Archive for Business and Finance
How to Write a Business Plan for Investors
Posted by: | CommentsA business plan is the objective assessment of your business and your goals. An investor will usually skim your business plan, so clarity and brevity are essential. Yet, venture capitalists use the information in your business plan to determine if they will invest in your company, so you must make all the pertinent information available. It’s best if you can adjust the business plan slightly to appeal to each potential investor. Venture capitalists inevitably have preferred areas of investment, and you can emphasize aspects of your company that might be of particular interest to them. Venture capitalists are also intrigued by anything that is unique about your product or service. Any patents, trademarks, unusual technology, production method, or increase in quality of a service or product will help sell your proposal.
The professional experience of your company’s founders and managers, including where they have worked and how well they have performed in the past, are also important.
Investors look for experience in the marketing, finance, and production sides of your business.
You must make the terms of the investment deal very clear and include the latest balance sheet (if it is an established business). Emphasize the growth potential of your business to show there will be a big return on investment!
Lastly, venture capitalists are usually interested in the future salability of your company. Their business is to invest in companies, then become liquid so they can invest again. Give them a list of the larger, publicly traded companies in the same industry. It will be easier for you to raise money if another company has already pioneered in your field successfully.
Delivering Your Business Plan
Theoretically, you could submit your plan to dozens of venture capitalists, but this may undermine your chances of raising funds rather than improve them. The SEC prefers businesses to send their business plan to fewer than thirty-five investors. Federal regulations limit you to a hundred potential investors, but certain states have set the limit at twenty. It’s worth your while to investigate, select, and approach the venture capitalists before sending them your business plan.
The best way to deliver a plan is through a third party. The third party is, in effect, recommending you to the investor, prompting the investor to read the plan with more serious attention. You can use almost anyone whose liaison with the investor is positive: accountants, lawyers, consultants, bankers, and other entrepreneurs?
Designing Your Product or Service – Evaluating Your Business Idea
Posted by: | CommentsThe design of your product or service evolves as you determine its viability in the market. Depending on the anticipated reaction of the customer, you may decide to be guided in certain ways. If research shows that most of your customers will be teenage girls and that teenage girls prefer primary colors over pastels, then you should incorporate that preference into your design.
Of course, function and practicality dictate the overall design. If your idea is a service, like a drive-through icecream store, then certain requirements of the system may dictate the layout of the establishment. It’s a good idea to go to other drive-through businesses—whether a fast-food concern or a dry cleaner—to find out what the salespeople and customers think of that aspect of the design. You may come up with remarkable innovations based on these insights.
When you are dealing with the design of products, you also have to take into account manufacturing limitations, patent protection, and distribution requirements. If you intend to cater to industrial users, your product must fit into an existing or planned production system.
Innovation is the alteration of an existing product to better fit the market. Usually, the best ideas incorporate innovative changes in the style of the product or add desirable features. Or you can develop a new use for an established product. The current food processors are examples of blender technology expanding to include other uses.
Most invention today is done by the product research and development departments of manufacturing firms rather than by independent inventors, but a significant percentage of important ideas and products have been created by people just like you.
Certified Lending Institutions
Posted by: | CommentsThe final decision for granting an SBA-guaranteed loan is made by financial institutions designated “certified lending institutions.” You can cut the processing time if you apply for your loan at a certified lending institution.
Control Data Corporation, authorized by the SBA to provide guaranteed loans, has Business Centers around the country. These Business Centers offer data processing services, business planning, marketing assistance, and lending services. For more information, contact your local Control Data Business Center or the main office at:
Control Data Corporation 5241 Viking Drive Bloomington, Minnsota 55435 (612) 893-4200
The Money Store Investment Corporation offers SBA-guaranteed loans in branch locations in twelve states. For more information, contact the Union headquarters of The Money Store at (908) 686-2000.
Allied Lending Corporation provides SBA-guaranteed loans for the Washington, D.C. area:
Allied Capital Lending Corporation 1666 K Street NW Washington, D.C. 20006 (202) 331-1112
Fortistar Corporation provides SBA-guaranteed loans for New York State:
Fortistar Corporation 115 East 57th Street New York, N.Y 10022
(212) 644-0920
The First Commercial Bank provides SBA-guaranteed loans in Los Angeles:
The First Commercial Bank Los Angeles, California 92071
(213) 362-0200
E-commerce – What Equipment Do You Need?
