Every business sells something. The challenge is attracting customers who will buy what you're offering.
The buzz word today is "networking". Everyone says you get clients and customers through networking. Even big consumer package goods companies and auto companies are trying to network with consumers via social networking sites. Networking is just the first step in establishing a relationship.
This past week I've undertaken a new project for myself -- reconnecting with potential customers, keeping up with current clients and reaching out to contacts who might have ideas for new customers for me. It was hard to start. But now that I'm going, I'm picking up momentum.
Of course, my first step was having a goal. The second was to make a plan. The third -- to execute.
If you want to build your business, you have to contact your customers and potential customers.
Friday, August 29, 2008
Wednesday, August 27, 2008
10 Tips for Starting a Business - Tip #10 - Get Going
You've done your research. You've developed a great plan. You've assembled a super team. You have an exit strategy.
Now, you have to launch. Execute your plan. Take action.
The first action you need to take, if you haven't already, is to be aware of any legal or tax restrictions or implications. It's best if you contact your attorney and accountant for advice. You can also read up on local, state and federal requirements.
Sometimes you don't need money to start. Other times, you do, but you can be creative in finding money. If you have savings or friends and family who are willing to bet on you and your team, you can get going. Banks, angels and VCs usually want to see that you have started and have a revenue stream or amazing intellectual property protected by patents before they'll jump in.
As you take action, you'll probably deviate from your plan. Things will happen. You have to be resilient and open to the possibilities while having enough focus to not get sidetracked. For example, Teroforma was originally going to sell its tableware via its unique website directly to consumers. But so many retailers were interested in their wares, they are now more of a B2B model.
Now, you have to launch. Execute your plan. Take action.
The first action you need to take, if you haven't already, is to be aware of any legal or tax restrictions or implications. It's best if you contact your attorney and accountant for advice. You can also read up on local, state and federal requirements.
Sometimes you don't need money to start. Other times, you do, but you can be creative in finding money. If you have savings or friends and family who are willing to bet on you and your team, you can get going. Banks, angels and VCs usually want to see that you have started and have a revenue stream or amazing intellectual property protected by patents before they'll jump in.
As you take action, you'll probably deviate from your plan. Things will happen. You have to be resilient and open to the possibilities while having enough focus to not get sidetracked. For example, Teroforma was originally going to sell its tableware via its unique website directly to consumers. But so many retailers were interested in their wares, they are now more of a B2B model.
Tuesday, August 26, 2008
10 Tips for Starting a Business - Tip #9 - The Exit
What is your Exit Strategy?
This is an essential question to answer, particularly if you are going to be seeking capital from outside investors. Venture Capitalists want their money out in three to five years. Most expect you to sell your business or go public.
Developing your exit strategy means you have to think about what you want to do with your business and what you want out of your business. Do you enjoy starting things but not running them? Think about getting the business going, then hiring a chief executive officer and other C-level executives to run the business for you. Think about selling the business to a larger firm in about five years. You could sell to competitors, suppliers, customers or strategic allies.
Companies with dramatic growth and profits that become household names can go public. (Think Google or Apple.)
Or maybe you just want to run and grow your business, letting it throw off cash in the form of dividends. Maybe you just want a business that is a joy to run and will steadily grow and provide you with a living.
In some cases, you can have a business that your kids take over.
Whatever you do, plan it out. Make your business do what you want it to -- be in control -- make your business suit the life you want -- not the other way around.
This is an essential question to answer, particularly if you are going to be seeking capital from outside investors. Venture Capitalists want their money out in three to five years. Most expect you to sell your business or go public.
Developing your exit strategy means you have to think about what you want to do with your business and what you want out of your business. Do you enjoy starting things but not running them? Think about getting the business going, then hiring a chief executive officer and other C-level executives to run the business for you. Think about selling the business to a larger firm in about five years. You could sell to competitors, suppliers, customers or strategic allies.
Companies with dramatic growth and profits that become household names can go public. (Think Google or Apple.)
