Monday, February 25, 2019

how to start a small business

how to start a small business


How To Start A Startup As A Small Business Owner - Forbes

Posted: 19 Feb 2019 11:01 AM PST

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The Small Business Administration defines a small business as an independently owned entity built for profit and is not dominant in its industry. Startups, on the other hand, are temporary organizations created to search for a repeatable and scalable business model as defined by entrepreneur, author and investor, Steve Blank.

Based on numerous conversations with small business owners interested in building a technology startup, I found that entrepreneurs are mostly intrigued by the scalability and repeatability aspects of a startup that are not feasible under the small business model. In other words, I observed that most small business owners who want to start a startup are looking to build a venture that reaches and serves thousands of customers without necessarily needing hundreds of employees.

A successful small business owner recently told me that 80% of his business expenses are overhead costs that average $450,000 per month. He emailed, "I would rather run a $1 million business with 80% margin than generate $10 million in revenue and only keep $800 thousand."

While simple projections can make sense, building a startup is one of those battles where "everyone has a plan until they get punched in the face," says Mike Tyson. However, just like any business, there are right and wrong ways to start it and there are many strategies by which an entrepreneur can mitigate risk of failure and increase certainty in the path to market and growth.

Here are two important lessons about startups followed by how to start a startup especially if you are currently running a growing small business or have developed expertise in a particular industry.

  1. A Startup Is Not A Small Business

While small businesses execute on a validated business model, startups search for one. Take the example of a restaurant. For as long as we can track humans, selling and trading food were how people survived for thousands of years. The main responsibility of a restaurant owner is to provide quality and accessible food at a price that justifies the value. One startup idea that comes to mind related to restaurants is a food on-demand app. Consumers have been used to buying food a certain way, therefore, the job of the entrepreneur is no longer making and selling the product only but in educating the buyer and validating the on-demand model which may sound viable but is not necessarily valid for every segment.

This important distinction simply means launching a startup with a small business building mindset will rarely work. If you have not previously experienced the ups and downs of startups, it is wiser to hire a mentor and team members who can help you build a valid, viable and valuable solution the right way.

  1. A Startup Is Not An App

According to CB Insights, it costs less than $5 thousand to launch a startup today compared to $5 million twenty years ago. Take a moment and Google, "cost of building an app." Most of the estimates you will find exceed $100 thousand only for the first version of the application. The question is, if it has never been cheaper to start a startup why is the cost of an app in the six figures range?

The truth is, a startup is not synonymous with applications. Apps, web or mobile, are accelerators and, in many cases, not mandatory to launch a startup and deliver a solution. In most cases, entrepreneurs can deliver the desired outcome by leveraging existing tools and by doing things that don't scale.

The founders of the food on-demand application DoorDash used Find my Friend app, their cars and a simple landing page to connect buyers with local restaurants and deliver the food. As CB Insights explains, thanks to open source technology and cloud-based tools, virtually every entrepreneur with an idea and a passion can launch a startup venture quickly and cost efficiently.

Based on conversations with first-time technology startup founders over the years, I found that most entrepreneurs rush into building an advanced application thinking that it is the quality and functionality of the app that determines the success of a startup. Many founders spend over a year and hundreds of thousands of dollars building a product just to realize it isn't solving the right problem, the right way. Instead, here are three key steps that will help you alleviate risk and increase chances of success.

Focus On What You Can Control

If you are brainstorming ideas, keep in mind that your startup is more likely to succeed if you control most of the variables. In other words, ideally, you want to create a scalable solution in an industry you are already in with customers you spent years learning about and serving and with other key stakeholders like partners, suppliers or distributors that you understand and perhaps know.

This scenario will allow you to make wiser hypotheses, avoid many mistakes and accelerate the path to market by creating solutions you know people will pay for if not willing to invest in it before it's launched.

Delay Automation And Focus On Manual Work

As noted earlier, many entrepreneurs at the early stages focus exclusively on creating a web or mobile app which are costly and time-consuming. Instead, find existing tools that you can leverage to solve the problem quickly and cost efficiently.  It took the founders of DoorDash an afternoon to set everything up and receive the first order. They could have spent months building an advanced food ordering app but decided to start by doing things that don't scale, gather customer feedback and generate revenue quickly and then progressively invest in the advance, scalable version of the product.