Posted by: | CommentsAs a minimum for good connection, speed and storage, you will need the following. (This is in summer 2011; better systems may by now be available for the same or a lower price.)
Computer
Go for a reliable and well-known manufacturer so that, if there is any problem, you are working with a company with a good reputation and back-up support. Whilst it may seem attractive to have a cheap machine ‘built’ by a local shop, you may find either that they are not there when you return with a problem, or that they are not interested in solving your problems – their main aim being to sell you the machine. Having decided on a brand name, you do not, however, have to buy through a high street retailer. Remember, their prices include your share of their overheads, staffing, advertising etc. You are going to be a web trader, so trade over the web! With access to the Internet (via a friend or an Internet cafe, for example), you can buy online. Of course, you should visit the retailer and take any free advice that they have to offer before making your final purchase. It is easy to be fooled into thinking that you are getting a good deal by buying a ‘package’ which offers ‘everything you could possibly need’, often including a scanner, a printer, even a camera. Look at exactly what is on offer before you succumb to the advertising. Often, these packages are not as good as they seem and include a great deal of software which you will not need. It is the performance specifications that are important; these are often buried amongst the ‘extras’ in a package.
Speed and size
You need first to decide whether you want a desktop or a laptop. Laptops are more portable and just as versatile, but are also more expensive and more likely to be stolen. The advantage of being able to take your work with you wherever you go has to be weighed against these security risks. Desktops can take up an inordinate amount of space, but, for most businesses, desktop machines are the preferred option. Your brain can hold information, process information and remember information. The larger your memory, the more you will know, but whether or not you can use your knowledge depends on the speed at which you can access the stored information and the efficiency with which you can process new information. So it is with a computer. Your system has a speed at which it operates or processes (the speed at which it can ‘think’). This is governed by the efficiency of the ‘chip’ which operates it, its memory or stored information, both on the hard disk and held in its RAM or Random Access Memory, and the efficiency of its operating system.
The most widely used operating system is Microsoft Windows, of which there are various versions, the latest being Windows ME (the millennium edition). Beware, later versions of some software do not have compatibility with earlier versions built in. While it is slower, less efficient and more likely to stall or collapse than its rival Mac system, Windows is still the industry standard. Buying a Macintosh is likely to make you the darling of the publishing world, open up excellent photo and video editing facilities and show that you have a certain style; buying a PC is (unfortunately) likely to show that you have more commercial sense. Try to avoid ‘pre-installed’ versions where you don’t actually purchase the CD. If anything goes wrong, this means that you can’t fix it yourself.
Drives
Software has to be loaded on the machine and information saved. To do this you will need various drives. The size of the hard drive governs the amount of information that your computer can actually hold. A few years ago, a one-gigabyte drive would have seemed large, now ten-plus gigabytes for a hard drive is common. A CD drive is standard, and CD/RW drives allow you to ‘burn’ information on to a blank CD (the RW means Re-Writeable). You may also want a DVD drive in order to be able to load and watch movies. There are combined CD/RW and DVD drives on sale. Even with the new technology, you will still need the ‘old’ 3.5-inch floppy drive. You will also, of course, need a modem. This can be internal (the usual offer from a retailer) or external. An external modem has the disadvantage of extra wires and connections but the advantage of being accessible should anything go wrong. Finally, go for a good, fast printer, a scanner and a 17-inch screen. The extra size will make working on the computer so much easier.
E-Commerce – The Success and Failure on the Internet
Posted by: | CommentsThese patterns of success and failure should not alarm the intrepid Internet starter. Similar stories of success and failure are happening all the time – but in ordinary business. There are over three and a half million small businesses in the UK. Indeed 92 per cent of UK businesses are ‘micro businesses’ with fewer than ten employees; nearly 70 per cent have two employees or less; 13 per cent are one-person businesses. Around 50 per cent of such small businesses traditionally fail or are bought out within their first two years of operation. There is a constant cycle of failure and renewal, with the new businesses often learning from the mistakes of those in whose footsteps they follow. The failure of the so-called dot.com sector has been highlighted because many of these failures have been lumped under the same heading, but they are failures that would have happened anyway. They are certainly not exclusively failures that have been brought about because the capital market’s love affair with Internet businesses has ended.