Or maybe you just want to run and grow your business, letting it throw off cash in the form of dividends. Maybe you just want a business that is a joy to run and will steadily grow and provide you with a living.
In some cases, you can have a business that your kids take over.
Whatever you do, plan it out. Make your business do what you want it to -- be in control -- make your business suit the life you want -- not the other way around.
Monday, August 25, 2008
10 Tips for Starting a Business - Tip # 8 - Make Money
It may seem like an obvious notion, but businesses should make money. If you are going to invest your own money, borrow money or ask other people to invest in your business, then you really need to know how you will pay back yourself, your creditors and your investors.
In fact, before you can raise money, you need to be able to explain exactly how you'll make money.
Back in the days of the dot-com boom, it seemed that entrepreneurs only had to explain how they would generate revenue -- or sales. The idea of actually making money -- i.e., a profit was largely ignored. That's why we had the dot-com meltdown and so many businesses went out of business.
But nowadays, you need to know how you'll generate positive cash flow and profit. That takes a financial plan, or more simply, a budget. You need to answer these questions:
How much do you think you'll sell each month?
What will it cost to create what you sell (cost of goods sold)?
What will it cost to sell what you sell (selling and marketing)?
What will your overhead cost (all your fixed costs)?
What's left after you subtract your costs from your sales (Your operating income)?
All that goes into your income statement. When you actually make money, you can substract depreciation, income taxes, amortization and interest expenses to get net income.
To understand your cash flow, you'll have to look at capital expenditures and the cost of producing your inventory, in addition to other cash outflows and inflows. These numbers are key in understanding what it will take to open and operate your business. Cash is king. If you have the cash to pay the bills, you'll be O.K..
Your assets (your cash and what you own) and your liabilities (what you owe) and your owner's equity (the difference between your liabilities and assets) are all on your balance sheet. Bankers care about balance sheets.
To learn more, visit www.sba.gov. That's the website for the Small Business Administration. They have lots of great information about financial planning and budgeting. Or contact me at upstartwyn@gmail.com.
In fact, before you can raise money, you need to be able to explain exactly how you'll make money.
Back in the days of the dot-com boom, it seemed that entrepreneurs only had to explain how they would generate revenue -- or sales. The idea of actually making money -- i.e., a profit was largely ignored. That's why we had the dot-com meltdown and so many businesses went out of business.
But nowadays, you need to know how you'll generate positive cash flow and profit. That takes a financial plan, or more simply, a budget. You need to answer these questions:
How much do you think you'll sell each month?
What will it cost to create what you sell (cost of goods sold)?
What will it cost to sell what you sell (selling and marketing)?
What will your overhead cost (all your fixed costs)?
What's left after you subtract your costs from your sales (Your operating income)?
All that goes into your income statement. When you actually make money, you can substract depreciation, income taxes, amortization and interest expenses to get net income.
To understand your cash flow, you'll have to look at capital expenditures and the cost of producing your inventory, in addition to other cash outflows and inflows. These numbers are key in understanding what it will take to open and operate your business. Cash is king. If you have the cash to pay the bills, you'll be O.K..
Your assets (your cash and what you own) and your liabilities (what you owe) and your owner's equity (the difference between your liabilities and assets) are all on your balance sheet. Bankers care about balance sheets.
To learn more, visit www.sba.gov. That's the website for the Small Business Administration. They have lots of great information about financial planning and budgeting. Or contact me at upstartwyn@gmail.com.
Friday, August 22, 2008
10 Tips for Starting a Business - Tip # 7 - Your Team
Investors don't invest in products or services. They invest in people. They look at the management team as the most important part of the business.
Even if you aren't going to raise outside capital, you still need a strong team to make your business successful. Of course, the first member of your team is YOU. Why are you the person who will create a business that is successful? Do you have experience as an entrepreneur? Do you have experience in the industry? How about your partners or your advisers?
