Tag Archives: business plan

Entrepreneurship Guide for MBA Students


ONLINEMBA

The entrepreneur path is not for the weak of heart. When you start down this road, you will face extreme unknowns and take on major risks. As a business owner, you will need to trust your ability to lead an organization through its growth and an unstable future.

However, the rewards for successful entrepreneurship are great. You are your own boss, and you get to call the shots. You will have the opportunity to watch a startup team develop and take your organization to new heights. Owning a business allows you a wide range of freedom for career direction and growth.

I. Questions to Ask Yourself Before You Begin

Time to sit down and get some answers before moving forward with an entrepreneurial career shift. It may help if you write down the answers to these questions. You may also have a close friend, family member, or association listen to your answers and provide feedback.

Are you a natural leader?

Do you prefer to delegate work or are you more interested in completing tasks that are given to you? Do you enjoy doing very specific types of work, or are you a Jack-of-All-Trades? If you decide to pursue your own venture, you will initially need to rely on yourself to fill multiple roles. Don’t be surprised if you find yourself toiling into the late hours managing payroll, finishing client projects, and cleaning up the office.

Are you ok with taking risks?

Think about your current lifestyle. Would you be able to live with less? It is a distinct possibility as you launch and grow your business. Do you have family members who are dependent on you? If so, what is your contingency plan if things don’t work out right away or at all? The steps you take to prepare may inform your willingness to start a new career path.

Many startups suffer from large setbacks and failure. Examine your history with career obstacles and think about how you might react. Some CEOs will just scrap an idea and move on to their next business venture. Will you be able to bounce back if your startup doesn’t work out the way you’d like?

How imaginative are you?

It is no surprise that creative individuals tend to be the most successful entrepreneurs. Even if a product isn’t particularly innovative, business owners are usually able to envision marketing tactics, operations, and distribution methods that their competitors cannot even imagine. How willing are you to think outside of the box?

Is this idea financially viable right now?

Before leaping into a new business, you will want to seriously consider whether it is the best timing for your financial situation. Some people don’t get to choose – if they’ve been laid off or unemployed, many turn to entrepreneurship out of desperation. But you still need to manage startup costs and living expenses before you get a business off the ground. You will most likely need to be frugal in the early stages of your venture. Being a spendthrift can sink your entrepreneurial efforts into the ground.

II. Know the Habits of Highly Successful Entrepreneurs

Entrepreneurs have certain traits in common. They are often passionate about their own ideas and work and organized with their time and finances. Entrepreneurs cannot be shy when it comes to self-promotion. They understand the value of networking, word-of-mouth, and a solid online portfolio. Business owners will spend so much time thinking and researching their industries, that they will eventually become subject experts.

As an entrepreneur, you must be willing to learn from your setbacks and correct your course. Indigo Johnson, the CEO of employment management firm Careers in Transition, describes her struggle to leave behind her strict leadership behavior, cultivated during her time with the Marines, in favor of a more flexible approach. This shift helped her organization retain their top-notch employees, who have room to grow and learn within the company.

As a business leader, you must become known as an expert within your field. Min Cho, the founder of Nova Datacom, earned nearly two decades of banking industry experience before she launched her small business. Nova Datacom has since grown into a multimillion-dollar organization. Once you launch a company, you must continue to grow and learn, in order to maintain your expert status. Entrepreneur Elon Musk, the brainchild behind SpaceX and Tesla, uses his high-tech engineering lab to keep on the cutting edge of innovation.

III. Solidify and Assess Your Big Idea

Are you brimming with excitement, ready to test out your grand, new business venture? Slow down, before jumping in, you will need to test out the stability of your project and work out the details of market demographics, investors, and operations. You’ll also want to examine case studies of other businesses in your market, so that you can learn from their successes and failures. Once you’ve done that, ask yourself some hard questions about your next steps forward.

  • Who will my product and service help?
  • What is the market landscape? Is there a need for this product or service in the long run?
  • Who are my best resources and will they be able to help me start a business?
  • Financially, can I handle not earning money until this business has grown?
  • How will I protect my work using copyrights and patents?
  • Do I need a mentor?

