One of the most common mistakes entrepreneurs make is thinking that they have no competition. I can't tell you how many have told me that their idea is so new and innovative that no competitors exist at all. But the truth is that some other product or service is competing for the customer's time, attention and money. Investors know this. They always look askance at businesses that claim no competitors. Investors want to read a good competitive analysis and know that you know what your competitive advantage is.
You may just have to think more broadly. Who is a partial competitor? Who is in a related industry who might jump into your category and become a competitor?
I just read a great quote from Mike Linton, who is the former CMO for Ebay and Best Buy, which shows how even large, established industries don't always understand who their true competitors are. Read it, and think of how this might apply to your business and category. The quote appeared in Ad Age.
"Don't be blindsided by the competition and get lost in what innovation is.
Record labels still believed they were each other's competition even as they engaged in legal battles with music download, peer-to-peer sites and the consumers who used those sites. They didn't see that consumers were bypassing the $19.99 CD en masse while Apple created a colossal digital-music franchise."
Showing posts with label start-up tips. Show all posts
Showing posts with label start-up tips. Show all posts
Friday, September 11, 2009
Saturday, August 8, 2009
Start-Up Tips for Nonprofits - Get a Fiduciary
As a member of the board of advisers for two start-up nonprofits, I've learned a secret: You need a fiduciary sponsor. In other words, you need an established nonprofit to help incubate your start-up nonprofit. Aging in Place in Darien, for example, is being sponsored by the Community Fund of Darien. All fund raising is done under the Community Fund banner, and then the money designated for AIP gets funneled to us. This way we get to make sure our concept, mission and vision are all viable. We can fine-tune our strategic business plan. And if we decide that we are worthy enough to become an independent nonprofit, we have an office to work from and funds to keep us going as we fill out all the forms for the state and the IRS.
It helps to be able to show the IRS that the organization is a viable one that meets a real public need. All the business details that IRS wants to know about, we can answer because we have been up and running.
The key to finding a fiduciary to accept donations and provide incubation is discovering one whose mission meshes with your own. Then, you need to work out a contract that stipulates how you will interact with each other. There are lawyers who specialize in such matters. Go out and find one -- preferably one that will do the work pro bono or for a reduced fee.
It helps to be able to show the IRS that the organization is a viable one that meets a real public need. All the business details that IRS wants to know about, we can answer because we have been up and running.
The key to finding a fiduciary to accept donations and provide incubation is discovering one whose mission meshes with your own. Then, you need to work out a contract that stipulates how you will interact with each other. There are lawyers who specialize in such matters. Go out and find one -- preferably one that will do the work pro bono or for a reduced fee.
Friday, July 24, 2009
Business Tip - Deliver Great Customer Service
When I deal with a company of any size, I want to be treated well. I want polite and intelligent salespeople, customer service reps. and tech. support experts.
When I write business plans for start-ups, I always ask what the plan is for customer service. To me, customer service is a key component of your business and marketing plans. You can have all the advertising and PR in the world but drive customers away with poor customer service. Not only that, but you'll gain great word-of-mouth advertising, if your customers are happy. That's because customers are more likely to sing your praises when satisfied and tell everyone they know how much they dislike your company when dissatisfied. They'll even tell people they don't know by broadcasting dissatisfaction on the Internet. Just think of the songwriter who put a song about United breaking his guitar on YouTube, or the current diatribe about cell phone companies in the NY Times.
You want great PR - great viral marketing - great word-of-mouth recommendations.
Zappos is a company that has become incredibly successful because of its great customer service. Business Week and Advertising Age have both run articles about Zappos's customer service recently. I highly recommend the articles: http://www.businessweek.com/magazine/content/05_49/b3962118.htm. Zappos essentially brings the shoe store to you via the Internet.
So as you plan how you'll start up or how you'll grow, remember to build in a plan for terrific customer service.
When I write business plans for start-ups, I always ask what the plan is for customer service. To me, customer service is a key component of your business and marketing plans. You can have all the advertising and PR in the world but drive customers away with poor customer service. Not only that, but you'll gain great word-of-mouth advertising, if your customers are happy. That's because customers are more likely to sing your praises when satisfied and tell everyone they know how much they dislike your company when dissatisfied. They'll even tell people they don't know by broadcasting dissatisfaction on the Internet. Just think of the songwriter who put a song about United breaking his guitar on YouTube, or the current diatribe about cell phone companies in the NY Times.
You want great PR - great viral marketing - great word-of-mouth recommendations.
Zappos is a company that has become incredibly successful because of its great customer service. Business Week and Advertising Age have both run articles about Zappos's customer service recently. I highly recommend the articles: http://www.businessweek.com/magazine/content/05_49/b3962118.htm. Zappos essentially brings the shoe store to you via the Internet.