Remember, if you are running a successful business, you have most if not all of the know-how needed to run an e-business. E-business and e-commerce are, after all, nothing more than business and commerce with an ‘e’ on the front. This means that, far from having to struggle with new ideas and concepts, what you actually have to do is to adapt and adopt your own expertise and experience in a slightly new mode. The basics of business still apply. (How would you, as a business, have reacted had you been around when Alexander Graham Bell made that first telephonic break through? Would you have shunned the new technology, or embraced it enthusiastically, or been a wary but forward looking supporter?) You, the supplier, are making goods and/or services available for other businesses (business to business, or B2B) for local and national government buyers (business to government, or B2G) or for prospective customers/consumers (business to consumer, or B2C). The fact that you can now do this for a fairly basic outlay – even on a very limited budget – means that you can supply the same product or service to a much greater market. Whatever the size of your market segment or particular market niche, you can now immediately reach that same niche on a worldwide basis. If this seems like too much trouble then just ask yourself the following questions about your business:
- Would it help increase sales if you were open all hours of the day and night, seven days a week?
- Are you a business which relies on communication, either with other businesses, with your suppliers, or with your customers?
- Do any of your competitors have web sites or the ability to trade online?
- Do you need or use market research information to support and enhance your business?
- Are you a business which provides customers with after sales service and/or advice?
- How do potential customers know that you exist?
If you answered ‘yes’ to any of these questions then it is not just likely but inevitable that you can use the Internet in order to enhance and expand your current business. You don’t need vast amounts of technical know-how or online experience; you don’t need expensive consultants or webmasters. You do need to make some investment – more often in time than in money – to be able to be assured of success.
Can You Start a Totally New, Pure Credit File?
Posted by: | CommentsThe promise of avoiding past bad credit by beginning a new credit file has been promoted by a variety of people across the country. It’s an appealing concept. Your credit file at a credit-reporting agency has reports of late payments, repossessions, bankruptcy, foreclosure, and goodness only knows what else. It’s the credit report from hell and there isn’t a chance it will ever help you get a mortgage. So wipe it all under the table and start off fresh with a new report.
It doesn’t work that way. Your credit report is tied to your social security number, name, address, and other identifying features. For you to start a new report would probably mean changing your name, getting a new social security number, and so on. It would mean you would have to lie somewhere, probably often. While you might get away with it for a while, in the long run things would probably come out into the open, particularly if you succeeded in using a “new report” to get a mortgage and then couldn’t make the payments.
A lender or credit-reporting agency which discovered false credit report would undoubtedly turn it over to government for criminal prosecution.
What you can do is become a cash-paying citizen and eventually turn your credit around. Remember, time heals all. A number of years of good credit can make even the worst report slowly fade away.
Impromptu Speaking – At the Drop of a Hat
Posted by: | CommentsSometimes the need may arise for you to speak with the minimum of preparation. You may be asked by clients, your boss or colleagues to give a verbal report or a summary of your views ‘at the drop of a hat’. Or perhaps you’ll find yourself in a situation where you need to respond to something another person has said, perhaps offering a ‘vote of thanks’ or something similar at an industry event. How do you handle moments like this, particularly if you’re someone who likes to have time to prepare?
Well, the secret lies in keeping things simple and not worrying about making mistakes. Since you’re speaking off the cuff, you’re clearly not going to be able to deliver a perfectly structured presentation, so don’t set your expectations of what you’ll achieve unrealistically high. There’s every chance your mind will go blank at least once or you will get stuck for words. It’s not a big deal.
The most important thing is to decide quickly what you want to say, then come up with no more than three key messages that communicate your core idea. Once you’ve put them in order, you’re pretty much ready to go. If you start out strong you’ll grow in confidence, and the rest will fall into place so be clear exactly what you’re going to say in that first crucial sentence.
There’s always a danger of waffling and rambling when you speak in a spontaneous manner, since you haven’t had a chance to think things through. You need, therefore, to be disciplined. Keep it simple. Less is more. Stay focused, and avoid going ‘off-piste’, and you’ll succeed.
An excellent way of developing this skill is to practise using a presentation you set yourself. Imagine you’ve been asked to report on a project you’ve been working on and you have two minutes to prepare. Then quickly pull together your thoughts, and actually deliver them out loud. If possible, record what you say either on tape or video, and then review the recording afterwards. What worked? What could have been better? It’s like practising your scales when you have to play a musical instrument in public. The more you practise the more fluent you’ll become.