We’re living in an era of struggle for startup ventures. In post-Recession years, employment rates at startups have been only 45% of the 1999 rates, according to the U.S. Small Business Administration’s Office of Advocacy. How likely is it that your startup will survive past its first four years? In the information industry, only 37% of organizations make it through this period. The industries with the highest four-year survival rates are finance, insurance and real estate, holding strong at 58%. These rates will fluctuate depending on the current state of the economy, but it is a good idea to research your niche industry first.

Before making the leap, plan out a timeframe. Depending on your business plan and capital needed, it can take you a few months to reach “ramen profitability,” a term for having enough funds to run your business and live without outside income. Investor Paul Graham encourages startups to share the load with a founding team, rather than an individual founder. While your equity will be split amongst the other founders, your chances of success will be far greater.

IV. Map Out a Realistic Business Plan

Before you knock the business plan, think about how many doors this brief document can open. A well-crafted business plan can show VCs and angel investors that you have both the vision and the credibility to carry your ideas into fruition. This will help you secure the necessary funding to take your plans to the next level. Enloop is an excellent, free online tool that can help you start a business plan and compare your projected success rates to similar startups. Your business plan should also give you a roadmap to follow for your upcoming years of growth.

Retail Business Plans

Startups account for 52.6% of all retail sales in the United States, according to the U.S. Small Business Administration. You will need to do in-depth research into operations, shipping, sales predictions, wholesalers, market statistics, and marketing as you write out a business plan for retail. Consider how much risk is involved with your particular product, as you consider how to approach investors. A strong marketing strategy will be crucial, since your predicted sales will rely on brand visibility and recognition.

Services

Some of the most popular professional services industries for startups include temporary staffing, healthcare technology, self-improvement consulting, and accounting. The success of a service will hinge on your influence amongst key demographics. In many ways, you will need to concern yourself with similar issues retail businesses face. Place an emphasis on building a team of sales associates who can convey the true value of your services. Exposure will be crucial with a service-based career, where people learn about you through word-of-mouth or your online presence.

Food Industry

The National Restaurant Association predicts that over $660.5 billion will be generated by restaurant sales in 2013. This doesn’t even include the huge amount of revenue generated by bars, bakeries, cafes, and food trucks. As you generate a food-service business plan, you will need to read up on FDA food regulations, to make sure that your proposal is compliant with federal government regulations. Many food businesses rely on additional forms on income, including space and stage rentals, which should be includes within your projected revenue graphs.

Formatting

There are specific business plan elements that must be addressed, no matter what type of venture you’re exploring. This is a list of the most common components you will need to address during the business plan drafting process.

  • Executive Summary: This is the crux of your business plan. Here, you will outline your company mission, objectives, and background.
  • Company Summary: Who are the founders and how do they split ownership? Create graphs of your expenses, assets, and investments.
  • Products or Services: Go in depth with the project management steps for the development and creation of your products and services.
  • Market Analysis: Who is your target demographic? Show market testing and research that supports these audiences. Are there hidden demographics that would benefit from your products and services?
  • Implementation and Forecasts: You will want to examine two possible futures with your forecasts: conservative and optimistic.
  • Financial Plans: Have you worked with a financial advisor to see if this venture is economically feasible? What are the hidden costs? Create an expense budget, cash flow statement, and a projection for breaking even.

V. Gain Exposure and Funding

Before you start getting your brand name out there, you will need to establish a solid online presence. This includes professional social media profiles, an engaging website, and a blog. Contact industry experts to see if they will contribute content in the form of guest blog posts and partner up with other companies online. These well-known figures and organizations have access to massive social media audiences. Your search engine rankings will climb as authority websites feature your startup. Once you have gained an online audience, it will be time to start the funding search.

Venture Capital

Look into investment companies such as Diamond State Ventures, Madrona, and NewSpring Capital, which can match your organization with the best venture capitalists. Make sure that your startup team and your business plan are polished – you will need to be prepared when networking with potential investors. Don’t go into VC meetings empty-handed. Practice pitching your startup and take your best team members with you. Don’t spam VCs with funding requests – the key is to build meaningful relationships with investors who believe in your cause.

