it. Make it a part of your company, and you'll have a secret weapon.
#11 (bonus!): Be Wary
Overgeneralized lists of business "rules" are not to be taken too literally. There are exceptions to everything.
Presentation Tips ...
From Randy Accetta ...
Tips for preparing material
1. Think in smaller units – viewers and listeners of podcasts expect short segments, so we will divide your podcast into brief segments (between 2 – 8 minutes, or so). If possible, try to divide your material into discrete time segments (again, 2-8 minutes in duration, or so).
2. If appropriate, begin with an engaging hook (anecdote that drives the topic, statistic, quotation, question); if not appropriate for engaging hook, at least provide a basic overview of general topics of session.
3. If appropriate, discuss your personal reason for delivering the topics. Controlled and targeted personal anecdotes are helpful to drive the lesson home.
4. Early in your talk, provide a list of outcomes you want students to receive – address what they will get out of it.
5. Try to provide details for key points rather than stay on a surface level, with application and examples, as appropriate.
6. Mistakes and failures are interesting, so if appropriate discuss problems, mistakes, solutions, and lessons learned.
7. As you end, provide a summary of information, with review of lessons learned and possible resources: books, people, organizations.
8. As you end, if possible, return to your opening with insight based on the topics presented.
Strategies for video filming
1. If possible, wear neat, classic clothes in darker shades. More classic attire will ensure that the clip does not date as quickly, and darker shades will give more of a sense of authority. Generally, it is best to avoid wearing red or white, which tend not to show up as well on video. If possible, try to avoid clothes with intricate patterns or tightly placed stripes. These are UA podcasts, so the UA blue and red is not a bad choice.
2. Avoid making extraneous noise -- dangly jewelry that jingles, coins in pockets, cellphones not turned off, that sort of thing.
3. You’ll be wearing a microphone, so be prepared to have a mic clipped to lapel or shirt collar.
4. Speak to the classroom audience and don’t worry about looking at the camera.
5. Don’t feel the need to hurry or talk fast – take your time.
6. Remember that theatrical pauses and thinking pauses add an element of power to the following utterance.
7. Please repeat questions before answering them.
8. Speak in personal, anecdotal terms. Use analogies to illustrate your point. Don’t be afraid to tell stories that drive home the lesson.
9. Be energetic
10. Smile
Strategies for spoken word, both audio and video
1. For clarity’s sake, use lists (3 lessons, 5 items of importance, 4 key elements, etc).
2. Use marking words and numbered bullets (first, next, third, most important, another key point is, etc).
3. Ask rhetorical questions and invoke third person “you.”
4. Be repetitive – repeat words, use synonyms, repeat sentence same structure.
5. Consider developing a written script for rehearsal purposes.
6. For audio podcast, reading from a written script is most beneficial.
7. For video podcast, it’s best not to memorize – if possible, extemporaneous speaking is most relaxed and video-friendly.
8. Practice reading the script out loud – time each segment (generally, one single spaced typed page is approximately three minutes of recorded audio).
9. Remember that microphones are sensitive – we can edit later, but the mic will pick up all utterances and sounds.
Tips for slides
1. Appropriate colors (dark writing on light background, or light on dark)
2. Clean fonts -- sans serif type of fonts are easiest on the eye (Calibri, Arial, Verdana)
3. Few words on each slides
4. Images to carry the idea
5. First and last name of speaker, with professional affiliation
6. Clear charts and graphs
7. Branded with logo of your choice (if possible)
8. Topic tracker (if possible)
How to calculate start-up costs ...
From the Wall Street Journal ...
By COLLEEN DEBAISE
Adapted from the upcoming book THE WALL STREET JOURNAL COMPLETE SMALL BUSINESS GUIDEBOOK (Three Rivers Press, Dec. 29, 2009).Got a pen handy? To best estimate your start-up costs, you'll need to make a list— and the more detailed the better. A smart way to start is to brainstorm everything you'll need, from tangible goods (such as inventory, equipment and fixtures) to professional services (such as remodeling, advertising and legal work). Then, start calculating how much you'll need to pay for all those goods and services.