If you just have an idea or a prototype of an invention, can you tap outside experts to help you produce and market your product? Do you have trusted advisers, such as a lawyer or accountant, who can help you? How about a professional strategic planner or operations expert?
Figure out what people you need, whom you want to work with, then get the team together.
But whatever you do, make sure you work out who will contribute what and what each person will receive in rewards. Pay? Stock? Options? Work it out in advance. Then, put it in writing. Get a lawyer to help you craft a document detailing what will happen if the company grows or if the company goes bust or is sold.
In any event, if you're raising capital, highlight the skills, talents and experience of the management team in all your pitches. That is your key to success.
Even if you aren't going to raise outside capital, you still need a strong team to make your business successful. Of course, the first member of your team is YOU. Why are you the person who will create a business that is successful? Do you have experience as an entrepreneur? Do you have experience in the industry? How about your partners or your advisers?
If you just have an idea or a prototype of an invention, can you tap outside experts to help you produce and market your product? Do you have trusted advisers, such as a lawyer or accountant, who can help you? How about a professional strategic planner or operations expert?
Figure out what people you need, whom you want to work with, then get the team together.
But whatever you do, make sure you work out who will contribute what and what each person will receive in rewards. Pay? Stock? Options? Work it out in advance. Then, put it in writing. Get a lawyer to help you craft a document detailing what will happen if the company grows or if the company goes bust or is sold.
In any event, if you're raising capital, highlight the skills, talents and experience of the management team in all your pitches. That is your key to success.
Thursday, August 21, 2008
10 Tips for Starting a Business - Tip # 6 - Get the Word Out
Despite the cliches, if you build it, people will not necessarily come. If you build a better mousetrap, the world will not beat a path to your door.
How will people -- customers -- know that you built the baseball field in the middle of a corn farm or a better mousetrap?
You have to get the word out. You can try word-of-mouth, which marketers sometimes call "viral marketing". That works sometimes. You probably don't have money for a big ad campaign. Lots of dot-coms that advertised on the Super Bowl during the technology boom failed because they spent too much money on advertising and marketing.
What you need to do is make a plan. Figure out who will buy your product and what you need to tell the potential customers about the product or service. Then, figure out the most efficient and effective way to get that message across to the target.
This can be PR -- putting articles into papers, contacting local news TV and radio stations. Or it can be going to trade shows and running small ads in the trade press or getting articles into the trade press.
The most effective and most essential thing you can do, however, is to create a website. It can be simple. But if you optimize it for the search engines, you'll get traffic. You can always refer your potential customers to your website so that they can read your story and see your products or understand your services.
See the article on search engines and local search that is in my list of articles on the right. Free local listings can be highly valuable for a start-up.
Contact me with marketing questions or comments - upstartwyn@gmail.com.
How will people -- customers -- know that you built the baseball field in the middle of a corn farm or a better mousetrap?
You have to get the word out. You can try word-of-mouth, which marketers sometimes call "viral marketing". That works sometimes. You probably don't have money for a big ad campaign. Lots of dot-coms that advertised on the Super Bowl during the technology boom failed because they spent too much money on advertising and marketing.
What you need to do is make a plan. Figure out who will buy your product and what you need to tell the potential customers about the product or service. Then, figure out the most efficient and effective way to get that message across to the target.
This can be PR -- putting articles into papers, contacting local news TV and radio stations. Or it can be going to trade shows and running small ads in the trade press or getting articles into the trade press.
The most effective and most essential thing you can do, however, is to create a website. It can be simple. But if you optimize it for the search engines, you'll get traffic. You can always refer your potential customers to your website so that they can read your story and see your products or understand your services.
See the article on search engines and local search that is in my list of articles on the right. Free local listings can be highly valuable for a start-up.
Contact me with marketing questions or comments - upstartwyn@gmail.com.
Wednesday, August 20, 2008
10 Tips for Starting a Business - Tip #5 - Basic Operations
You're really starting a business. Where is that business going to be? Now is the time to start planning your operations.