Crowdfunding

Project campaigns on Kickstarter raised $176 million from backers who were excited to see these ideas come to fruition. If you have a clearly defined business plan and a compelling video presentation, your company may be able to earn startup funds through websites like Indiegogo, Kickstarter, and GoFundMe. Crowdsourcing is most effective when it is partnered up with a solid web presence and media production. Consider hiring a web designer, filmmaker, and photographer to create the best content for your funding page.

Loans

Some of the most popular small business loans include the 7(a), 504, and the 7(m) microloan program, which are offered by the U.S. Small Business Administration. However, you don’t want to rely on loans for the bulk of your financing, as they have low approval rates in this economy. During the 2013 Fiscal Year, only 27% of startups were approved for the 7(a) Loan and 14% of startups qualified for the 504 Loan. Your startup should partner with a financial advisor to complete the extensive paperwork required to apply for an SBA loan.

Grants

It is rare to find grants that can be used for startup purposes, unless you intend to open in developing areas, conduct specific types of scientific research, or develop environmentally friendly products. However, Grants.gov is an excellent starting point to see if your organization will qualify for a grant.

Self-funding

While this funding method can place your personal finances at risk, it is a great way to start moving toward your vision quickly. Your 401(k), life insurance, and a home-equity loan are just some borrowing avenues you can explore.

VI. Get a Legal and Licensed Start

Before you start moving forward with business operations, you will need to acquire the right businesses licenses, file tax paperwork, and adhere to employer laws. The following checklist and resources will walk you through the ins-and-outs of business structures, accounting, taxes, and legal requirements.

  1. Choose a business structure based on your size and operations. Your categorization as a sole proprietorship, partnership, corporation, S corporation, or LLC will affect your company’s tax responsibilities.
  2. Obtain an Employer Identification Number.
  3. Obtain your state and city business licenses.
  4. Apply for local permits for applicable factors like zoning, building construction, and signage.
  5. Work with your accountant on your startup’s tax form schedule.
  6. Prepare for tax filing by collecting records of all sales, expenses, and inventory.
  7. Review federal and state employment laws.

VII. An Entrepreneur’s Essential Toolkit

Essential Software and Apps

  • LinkedIn: This is the industry standard social media platform for entrepreneurs to network and talk shop.
  • MailChimp: Manage your email marketing campaigns and connect with vast audiences with easy-to-use templates.
  • Crunchbase: This mobile app connects you to a vast database of tech companies, angel investors, and leaders.
  • TaskRabbit: Hire a virtual assistant or messenger to get tasks done on the fly.
  • Uber: Your own personal transportation service. Hire a driver for custom arrival points and destinations within seconds.

Entrepreneurial Education

  • Khan Academy: This non-profit institution offers free courses across a multitude of educational topics, such as chemistry, physics, finance, and art.
  • CreativeLIVE: Creative media and business experts host streaming courses and seminars, which are free if you catch them live.
  • Coursera: Over 80 universities around the world host over 450 free courses on this educational platform.
  • iTunes University: Get a taste of Ivy League education by downloading free video lectures, textbooks, and assignments from the top universities in the world.

Startup and CEO Publications

  • FastCompany: This publication is dedicated to tracking innovative trends in design and tech.
  • Inc.: A digital magazine dedicated to startup guides, money news, and industry leaders
  • Forbes: A biweekly print magazine that focuses on national finance and marketing. The online version offers a wide selection of columns featuring tech and business trends.
  • Harvard Business Review:This print and web publication engages the worlds of academia, management, and enterprise with the most current business news.
  • Entrepreneur: This web platform explores startups, technology, franchises, and marketing strategies within the U.S.
  • http://www.onlinemba.com/entrepreneurship-guide/

The Little, Big Idea


How just doing the first, tiny part of your idea can help you find out what you need to do to really make it a big idea

I often have conversations with people who have a Big Idea.

They have personal experience of something (an industry, a job, a market, a personal problem), have noticed something that needs to be done, and have come up with what they think is a solution.

Then they tell me they’ve been working on the idea for a year or so, and pull out a text document, a presentation, and/or a diagram of how the website needs to look and work.