Forget Ads And Get Your Hands Dirty

One of the advantages of controlling most of the variables as stated earlier is that you can market to a group that knows and trusts you. Nonetheless, many entrepreneurs prefer to invest significant advertisement amounts hoping that this will accelerate growth. In reality, a startup is not at a growth stage until it validates a business model and finds product/market fit. When you use ads to acquire new users, you miss a big part of the opportunity to gain customer feedback and learn what needs to be adjusted and created next. Even billion-dollar companies like Airbnb, Etsy and Uber acquired the first users by personally meeting and assisting them.

It can be enticing for successful small business owners to jump on the tech startup bandwagon especially when cash is no longer a problem. Nowadays, for most startup business models, funding is not a determinant of successful execution and thus taking measurable and educated steps are key to startup success.

How To Fund Your Start-Up Business Idea - Forbes

Posted: 25 Feb 2019 01:54 AM PST

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You've got the idea, the drive, the know-how: how about the capital? Funding is an essential part of any business, as without the seed money you'll be unable to fire the starting gun on your, er, start-up.

Entrepreneurs are an incredibly clever and industrious bunch, but many are in the dark about how best to fund their start-up business, preferring instead to focus their energies on a core offering. One supposes that reviewing funding options can seem like a dull, laborious task when you are devoting time and attention to your genius idea. In any case, great ideas can only fulfil their potential if they are backed by stable investment.

Read on to find out the best ways of obtaining financial backing for your start-up business idea.

1. Pursue a grant

The less monied cousin of a bank loan is a grant. While you shouldn't expect to be cut a massive check, there are dozens of grants available, offered by national and state governments (as well as private enterprises) in the interests of stimulating the economy and growing the jobs market so it's worth checking out your options for funding your startup.

These financial injections can help you save money on premises and fixed rates, purchase cheaper IT or manufacturing equipment and fund staff training. The main drawback, of course, is the fierce competitiveness of such grants, as well as the box-ticking involved: it can be a frustratingly drawn-out process, but that's the tradeoff for retaining equity. In the US, start-up grants are offered by organizations such as Small Business Innovation Research (SBIR), the National Association for the Self-Employed (NASE) and Idea Cafe.

2. Crowdfund

Person's Hand Protecting Stacked Banknotes Surrounded By Human FiguresGetty

Crowdfunding is a favorite of the digital economy, and probably the quickest way of obtaining finance for a new business. You don't even have to be massively tech-savvy to launch a crowdfunding campaign, but what you do need is a compelling pitch, one which strongly references your start-up's potential for growth, as well as a knack for interacting with your cash-rich community. If all goes to plan, you'll have capital you don't need to pay back, without ceding any operational control. As a side benefit, crowdfunding is a nifty form of advertising, a way of stimulating public interest in your company before it's even made its debut. The difficulty, needless to say, is in getting your voice heard in the vast crowdfunding landscape.

3. Family and friends

The idea of hitting friends and family for cash doesn't sit well with some entrepreneurs, but many of the world's top magnates readily admit to borrowing from their social network early in their careers. As such, you should have no compunction about doing the same. Soliciting short- or long-term loans from friends and family might lead to some domestic squabbles down the road, but you won't usually have to pay them back with interest added. Indeed, you might not have to pay loans back at all, depending on the generosity of your creditor. On the other hand, it's not easy to put together a hefty bankroll relying solely on family and friends; and you have to ask yourself whether you really want to risk straining meaningful relationships.

4. Get an angel investor on board

Don't pray to the angels; seek angel investors. Targeting high net-worth individuals who have a track record of supporting start-ups isn't difficult to do, but the challenge lies in convincing them you're worthy of their investment. There are many online angel investment networks, as well as local investor groups you can pitch to in person, so do your research and start submitting your pitches. Find the right angel investor and not only will you benefit from their financial support but also their wisdom: oftentimes, they offer mentorship as a side dish alongside their capital. On the other hand, they generally offer less financial backing than banks and venture capital funds.

5. Raise money yourself

Entrepreneurs are a hardy, headstrong bunch and many elect to fund their business all by themselves. Breezing past the bank, they sell their possessions, save money from their day job, invest in various endeavors and free up capital by remortgaging (OK, that one does require a hasty U-turn to the bank). By going it alone, you'll retain complete control and be unburdened of the interest and strain of other avenues. And this decision has a precedent: over 90% of start-ups get up and running without the aid of loans or grants. On the other hand, raising money can become a full-time job in its own right – taking your attention from your business. To bootstrap or not to bootstrap: that is the question.

