THWUMP: Your 80-page masterpiece plops on the table.
If you are referring to your business plan, you’ve fallen into one or more of the following #entrepreneurfail traps:
- Assuming that quality and quantity are the same thing
- Babbling because you are just not focused on one idea or clearly identified your customer
- Assuming that if it looked like a book, the business plan would sell itself!
- Not realizing your plan won’t stay the same when you actually start launching and executing
- Forgetting that its a constantly changing document that will re-mold itself a million times in the future
In a nutshell, the purpose of a business plan is to succinctly yet thoroughly provide an overview of your product, value proposition, business model, and the steps to get there. Far too many entrepreneurs assume that it is a document to brain-dump every possible marketing strategy and list all possible revenue-generators for your business.
On the surface, a long business plan may seem weighty and powerful, but you should be aiming for a fluff-to-stuff ratio of 0:1. The business plan needs to be actionable and focus on priorities. I’ve mentored some entrants in a business plan competition, and inevitably, the more direct and concisely thought-through business plans signaled a cohesive team and a concrete strategy.
The longer the business plan, the more likely:
- No one is going to read that thing so say good-bye to chances of investment
- Your customer has sailed away on another ship or the needs have change by the time you launch
- A competitive company has already launched by the time you finish the plan
In fact, if you are not seeking immediate investment, we used and liked the one-page business plan by Chris Guillebeau. It has all the key elements, its not overwhelming, and it gives you enough to get started.
Did you create a business plan when you first launched your business? Let us know in the comments below.
This was originally created by #entrepreneurfail. Find out about the stupid things entrepreneurs do by signing up at http://www.entrepreneurfail.com.
Are you an entrepreneur, marching to progress?
Everyone has seen the famous scientific drawing, showing the compressed evolution of 25 million years. Entrepreneurs also go through a mental evolution as they go deeper into their businesses.
I got a sale! The first fresh-faced entrepreneurs focus on volumes. Striving to increase the numbers they sell, they would use any tactic to sell more items. Ironically, huge companies (often with large inventory shipments) also capture these metrics, and looking to hit their volume metrics monthly.
The next generation of entrepreneurs are seeking revenues. No longer satisfied with just volumes, they know that pricing can make a huge difference to the perceived value of their products and services. They are carefully looking at the elasticity of their products and services. Sure they are aiming for volumes, but the true lever is revenue.
Then reality hits! Revenues have been great, but that doesn’t mean they get to keep any of it. Anybody can flit products away at discounted prices or by bolstering salespeople to hit their sales targets for commissions. However, all aspects of the cost of doing business need to be considered to successfully generate and maintain Profits.
And now we reach the modern day successful startup and entrepreneur. In this article, Jefff Bezos recently said that “cash flow per share was the most important thing for Amazon, not profit margins”. Free cash flow, matched with the profits, revenues, and volumes sum upto a successful entrepreneur and company. You just have to let evolution get you there.
Which stage of evolution are you in? Let us know in the comments below.
This was originally created by Kriti Vichare for #entrepreneurfail: Startup Success.
One of the toughest tasks a startup will do is raise capital. That’s not a new or bold statement, and in fact it’s hardly even disputable at this point. Anyone that has been through the process of fundraising will tell you the same thing, “It’s incredibly difficult. Take the amount of time and work you think it will take, and multiply it by ten.”
That’s a quote Alex, the founder of Tixers, and I have heard several times. Not only did we hear it, but we found it to be completely accurate. However, luckily for us, we announced just a couple of weeks ago the closing of our seed round for Tixers at over $250,000. (See the Tixers team below)
Now, I want to help other members of the UP Global Community to do the same.
Startup Weekend is in our blood. Alex first pitched the Tixers concept at Startup Weekend Cincinnati, winning first place and meeting two advisors that we still work with closely to this day. I attended my first Startup Weekend Columbus as an undergraduate sophomore, switched into the business program at Ohio State, and have been organizing Startup Weekend Columbus for over a year now.
When Alex approached me to meet and talk about potentially joining the Tixers team back in February, one of the biggest draws for me was the stage of the business. Tixers was just about finished going through the UpTech accelerator program in Covington, Kentucky, and was beginning to gear up for a seed round. I had no real understanding of the fundraising process but tossed myself in anyway. Now, having gone through it, I can share that experience with you.
Allies are incredibly important
Our initial investment came from UpTech as part of their incubation program. After graduating from the program, UpTech became one of our biggest fans and allies in the fundraising process. In fact, the fund pivoted to lead our seed round. This is important, as UpTech and the investors in its network knew our business better than anyone else and could advocate on our behalf to others.
A lead investor is incredibly important when you are fundraising, and can be one of the more difficult aspects. Many investors will follow their friends and colleagues into deals, and so it’s important to leverage the networks of your allies.
A well-rounded team is a huge strength
For a long time, Alex operated as a relative one-man operation. Though he found investment interest, there were some parties who were afraid of the deal due to the fact that the business lived and died solely with him. It didn’t take long for focus to shift to acquiring talent to round out the Tixers team.