Is your headquarters in the basement of your house? Your garage? An empty bedroom? Or are you going to go out and rent a building or a space in a business incubator? This is one of the basic questions you need to answer. How much will it cost to rent space? Do you really need to do this?
One of my clients, a fashion designer, designed all of her creations in her basement. She had her patterns, her computers and her samples all in the basement. To manufacture her clothes, she ordered fabric from France and had it shipped to the manufacturers in New York. There, the pattern makers, cutters and sewers mass produced the clothes. Then, they shipped the clothes (the inventory) to a warehouse. The warehouse shipped everything to the boutiques. It was quite a process. Brigitte, the designer, found that she would need far more volume if she wanted to contract with overseas producers in places like China or Turkey. That's why she manufactured in New York.
Another client, Teroforma has their headquarters in the same building as their warehouse. They do their own shipping to consumers and to retailers. Their inventory is manufactured by artisans overseas. But while the management was finding designers and artisans, they worked out of their house.
Another client, MyBroadway.com, has its production studios for producing proprietary videos in the same building as its offices in New York City. This gives the company a distinct advantage.
What do you need to provide your service or manufacture and sell your product? If you're an inventor, will you license your design or actually manufacture and sell your product?
You need to think all this through and price the alternatives. What will computers cost? Furniture? Overhead? Personnel? Security? Should you lease or buy?
Start doing your homework.
Is your headquarters in the basement of your house? Your garage? An empty bedroom? Or are you going to go out and rent a building or a space in a business incubator? This is one of the basic questions you need to answer. How much will it cost to rent space? Do you really need to do this?
One of my clients, a fashion designer, designed all of her creations in her basement. She had her patterns, her computers and her samples all in the basement. To manufacture her clothes, she ordered fabric from France and had it shipped to the manufacturers in New York. There, the pattern makers, cutters and sewers mass produced the clothes. Then, they shipped the clothes (the inventory) to a warehouse. The warehouse shipped everything to the boutiques. It was quite a process. Brigitte, the designer, found that she would need far more volume if she wanted to contract with overseas producers in places like China or Turkey. That's why she manufactured in New York.
Another client, Teroforma has their headquarters in the same building as their warehouse. They do their own shipping to consumers and to retailers. Their inventory is manufactured by artisans overseas. But while the management was finding designers and artisans, they worked out of their house.
Another client, MyBroadway.com, has its production studios for producing proprietary videos in the same building as its offices in New York City. This gives the company a distinct advantage.
What do you need to provide your service or manufacture and sell your product? If you're an inventor, will you license your design or actually manufacture and sell your product?
You need to think all this through and price the alternatives. What will computers cost? Furniture? Overhead? Personnel? Security? Should you lease or buy?
Start doing your homework.
Tuesday, August 19, 2008
10 Tips for Starting a Business -- Tip # 4 -- What Will It Take?
What is it going to take to start your business?
How will you make and sell your product or service?
How will you get the word out?
Now is the time to start really researching and planning. Do you need an office? A factory? What can you do yourself? What do you need to outsource?
To find out, go out and study similar businesses. Talk to business owners, read articles in the trade press, join trade associations, go to events.
Make a list of questions, then go out and get them answered.
What will it take in time, space and money? Write down the answers. Create a plan for achieving your goals.
How will you make and sell your product or service?
How will you get the word out?
Now is the time to start really researching and planning. Do you need an office? A factory? What can you do yourself? What do you need to outsource?
To find out, go out and study similar businesses. Talk to business owners, read articles in the trade press, join trade associations, go to events.
Make a list of questions, then go out and get them answered.
What will it take in time, space and money? Write down the answers. Create a plan for achieving your goals.
Monday, August 18, 2008
10 Tips for Starting a Business - Tip #3 - The Big Idea
They say that necessity is the mother of invention. That's why big needs help inventive people come up with BIG IDEAS. You know there's a need. You know there's a big, growing market with that need.
How are you going to fill that need? What is your BIG IDEA?