And they begin going into vast detail about all of the features of the solution. It’s going to do this, and then this, and it also will do this. And because this is a global problem it obviously needs to do this and this and this. And so on. A huge list. They back it up with how they’ve got some interest from someone important, and have had an amazing conversation with someone you’ve never heard of but are meant to know.

Can I stop you there?

I suspect I come across as rude, but I usually start staring into the middle distance and then suddenly cut them off mid-sentence before they’ve finished.

I start asking some difficult questions:

  • How long have you been working on this?
  • What are your assumptions?
  • How do you know that your assumptions are right?
  • What have you done to validate that people will really do what you think they will do rather than telling you they will?

And most importantly: why has it taken you a year to get this far and you’ve still got nothing on a screen?

Usually I get a bit of a blank look, some uncomfortable excuses and then I tell them a version of the following. The effect is often quite dramatic, so I thought I’d share.

The Little Big Idea

Having Big Ideas is wonderful, it’s to be encouraged. I’m inspired, as I’m sure you are, by people who have one and then follow through, and keep following through until they’ve built a company around their idea.

A packet of Sugru

Have a read of Sugru’s story page and you’ll see exactly what it takes to make a Big Idea a reality. Seriously, that’s got to be one of the best pages on the web.

Sugru is what I’d call a “Little, Big Idea”. At its heart it is a very simple proposition – a Little Idea, that has potential to do something pretty Big.

Sugru is a product that lets you fix physical things that are broken, or adapt them to make them better. It’s a type of waterproof putty that hardens at room temperature. It’s just some silicone rubber.

But when you think about what that means – less wastage, reuse before recycling, improving how we use products by adapting them to fit our needs, it’s clear that it’s also a Big Idea.

Just get started

A lot of people, when they have that Big Idea moment, throw themselves into writing it all down, planning it out, and doing things about the thing. Not the thing itself.

My favourite part of the Sugru story is what the founder, Jane ni Dhulchaointigh, says about the first prototype for what would become the product:

The first Sugru prototype – a better knife handle by moulding putty around the existing handle

“If I’m honest, the first version of sugru was pretty horrible — made from smelly silicone caulk and waste wood dust from the wood workshop. But it helped me hack my kitchen sink plug bigger, and make a knife more comfortable.”

That’s the opposite of going for the Big Idea pitch. My usual reaction on hearing such a pitch, is to pull the conversation well away from the “We’re going to scale up across EMEA” stuff and back to the first prototype.

What’s the first thing you could build to test the idea out? What could you learn by making a rough prototype and then getting some people to look at it, use it and react to it? Often you’ll have your assumptions challenged and end up with new realisations about what you’re supposed to be doing.

Just get started. Do the first, tiny thing. The “Little Idea”. Make the equivalent of putting some putty on your knife to make it easier to cut with. Apply that to whatever it is you’re working on and then go from there.

Start, then write the plan

In my last startup we did this, to a degree. If I could go back I’d follow this approach even moreso. “Why is it so hard to find a specific moment in a video?” was the problem.

I sketched up a solution in a browser in an afternoon that let you play through a Youtube video, type in text, and have it appear at that point in the video. You could then search based on that text and find the bit you wanted. We showed it to some people, we wrote a business plan about how you could turn this Little Idea into something bigger – video is a huge market. And we got some investment very quickly to follow through on developing that into a business.

Without that early experiment we wouldn’t have known what it was that we were trying to do, and we learnt very quickly what was, and wasn’t in the plan.

More close to home, my wife Emily had a Little, Big Idea recently. Subscription boxes are a big deal in the States, but not yet in the UK or Europe. She thought it would be interesting to see if she could get a craft subscription box off the ground. I spent a couple of hours making her a logo, she wrote one blog post, no website, no big plan required, and now she has a little business, the Crafty Fox Box, growing. She’s had to learn as she’s gone along, but rather than taking months to get the idea perfect, she just started it. It’s a liberating way of doing things, and she’s already started her second, a stationery subscription box: paper.do.