Once our CTO, Andy, and I were on board, our team became a real strength and selling point for investors. We could each point to our specific backgrounds and skill sets that contributed directly to the new company, and that really got potential investors excited.
Your passion shouldn’t be a secret
If you are passionate about your idea (and you should be, or you will fail) then you should wear that excitement on your sleeve at all times. How can you expect someone else to be excited about your idea if you are yawning and speaking about it in monotone to them? When you can speak about your idea with passion and excitement, it is contagious. You win people over to your vision and make them want to be a part of it – remember, people want to be a part of a “winner” and not feel like their investment is a donation or charity.
Be ready and excited to pitch
This ties in with passion, but you should be ready to pitch your idea on a moment’s notice. If you get an opportunity to pitch at an event or in front of a group of people, you should take every opportunity possible to pitch. For Tixers, simple pitches have led to a $25,000 investment, a trip to and winning pitch in Vegas, and countless contacts that have turned into advocates or customers. By spreading your message, you are giving that message an opportunity to reach much further than just the individual(s) you are pitching to at that moment.
Toe the line between persistent and annoying
It should come as no surprise that individuals who qualify as accredited investors are also very busy people. Having a verbal commitment for funding is really exciting and will be an awesome feeling. However, it’s important to remember that a verbal commitment doesn’t feed you, and can’t buy that piece of equipment that can take your business to the next level.
Don’t get me wrong, a verbal commitment is often the first step to closing an investment, but you need to keep in touch with those individuals and move them down the “investment funnel.” People get busy and other plans and obligations come up, but you need to be aware of those plans and close those investors before the plans bog down the entire process. Until you have the checks in hand and the proper paperwork filed, you will not close your round and get back to focusing on the really important business at hand.
Know the industry and where you fit
You don’t have to be a 40-year veteran of an industry to “know” the industry and disrupt it. Granted, those individuals may know it the best, but there have been many entrepreneurs who bring a system that has worked in one specific industry to a new industry and been very successful.
However, it is a prerequisite to have a baseline of understanding of the industry, it’s competitors, the market trends, and most importantly, where your business fits. For someone else to trust you with their money, they need to know that you know where your business fits in the market and where it is going. It doesn’t take very long for a savvy investor to find out if you are clueless or not during a Q&A session.
Expand your mindset as to who can invest
We would all love to get investment from Sequoia, Andreessen-Horowitz, Greylock Partners, etc. You may even know and target the prominent Angel group in your region. However, an accredited investor can come in many shapes and sizes. In the early stages of a company, whether its pre-seed or seed round, it’s going to be very tough to get institutional funding – especially outside of the coasts. The “Friends and Family round” still can be a great source of financing for your round, whether it’s directly contributed to by those individuals, or if they are connecting you to other individuals that they know.
You also don’t need to necessarily be geographically focused. You don’t need to hunt down investment in your immediate vicinity and you certainly don’t need to flock to the east or west coasts. Again, leveraging your network to find individuals in your field or industry is more important to your startup than necessarily having someone who can ride a bike to your office.
We are very lucky to have gotten connected with an incredible group of individuals who believe and were ready to invest in our vision.
Fundraising is hard, and will only get harder as more and more companies are started and look for capital. However, there will always be capital and support for great ideas. If you build something great and believe in it, you will be able to convince others to your vision as well. Good luck!
Unless you are going into a business venture with your pockets lined, getting your startup started takes capital. Finding the startup capital for your new company means finding investors, which is sometimes like going on a treasure hunt if you don’t know the right avenues to take. To help with the funding hunt, here are five tips for finding an investor for your startup company.
Rehearse and Re-Rehearse Your Pitch
The way you handle your startup pitch could be the difference between walking every player on the team of pitching the perfect game. Before you step foot in front of an investor, it’s imperative that you practice your pitch until it becomes part of your vocabulary and a topic that you are the authority on.
This means rehearsing, which should basically lay the groundwork for how you will handle meeting with investors. In other words, not only will you have to know your business plan like the back of your entrepreneurial hand, you’ll have to predict potential questions. Don’t go it alone, rehearsing with a friend instructed to give no mercy is a great way to get the kinks out of your startup pitch.
Research the Investors
Obtaining investments for your startup starts with knowing your audience: the investors. Learning about an investor’s ideals, past investments, and overall business mentality will help in securing the funding you need. But don’t put all of your startup’s eggs in one investor’s basket.
If you want to reach the largest audience possible, make a list of at least three potential investors you’d like to pitch to. Then, learn everything there is to know about each investor. Once you get a feel for their sensibilities, set up pitch meetings based on the most desirable to least desirable investment opportunities. By doing so, you’ll know how aggressive you need to be from one meeting to the next depending on your success rate.
Know the Difference Between Investment Types
Put your pitch and list of investors aside for a moment. Before you walk into the shark tank, you need know what type of investment you want to acquire for your startup. Besides, the investment type has everything to do with your potential for success. Private equity and venture capital are the most common types of investments and are made by privately owned institutions and individuals.