So as you plan how you'll start up or how you'll grow, remember to build in a plan for terrific customer service.
Friday, June 26, 2009
Small Business Tips: Get a Web Site
I am about to renovate a bathroom. I began my search for a new vanity by going online to see what my local kitchen and bath stores had to offer. I came up dry. One place I used for my last renovation three years ago still has no Web site! It has a listing on Yahoo! yellow pages, but it has nothing to click-through to. Other places with Web sites had sites with nothing to look at. They say they have to come out and measure and design. Guys! Give me some choices online. Give me some ideas. Don't make me drive all over.
If you want to sell, if you want customers to come in the door, you need a Web site. The Web site is your gateway to the world, even with a local business. These small business owners have no idea that local people search locally. I read recently that about 30% of small, local businesses still don't have a Web presence. That is crazy. The majority of people have broadband and shop online.
But the big companies are no better. Kohler's site is too hard to navigate.
I finally went to a kitchen and bath store and sat down with a salesman. He took me all over the store, gave me two thick catalogs, and wrote up a computerized proposal. He kept up-selling. Maybe that's why the places don't have Web sites. They want to up-sell. But you need people to come in the door first. Let customers find you on the Web.
If you have a business, put up a Web site. You can do it cheaply -- about $10 per month for an off-the-shelf template -- or very well -- thousands of dollars for a great site with all sorts of capabilities.
Let the public get to know you online. Bring in the traffic. Research shows that most people shop online and buy in the bricks and mortar store. I repeat - if you have a business, you need a Web site.
If you want to sell, if you want customers to come in the door, you need a Web site. The Web site is your gateway to the world, even with a local business. These small business owners have no idea that local people search locally. I read recently that about 30% of small, local businesses still don't have a Web presence. That is crazy. The majority of people have broadband and shop online.
But the big companies are no better. Kohler's site is too hard to navigate.
I finally went to a kitchen and bath store and sat down with a salesman. He took me all over the store, gave me two thick catalogs, and wrote up a computerized proposal. He kept up-selling. Maybe that's why the places don't have Web sites. They want to up-sell. But you need people to come in the door first. Let customers find you on the Web.
If you have a business, put up a Web site. You can do it cheaply -- about $10 per month for an off-the-shelf template -- or very well -- thousands of dollars for a great site with all sorts of capabilities.
Let the public get to know you online. Bring in the traffic. Research shows that most people shop online and buy in the bricks and mortar store. I repeat - if you have a business, you need a Web site.
Friday, June 19, 2009
Start-Up Tip - How Will You Make Money?
In an era when companies like Twitter can raise millions in capital and have no revenues flowing in, you may wonder why your business needs revenue or profits to exist or to raise capital. Twitter is simply in a league by itself. Investors invested in young, smart people with track records. That can happen -- but not very often.
The average Joe or Jill has to be able to demonstrate to investors that their business idea can make money. That means you need to plot out how you're going to do it. I've had all sorts of ideas of how I'd make money, if I were running Twitter, but they are not about to hire me. I'm not young and hip.
Making money is not that mysterious. You make a product or create a service, and you sell it to customers. Of course, Twitter doesn't sell its service. Google doesn't either. But Google does sell pay-for-performance advertising.
So, ask yourself -- What am I selling? What can I charge? With pay-per-click or pay-for-performance advertising, the market determines what you can charge. Demand drives the price and the volume because advertisers bid on the keywords they are buying. This works the same on Bing, Yahoo! and other pay-for-performance search engines and ads.
But what if you sell knives? You have a great design. Where will you sell it? What will you charge? How will you get it to consumers? What will it cost to manufacture? All these calculations go into figuring out how you're going to make money. Even if you don't like to do math, learning to do this kind of math is essential (and fun) because it empowers you to understand your business. Entrepreneurs who understand their businesses can more easily raise money and can have an easier time making money.
Take a look at other products on the market and see what price points they sell at. Find out what the sales volume is. Think about your wholesale price to your customers and how that will compare to the retailers' final price to consumers. Figure out the mark-ups and the profit margins. What is normal in your industry?
And while you're at it, remember the importance of having a brand. It doesn't cost a lot to make Nike sneakers, but Nike charges a lot for them because of their brand name. Can you create a valuable brand like Nike or Google? Even Twitter has become a valuable brand because of all the people using it. It's helping to fuel the revolution in Iran. How powerful is that?
The average Joe or Jill has to be able to demonstrate to investors that their business idea can make money. That means you need to plot out how you're going to do it. I've had all sorts of ideas of how I'd make money, if I were running Twitter, but they are not about to hire me. I'm not young and hip.
Making money is not that mysterious. You make a product or create a service, and you sell it to customers. Of course, Twitter doesn't sell its service. Google doesn't either. But Google does sell pay-for-performance advertising.