Some of the expenses incurred during the start-up phase will be one-time costs, such as the fee for printing up your brochures, creating your LLC or acquiring a permit, while others will be ongoing, such as rent, insurance or employees' salaries. In general, it's best to use a two-step process. First, come up with an estimate of one-time costs needed to get your doors open, and then develop an operating budget for the first six months or even the first year of the business. Check out the Better Business Bureau's sample worksheet here.
The categories listed below will aid you in completing your list of costs for opening and operating a small business:
Location. Think about how much you'll need to pay for rent, to make improvements to the space or for full-scale renovations.
Inventory. Figure out the cost of raw materials, plus any production costs, or the wholesale prices of products you'll be selling. Calculate shipping and packaging costs, sales commissions and other costs related to the sale of your product.
Equipment. Add up how much it costs to buy or lease computers, copiers, telephones, heavy-duty machinery or other fixtures.
Employees. Calculate salaries and wages, plus benefits you would offer, and don't forget payroll-related taxes, overtime pay and workers' compensation.
Marketing. Figure out how much you'll pay for new stationery, marketing materials, advertising campaigns, the sign above your door and meals or entertainment with clients.
Administrative and operational costs. Keep track of how much you'll need to pay for insurance (to protect against property damage, business interruption and floods) and office supplies. Don't forget utilities, a commonly overlooked expense, and other charges, such as phone and Internet service, cleaning and property maintenance.
Professional fees and permits. Add up how much you'll pay for your attorney, accountant or other advisor or consultant. Factor in what you'll need to pay for permits or licenses related to your business.
If you're still having trouble figuring out how much money you need, do research on other companies in your industry and region of the country. Talk to other business owners about how they figured out start-up costs— and ask specifically about expenses they forgot. The SBA offers free counseling through its Small Business Development Centers and its affiliate, SCORE. You can also seek advice from an accountant or attorney accustomed to dealing with small businesses.
When in doubt about your projections, you should always err on the side of overestimating your up-front investment cost and underestimating sales. Eric van Merkensteijn, a University of Pennsylvania business professor who left academia in the late 1990s to open a restaurant in Philadelphia, offers this advice: Figure out your start-up costs, then double that number. Then double it again. Only then will you have a realistic number, says the professor, who closed the business in 2004 and returned to campus.
Critical tasks for innovators and entrepreneurs ...
- Be passionate about everything you do.
- Proactively seek new opportunities.
- Stay alert.
- Look for ways to profit from change and disruption.
- Look for ways to create better business models.
- Pursue opportunities with discipline, not emotion.
- Don’t just talk, act!
- Maintain a collection of potential opportunities and ideas.
- Focus on quality opportunities, not quantity.
- Invest your time, energy, and money only if the opportunity is truly attractive and feasible.
- Don’t dilute your efforts.
- Beware of analysis paralysis ... don’t just think about doing it, do it!
- Adapt when needed, but don’t lose your true vision.
- Don’t try to do it alone ... engage everyone on your team, your partners, your suppliers, your customers.
- Build a strong network of relationships.
- Make sure everyone wins ... your partners, your employees, your investors, your customers.
- Earn a profit solving customer problems better than the competition.
[Adapted from “The Entrepreneurial Mindset” by Rita Gunther McGrath and Ian MacMillan]
Elements of a condensed income statement ...
Income Statement (also called profit and loss statement) ...
Revenue (Sales)
Less: Cost of goods sold (COGS)
Gross Margin
Less: Operating expenses (including selling expenses and general & administrative expenses)
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) (Income from operations)
Add or Less: Other income and expenses
Income before tax
Less: Provision for income taxes
Income from continuing operations
Add or Less: Income from discontinued operations (net of tax)
Income before extraordinary items and cumulative effect
Add or Less: Extraordinary items (net of tax)
Add or Less: Cumulative effect of a change in accounting principle (net of tax)
Profit (Net income)
Traditional Business Plan Outline ...