6. Seek venture capital

Finding a venture capitalist who shares your vision, or at the very least believes in your ability to turn your idea into a successful, profitable venture, is a good way of raising cash. Of course, you will need a fine-tuned business model, ideally one that's ready to scale. The main con with this option is that venture capitalists are typically looking for the next big thing, and so many entrepreneurs struggle to convey the scale-ability of their enterprise. Venture capital funds, by their very nature, have a short shelf life as they generally seek to recover their investment, turn a profit then move on to the next fresh start-up.

7. Good ol' bank loan or line-of-credit

closeup of a young businessman using a tablet on a table full of chartsGetty

In the modern age, it almost seems anachronistic to seek a bank loan. But if you've a solid credit history or existing assets which you're happy to offer as collateral, as well as a workable business plan with clear profit forecasts, it's still possible to launch your start-up with an infusion of bank cash. The advantages of this option are that you retain full equity, you can feasibly obtain a large figure and that you can build your credit; the negatives are that you'll need to pay back everything, plus interest, or leave yourself vulnerable to bankruptcy.

8. Ditch the bank in favor of micro-finance

Small-scale entrepreneurs can access capital via microfinance, circumnavigating the bank entirely. This is an especially good option for people with a bad credit score or track record, as micro-finance institutions like Non-Banking Financial Corporations (NBFCs) are more willing to green-light loans to individuals normally deemed high-risk. In essence, such organizations exist to promote financial inclusion and cater for those at the bottom of the financial pyramid. Pros: no need for assets, low interest rates. Cons: modest loans, various documentation (references, financial statements, business plan etc.) required.

Conclusion

Needless to say, all of the aforementioned options require a good deal of consideration. What might be right for one budding tycoon may not be right for another. For example, you may have an excellent bank manager whom you implicitly trust, and a robust line of credit, making a bank loan the perfect option. Or you could have a supportive network of financially-secure family and friends willing to back your idea to the hilt. Perhaps a combination of funding options is best, but only you will truly know. The important thing is to go with a funding option with which you are comfortable and confident so that you can focus on turning your business idea into a success.

Saint Vincent center offers advice, connections for small business startups - Tribune-Review

Posted: 24 Feb 2019 10:30 PM PST

Before an entrepreneur reaches the point where they feel comfortable calling themselves a small-business owner, there's the daunting prospect of first starting a business.

In the case of someone like FlexScreen President Joe Altieri of Plum, he was able to put in place a group of investors to help launch his business.

For those who may need advice and a few connections, there are places like the Saint Vincent College Small Business Development Center.

"We work with 'pre-venture' folks as well as existing established businesses," said Jim Kunkel, executive director of the college's center, one of 18 in Pennsylvania.

"In the small-business world, the backbone of financing comes from commercial banks," Kunkel said. "There are a lot of banks out there, and different banks have different cultures and approaches to small-business lending. But that's generally the launch point."

According to the U.S. Bureau of Labor Statistics, 20 percent of small businesses fail within their first year. That number that reaches 50 percent at five years.

With such a high failure rate for U.S. start-ups, banks can sometimes be hesitant to lend. Kunkel said the SBDC also works with alternative lenders: regional or county-based organizations with programs for incubating small business.

"They tend to be a little more flexible in their guidelines. They tend to take a little bit more risk with start-ups, and quite frankly, it's not unusual to see start-ups have both commercial bank as well as alternative-lender participation," Kunkel said.

Lenders also want to see a market analysis, he said.

"They want to see future projections, and they'll send these entrepreneurs to the SBDCs, and we put on paper a vision for the business, and then we try and quantify it," he said.

SBDC officials look at things like annual revenues within the industry an entrepreneur seeks to join, try to determine if there is a local market for such a business and a reasonable opportunity for a new business owner to borrow money and pay it back.

"Small businesses are not profitable right out of the gate," Kunkel said. "So we try and find the appropriate firm for a start-up to get sufficient capital and have a higher probability of success."

Kunkel pointed to the Progress Fund in Greensburg as one example of an alternative lender.

"They're focused primarily on travel and tourism, but they've been around for 20 years or so, and they've lent money to start-ups like microbreweries and bed-and-breakfast places," he said.

The Saint Vincent College SBDC covers Westmoreland and Fayette counties, serving as an outreach to local communities.

"We really are management consultants," Kunkel said.

For more on the SBDC, visit the website StVincent.edu and search "Small Business Development Center."

Patrick Varine is a Tribune-Review staff writer. You can contact Patrick at 412-871-8627, pvarine@tribweb.com or via Twitter .