Your idea for filling a need can be born from a passion you have or simply a frustration. That's how Airborne was invented. A second grade school teacher was tired of getting sick. She created an herbal concoction to help her immune system fight off germs. The product is wildly successful.
From the Airborne website: "Airborne is the best-selling herbal health formula that boosts your body's immune system. It was created by a former second-grade school teacher, Victoria Knight-McDowell." http://www.airbornehealth.com/about_index.php
One of my own clients saw a need in the marketplace for videos that enable people to talk about their passions and the products they are loyal to. It's called Loyaltv.com -- www.loyaltv.com. My favorite video on the site is the one about the Camry. That video lets people see so much more about that car than you would ever get from a car commercial or even the Toyota website. This site fills people's needs to learn more about products from real people telling real stories. I'm thinking of going out and making some videos like this myself. I want other people to know about the products I think are great.
Now, some people approach this whole business development dynamic differently. They have what they think is the Big Idea and then look to see if there is a need and a market. That's OK, as long as you have all three elements.
How are you going to fill that need? What is your BIG IDEA?
Your idea for filling a need can be born from a passion you have or simply a frustration. That's how Airborne was invented. A second grade school teacher was tired of getting sick. She created an herbal concoction to help her immune system fight off germs. The product is wildly successful.
From the Airborne website: "Airborne is the best-selling herbal health formula that boosts your body's immune system. It was created by a former second-grade school teacher, Victoria Knight-McDowell." http://www.airbornehealth.com/about_index.php
One of my own clients saw a need in the marketplace for videos that enable people to talk about their passions and the products they are loyal to. It's called Loyaltv.com -- www.loyaltv.com. My favorite video on the site is the one about the Camry. That video lets people see so much more about that car than you would ever get from a car commercial or even the Toyota website. This site fills people's needs to learn more about products from real people telling real stories. I'm thinking of going out and making some videos like this myself. I want other people to know about the products I think are great.
Now, some people approach this whole business development dynamic differently. They have what they think is the Big Idea and then look to see if there is a need and a market. That's OK, as long as you have all three elements.
What is your big idea? Is it big enough to catch on in the marketplace? 8 out of 10 new products die. What will make yours survive?
Wednesday, August 13, 2008
Ten Tips for Starting a Business -- Tip #3 -- Is There a Market?
There may be a need for your product or service, but is it a BIG need? In other words, how big is the market, and is it growing? You need to go out and do some research. The easy way is to do online research. But your public library can help, too, so can trade organizations in your industry.
Once you find out how big the market is, and if it's a growing market, then you need to find out how many competitors there are. Can you compete effectively? Again, you have to do research.
Maybe there is a small niche for your product, where you can fill a need that others can't.
One of my clients was a high-end fashion designer. Her creations were beautiful but very unusual. The market for unusual fashion design is small, and it is very crowded. Yet, she found a niche for her designs and was able to expand her sales by finding the boutiques that catered to the type of woman looking to make her own fashion statements.
Teroforma, which was just profiled in the New York Times Home Section, is in the crowded, large and growing market of tableware. But the company is positioned in the affordable luxury niche, which has virtually no competitors that can match Teroforma's quality or unique designs or sustainable and artisan-crafted manufacturing stories. Such stories resonate with consumers.
Remember:
How big is the market, and is it growing?
What is the competition like?
How are you different? Can you compete?
Once you find out how big the market is, and if it's a growing market, then you need to find out how many competitors there are. Can you compete effectively? Again, you have to do research.
Maybe there is a small niche for your product, where you can fill a need that others can't.
One of my clients was a high-end fashion designer. Her creations were beautiful but very unusual. The market for unusual fashion design is small, and it is very crowded. Yet, she found a niche for her designs and was able to expand her sales by finding the boutiques that catered to the type of woman looking to make her own fashion statements.
Teroforma, which was just profiled in the New York Times Home Section, is in the crowded, large and growing market of tableware. But the company is positioned in the affordable luxury niche, which has virtually no competitors that can match Teroforma's quality or unique designs or sustainable and artisan-crafted manufacturing stories. Such stories resonate with consumers.