COVER PAGE
- Venture Title
- Tag Line
- Logo
- Principles and Positions
- Contact Information
- Copyright and Disclaimers
EXECUTIVE SUMMARY
- Description of the Problem or Opportunity
- The Business Venture Concept and Solution
- Key Business Model and Venture Strategies
- Target Market and Projections
- Competitive Advantages
- The Team
- The Offering
THE INDUSTRY AND THE COMPANY
- The Industry
- The Problem or Opportunity
- The Product and Service Solutions
- The Company and the Concept
- Entry and Growth Strategy
MARKET RESEARCH AND ANALYSIS
- Target Market
- Customers
- Market Trends
- Direct and Indirect Competition
- Estimated Market Shares Sales
- Competitive Advantage
- On-going Market Evaluation
ECONOMICS OF THE BUSINESS
- Business Model
- Gross and Operating Margins
- Profit Potential and Durability
- Fixed, Variable, and Semi-variable Costs
- Months to Breakeven
- Months to Reach Positive Cash Flow
MARKETING AND SALES PLAN
- Marketing Strategy
- Pricing
- Sales Strategies
- Sales Forecast and Methodology
- Distribution
- Advertising and Promotion Strategies
DESIGN AND DEVELOPMENT PLAN
- Development Status and Tasks
- Difficulties and Risks
- Product Improvement and New Products
- Costs
- Proprietary Issues
- Intellectual Property Issues
MANUFACTURING AND OPERATIONS PLAN
- Operating Cycle
- Geographical Location
- Facilities and Improvements
- Operational Strategy
- Operational Plans
- Regulatory and Legal Issues
MANAGEMENT TEAM
- Organization and Legal Structure
- Key Management Personnel
- Management Compensation and Ownership
- Employment and Other Agreements
- Stock Options and Bonus Plans
- Board of Directors
- Investors and Shareholders
- Supporting Professional Advisors and Services
SCHEDULE AND DEVELOPMENT PLAN
- Timeline
- Development Goals and Strategies
CRITICAL RISKS, PROBLEMS, AND ASSUMPTIONS
THE FINANCIAL PLAN
- Actual Income Statements and Balance Sheets
- Pro Forma Income Statements
- Pro Forma Balance Sheets
- Pro Forma Cash Flow Analysis
- Break·Even Chart and Calculation
- Cost Control Strategies
PROPOSED COMPANY OFFERING
- Required Financing
- Valuation
- Offering
- Capitalization
- Use of Funds
- Return on Investment
SUMMARY
- Summary of Business Venture
- Mission Statement
- Vision Statement
APPENDIXES
- Resumes
- Product Data Sheets
- Marketing Material
- Detailed Research
- Issues of Sustainability of the Venture
- Impact on the Environment
- Impact on the Community
- Service and Warranty Policies
Entrepreneurial Mindset ...
- Take responsibility
- Get results
- Create value
- Earn a profit
- Solve customer problems
- Create competitive advantage
- Customer and quality driven
- Generate wealth
- Share the wealth with those that create it
Analyzing a new business idea ...
- Company. Think of your idea in terms of its product/service features, the benefits to customers, the personality of your company, what key messages you'll be relaying and the core promises you'll be making to customers.
- Customer. There are three different customers you'll need to think about in relation to your idea: purchasers (those who make the decision or write the check), influencers (the individual, organization or group of people who influence the purchasing decision), and the end users (the person or group of people who will directly interact with your product or service).
- Competitor. Again, there are three different groups you'll need to keep in mind: primary, secondary and tertiary. Their placement within each level is based on how often your business would compete with them and how you would tailor your messages when competing with each of these groups.
- Collaborators. Think of organizations and people who may have an interest in your success but aren't directly paid or rewarded for any success your business might realize, such as associations, the media and other organizations that sell to your customers.
The Entrepreneur's Creed ...
- Do what gives you energy ... have fun!
- Figure out what can go right and make it happen.
- Say "can do" rather than "cannot" or "maybe."
- Illegitimi non carforundum: tenacity and creativity will triumph.
- Anything is possible if you believe you can do it.
- If you don't know it can't be done, then you'll go ahead and do it.
- The cup is half-full, not half-empty.
- Be dissatisfied with the way thinks are, and look for improvement.
- Do things differently.
- Don't take a risk if you don't have to ... but take a calculated risk if it's the right opportunity for you.
Neat ideas ...
Springwise.com is one of the world's leading sources for new business ideas and concepts. Always an interesting read!
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