Venture capital in particular has the most room for growth because most venture capitalists provide expertise and advice for startups. Angel investing involves obtaining capital from an individual with an upper-level net worth, but it also comes with high interest. If you’re unsure of the approach to take and the interest rates involved, Fisher Investments on Financials can help you navigate the investment waters so you don’t end up with the wrong investment for your startup.
Be Honest About Your Startup’s Potential
One of the most important pieces of advice when it comes to securing funds for your startup is being realistic with yourself and your investors about the startup’s potential. This is hard to do early on because, in most cases, you won’t have any sales under your belt. Likewise, it’s very easy to become starry-eyed about how well your business will do.
In terms of ROI, you need to plan for the lower end of success. It may sound like the will to succeed isn’t there, but by playing it safe on the investment end, you’ll leave plenty of room for better-than-expected results on the business end. Likewise, planning for a smaller ROI takes some of the pressure off, which is extremely helpful when it comes to running a startup.
Let the Government Help
Private lenders can get you most of the way to your investment goals, but in case you need to fill in some funding gaps, the government can help. The U.S. Small Business Administration has an SBIC Program, which helps small businesses connect with investment companies. In addition, the government also offers numerous other loans and grants for qualified startups looking for investment help.
The investment tips above will help turn your startup dream into a fully funded reality.
Recently, we announced our new partnership with Google for Entrepreneurs and our commitment to building a presence in over 1,000 cities in the next three years. As we prepare to double our impact alongside an incredibly influential, global organization, we also consider where we’ve come from and the people who made our early journey possible. In partnering with Google for Entrepreneurs, we are also graduating from our first major supporter – The Kauffman Foundation.
The people at Kauffman believed in our vision from day one in 2009, even when our organization consisted mostly of ideas and goals. Walking in to pitch at Kauffman, we knew it would take a huge leap of faith on their part to listen to a three person team talk about creating entrepreneurs around the world. Luckily, they took a chance on us and our vision, and with their considerable financial support, we not only survived our early days, but surpassed our original goal of reaching 400+ cities in three years. Since then, our team has also grown from three to 47 employees with multiple offices around the world.
“Our founder, Ewing Kauffman, challenged us to be daring, to take calculated risks, and to base our decisions in experience and research,” says Thom Ruhe, vice president of entrepreneurship at the Kauffman Foundation. “Having nurtured and funded Startup Weekend’s growth at such a critical time, getting it through the tough times to now being sustainable, is what the Kauffman Foundation is about. We are privileged to have the opportunity to identify organizations like Startup Weekend to support, continuing Mr. Kauffman’s legacy of entrepreneurial philanthropy.”
I remember the day I first pitched at Kauffman back in 2009; I was challenged with the question: “How will you be sustainable after our grant period?” This question is important and easy to ignore when you’re focused on securing funding or grant support. Remember, partner agreements tend to be finite, and companies should plan accordingly. So while we had just secured a grant, part of that agreement involved dictating what would happen after the grant ended. This may sound harsh, but in reality, it’s critical. I believe that every foundation should maintain some sort of three year investment strategy with new grantees. It challenges the organization to plan with a great level of discipline and focus on sustainable revenue models. In this light, hitting goals and growing are milestones, but every day you take a step closer to the milestone that marks the end of that type of partner relationship. Ultimately, this stipulation forced us to always be looking ahead and planning for sustainability.
One of the greatest challenges for a rapidly growing non profit is finding a balance between the increase in activity and the overhead costs associated with this growth. One of the more significant unexpected costs we didn’t plan for is talent. People are important, and they cost money – salaries, benefits, committed overhead for the team. As you grow, so does every single one of your expenses. Everything from office space, to benefits, to the incredible time investments to ensure everyone is communicating with one another and aligned in their day to day actions. As you achieve your original goals, you inevitably outgrow your original operating costs in a big way. This reality calls for expanded partnership that can accommodate the needs of a mid-size company as opposed to an early-stage startup. As we faced rapid growth, we realized that we were outgrowing our initial partnership, and we would have to find a commitment that could support the increase in our activity. Google for Entrepreneurs, an organization that has always supported our cause, stepped up to take on our next set of challenges with us.
The Kauffman Foundation has always been one of our biggest supporters, and they truly are a part of the UP family. Without support from the Kauffman Foundation, we would not have reached the scaling phase we find ourselves in today. We realize how rare it is for a company to get to this point. It takes a great amount of faith in an early stage company and team with audacious goals. We know some of those goals may have seemed unachievable to others, but Kauffman shared our vision and was there to compliment us where we had gaps – capital and relationships – in the early days.
We are fortunate to be able to look back on our roots and early days with gratitude, knowing that a new partnership was a necessary part of the long-term goals that Kauffman established with us. Like a savvy early-stage investor, they knew they were our working capital as we found product-market fit. Today, we are fortunate to have partners ready to fund our progress as we scale – and we remember our crucial partners who got us off the ground.
Want to become a part of our next milestone? Get involved with UP programs in your area.