Remember:
How big is the market, and is it growing?
What is the competition like?
How are you different? Can you compete?
Tuesday, August 12, 2008
Tip # 2 Continued - The Need - Win Detergent
As I wrote this morning, Tip # 2 - is to make sure your business fills a real need. I just read in the Wall Street Journal an article about the official detergent of the Olympics -- WIN Detergent.
It was developed by a marathon runner who noticed that regular detergents could not get out the odor embedded in his running clothes. High tech fabric captures the sweat molecules, and those molecules attract bacteria.
WIN detergent is specially formulated to get to and dissolve those sweat molecules. Read about it on the WIN website -- http://www.windetergent.com/our_tech.html.
This stuff, according to the Wall Street Journal and to the manufacturer, really works. I think I'll try it. Anyway, it is the official detergent of the Olympic Games. This shows that even small companies can win big. Link to WSJ article: http://online.wsj.com/article/SB121842749618229161.html?mod=hpp_us_entrepreneur#
It was developed by a marathon runner who noticed that regular detergents could not get out the odor embedded in his running clothes. High tech fabric captures the sweat molecules, and those molecules attract bacteria.
WIN detergent is specially formulated to get to and dissolve those sweat molecules. Read about it on the WIN website -- http://www.windetergent.com/our_tech.html.
This stuff, according to the Wall Street Journal and to the manufacturer, really works. I think I'll try it. Anyway, it is the official detergent of the Olympic Games. This shows that even small companies can win big. Link to WSJ article: http://online.wsj.com/article/SB121842749618229161.html?mod=hpp_us_entrepreneur#
10 Tips for Starting a Business - Tip #2
Lots of people want to start a business because they love doing something, such as writing computer code. Others have an invention. Still others just want the freedom to be their own boss.
But the single most important thing you must figure out is if there is a need in the marketplace. Do lots of people have a need for your product or service? Is the need big enough that they will spend money to satisfy that need?
Tip # Find and Fill a Need.
But the single most important thing you must figure out is if there is a need in the marketplace. Do lots of people have a need for your product or service? Is the need big enough that they will spend money to satisfy that need?
Tip # Find and Fill a Need.
Monday, August 11, 2008
Ten Tips for Starting Your Business
Lots of people think about starting businesses. But if you really want to do it, you have to clear away the cobwebs of your mind. You have to start thinking strategically and logically. I don' t mean that you can't have passion. You won't succeed without passion. But you do need to become focused.
Tip 1: Decide what you really want out of your business. Where do you want to be in five years?
Stay tuned. More tips to come.
Tip 1: Decide what you really want out of your business. Where do you want to be in five years?
Stay tuned. More tips to come.
Thursday, August 7, 2008
Teroforma in NY Times
Teroforma, one of my clients, was featured in the Home section of the New York Times today. Teroforma creates unique housewares by pairing cutting-edge international designers with old world craftsmen and artisans. Teroforma's designs are arresting.
The article is at: http://www.nytimes.com/2008/08/07/garden/07goods.html?ex=1375848000&en=17723e5568e4a23c&ei=5124&partner=permalink&exprod=permalink
Teroforma can be found at: www.teroforma.com.
When I called to congratulate Andrew Hellman, the founder, he said that I had been right when I said that as you execute your plan, things will change. Nothing will turn out was you expect. New opportunities and challenges will come up. You just have to grab them and deal with them.
The article is at: http://www.nytimes.com/2008/08/07/garden/07goods.html?ex=1375848000&en=17723e5568e4a23c&ei=5124&partner=permalink&exprod=permalink
Teroforma can be found at: www.teroforma.com.
When I called to congratulate Andrew Hellman, the founder, he said that I had been right when I said that as you execute your plan, things will change. Nothing will turn out was you expect. New opportunities and challenges will come up. You just have to grab them and deal with them.
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