So, ask yourself -- What am I selling? What can I charge? With pay-per-click or pay-for-performance advertising, the market determines what you can charge. Demand drives the price and the volume because advertisers bid on the keywords they are buying. This works the same on Bing, Yahoo! and other pay-for-performance search engines and ads.
But what if you sell knives? You have a great design. Where will you sell it? What will you charge? How will you get it to consumers? What will it cost to manufacture? All these calculations go into figuring out how you're going to make money. Even if you don't like to do math, learning to do this kind of math is essential (and fun) because it empowers you to understand your business. Entrepreneurs who understand their businesses can more easily raise money and can have an easier time making money.
Take a look at other products on the market and see what price points they sell at. Find out what the sales volume is. Think about your wholesale price to your customers and how that will compare to the retailers' final price to consumers. Figure out the mark-ups and the profit margins. What is normal in your industry?
And while you're at it, remember the importance of having a brand. It doesn't cost a lot to make Nike sneakers, but Nike charges a lot for them because of their brand name. Can you create a valuable brand like Nike or Google? Even Twitter has become a valuable brand because of all the people using it. It's helping to fuel the revolution in Iran. How powerful is that?
Friday, June 12, 2009
Start-up Tip - What Will It Cost to Start Your Business?
When a group of entrepreneurs called me a few months ago about editing their business plan, I asked them how much money they wanted to raise. They said $150 million! I truly could not believe my ears. How could a new venture possibly cost that much?
Well, they were planning on purchasing all sorts of heavy equipment to create a renewable energy business and setting up shop in several states. Another potential client needed $1.5 million to pay lobbyists to help effect legislative changes that would make their business more viable and create demand.
Even in a booming economy, these are not reasonable start-up expenses, in my humble opinion.
But in a recession, you really need to consider bootstrapping. Start as small as you can and expand organically, plowing profits back into the business. Capital has dried up. Banks still are not lending; lines of credit are shrinking; friends and family don't have disposable cash to lend or invest; VCs and angels are pickier than ever.
So you need to ask yourself, what is the minimum I need to get started? Write down the expected expenditures on paper or in a financial computer program like Excel. Make yourself a spread sheet. Think of the cash that will need to come in to cover monthly expenses and capital expenditures. Ask yourself if you can go without a salary? Without benefits?
Here are items you need to think of:
Cost of you producing your product:
Raw materials
labor
machinery
warehousing, picking and shipping
Overhead:
office or factory or warehouse space
some office equipment
supplies
communications
IT
legal
accounting
insurance
travel
entertainment
marketing - advertising, pr, promotion, website, branding, graphic design, trade shows, etc.
patents
Depreciation
Interest
Taxes
Capital expenditures and leases
cars
equipment
land
software
The list goes on -- What can you do without? What is essential? Do you need to create samples? Brochures?
Figure it out and write it down.
If you need help, go to the Small Business Administration (www.sba.gov). I also consult or can provide my written guidelines to financial planning. email me at upstartwyn@gmail.com -- I know how to demystify financial projections and using Excel.
www.upstartbusinessplanning.com.
Well, they were planning on purchasing all sorts of heavy equipment to create a renewable energy business and setting up shop in several states. Another potential client needed $1.5 million to pay lobbyists to help effect legislative changes that would make their business more viable and create demand.
Even in a booming economy, these are not reasonable start-up expenses, in my humble opinion.
But in a recession, you really need to consider bootstrapping. Start as small as you can and expand organically, plowing profits back into the business. Capital has dried up. Banks still are not lending; lines of credit are shrinking; friends and family don't have disposable cash to lend or invest; VCs and angels are pickier than ever.
So you need to ask yourself, what is the minimum I need to get started? Write down the expected expenditures on paper or in a financial computer program like Excel. Make yourself a spread sheet. Think of the cash that will need to come in to cover monthly expenses and capital expenditures. Ask yourself if you can go without a salary? Without benefits?
Here are items you need to think of:
Cost of you producing your product:
Raw materials
labor
machinery
warehousing, picking and shipping
Overhead:
office or factory or warehouse space
some office equipment
supplies
communications
IT
legal
accounting
insurance
travel
entertainment
marketing - advertising, pr, promotion, website, branding, graphic design, trade shows, etc.
patents
Depreciation
Interest
Taxes
Capital expenditures and leases
cars
equipment
land
software
The list goes on -- What can you do without? What is essential? Do you need to create samples? Brochures?
Figure it out and write it down.
If you need help, go to the Small Business Administration (www.sba.gov). I also consult or can provide my written guidelines to financial planning. email me at upstartwyn@gmail.com -- I know how to demystify financial projections and using Excel.
www.upstartbusinessplanning.com.
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