Be immediate

When you’ve got a Big Idea, you’re always thinking about it, and if you focus on just making that first step, you’re maximising on that passion and energy. It’s pointless trying to do a Big Idea when you’re not passionate about it, and the main problem I see with the “write it all down, spend a year getting lots of documents together” model is that your passion isn’t going to be in it. It’s a formula for making sure that you’re tired of it before you’ve even spoken to any users.

I often scare myself when I’ve had an idea by putting it out almost immediately on the web. I tweet something like “Hey guys! I’m looking for some people who know about x to help beta test an idea. Let me know”. It’s exciting, and you get great feedback. We’re doing this at Makeshift, where we come up with a product idea, do a two week hack, put it in front of people and try to find out if there’s anything in it. We only do hacks on things that are easily achieved with our skills as a team, yet that point towards a large market. We’re trying to get to the point where everything we make is a Little, Big Idea.

Use the feature knife

I do most of my hacks in one or two days. I’ve learnt that if I can’t do something in that time, then I’ve probably overthought it, and it’s too complicated. And the things that are successful on the web are the simple things. Sure – after those few days it’s into iterate, iterate, iterate, but I try in my hacks to make sure that I’ve successfully demonstrated the bare minimum of the idea in that time.

To work this way you have to choose what constitutes the absolute bare bones, minimal version of the idea you’re going to go for. Then focus, say no to every feature that doesn’t help validate that idea. No, no, no. I call it the feature knife. This. Not that. This. Not that. Trim it down to it’s basic components, then set aside a fixed period of time and build it.

Obviously I’m lucky in that I can make a thing in a day – like Attending, a simple event-page maker I made last Friday out of frustration with Eventbrite. I had a good reaction, then asked Jase to give it some design attention. We did a few tweaks together, so as it stands today, that’s about 7 days of person-time. And now we try to get feedback about whether there’s anything in the idea.

Optimise for demonstrability over time

The classic hack-day demonstrability graph

The joyful thing about the make-something-quickly spirit that I refer to as hacking, for want of a better word, is that if you get it right you are optimising for visible productivity early on.

If you attend a hack day, or you’re building a rapid prototype (like the Sugru knife handle), you’ll get a graph that looks a little like this.

In the first 10% of time you’ll probably be able to demonstrate 90% of what the idea will be about. The remaining 90% of the time will be refinement, but it will still only add 10% of the perceived “done-ness” of the idea you’re demonstrating. It’s the shlep – the long, hard, graft that’s required to take a product idea to market and get it right.

But given that by hacking on an idea you can get to that 10% point very quickly, I’d argue that that is a very good idea indeed for a certain class of Big Ideas. Clearly, you can’t build a bridge this way. Or come up with a cure for a serious disease. But if your idea is digital in nature, then I’d argue that there is much to be done by optimising for that early part of the demonstrability-over-time curve.

Build something small

There is a prevailing wisdom that in order to make something successful you should write an extensive business plan before you start. It’s the MBA school of thought. Whilst I am sure that this is relevant in many situations, I would argue that this stage comes later than when you’ve had your initial, unproven idea. At that stage I think that a one-pager will suffice. If you can’t explain what the business model is in a one-pager then you’ve got bigger problems!

So, I suspect if you’ve read this far, you’re someone who has one of these Big Ideas. Are you writing the business plan without any validation? Have you done a prototoype? Have you done a hack to really see, with real people if you’ve got something worth investing your time in?

Set aside the business planning and the idea-flood for a moment, and get back to the simple, basic, core idea of what your idea is about and go and test that out. Good luck!


With thanks to #sundaypost (write a blog post on a Sunday with others) and everyone who supported me to write this idea on Help Me Write. What should I write next?

Written by

I’m @stef on Twitter. Sketching with code and making things that give a leg up to the little guy. Cofounder of @makeshift. http://makeshift.io

 

A NEW LINE OF THOUGHT


The Lean Canvas

John Jonelis

ENURemember when you wrote that 50 page business plan—the one that nobody actually read? Well, you never have to do it again! Now you can put it all on ONE PAGE.

It’s called the BUSINESS MODEL CANVAS, a.k.a. the LEAN CANVAS. It’s fast. It’s visual. It’s a living document. It’s the new tool of choice among startups, big business, and major universities. Continue reading A NEW LINE OF THOUGHT