3 Myths About Starting a Small Business - Business 2 Community

Posted: 30 Jan 2019 12:00 AM PST

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The New Year is here and with it a time to reflect on career goals. Aspiring entrepreneurs who are considering starting a small business in 2019 may find encouragement in new survey results from Kabbage. After polling 600 thriving U.S. small business owners, the survey found that the majority of successful entrepreneurs got started with little cash and short run rates. The survey also demystifies the cash flow obstacles many aspiring entrepreneurs may perceive as reasons to not start a business, when in fact they're all too common.

These are three myths aspiring entrepreneurs should know when starting and building their company.

Myth #1: You Need a Lot of Money to Start. One of the biggest perceived barriers to starting a company is the amount of capital required. In reality, many successful entrepreneurs get started with surprisingly small amounts of money. According to new data, 58 percent of small businesses started with less than $25,000 and one-third of successful businesses started with less than $5,000.

While the amount of capital required to get started may be lower than expected, managing cash flow is critical to growing a company. Many small business owners have begun using online lending platforms that look at a business' live performance data to approve funding instead of old bank statements and dated tax returns. These innovations help small business owners who may not have long credit histories and allows for faster and more flexible access to working capital.

For example, years after Illinois-based couple, Maryla and Derek Bosek, started their kitchen countertop store, Factory Plaza they found themselves struggling with cash flow. Having taken out several loans from their bank to buy a warehouse and cabinet production equipment, they needed more funding to hire a production team to keep up with demand. They turned to online lending and were quickly approved. With that funding, they were able to hire three more people and, as sales grew, eventually increased their production team to 16 people. By expanding their production, Maryla and Darek were able to increase their annual sales by $500,000.

Myth #2 Start a Business In The Industry You Know Best. Forty-one percent of survey respondents started a business in an industry that was new to them. Despite this, 82 percent of respondents did not doubt they had the qualifications and experience to successfully run a company.

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While confidence is key, no business owner should go it alone. Aspiring entrepreneurs should find a mentor or advisor in their industry who can help them avoid mistakes, keep an eye on long-term goals, anticipate upcoming expenses and give objective advice about cash flow issues. For those searching for a mentor, try connecting with industry contacts on LinkedIn, join a trade association or look at SCORE for opportunities.

Myth #3 Being a Business Owner Means Doing It All. Another common misconception is that business owners should both know how to do and manage every aspect of operating a business.

According to the survey, the areas of business in which entrepreneurs had the least amount of experience when they started their company was financing/bookkeeping, legal/compliance and marketing/advertising. To free up time that could be focused on bringing in new customers, hire consultants or part-time freelancers to manage tasks that you are unfamiliar with or that are time consuming.

Small businesses can also benefit from using technology to automate different aspects of business operations. Technology platforms can help manage tasks like resource scheduling, inventory management, digital marketing and customer service. Having the right tools in place can improve operational processes, reduce paperwork, increase efficiency and even improve worker productivity. Remember: a smart investment in your business is one that will secure its future.

10 unmissable new books to help you start a creative small business - Creative Boom

Posted: 18 Feb 2019 02:30 AM PST

Looking to start a creative small business, or already running one and trying to improve it? There's no need to waste time and energy reinventing the wheel.

Countless entrepreneurs have done what you're doing now, and for just a small amount of money, you can learn crucial lessons from their experience that can make a big difference to the performance of your business.

In this article, we've collaborated with Coconut to bring together our favourite new books that can help you start a creative small business. Each takes a different angle, but all of them impart crucial and original advice that can really help you make a success of your venture.

1. Company of One: Why Staying Small is the Next Big Thing for Business, by Paul Jarvis

Once, people assumed that the key to success was to create and scale up a new business; the bigger it became, the more successful you were. However, this book by Paul Jarvis - a veteran of the online tech world - turns all that on its head.

Instead, he argues that in the modern world, success in business means being able to work for yourself, determine your own hours and become a highly profitable and sustainable company of one. In short, the smarter solution is to ignore convention and remain small.

This refreshing text not only introduces this unique strategy but explains how to make it work for you, including how to set up, generate sustainable cash flow, determine your desired revenues, keep your clients happy... and all on your own. In short, it's about how to find a business that works for you, rather than the other way around.

Priced at £9.74 | Buy the book

2. Atomic Habits: An Easy and Proven Way to Build Good Habits and Break Bad Ones, by James Clear

Although this is not a book about running a business per se, it's one that every small business owner can potentially benefit from. In it, James Clear - an author, trainer and a regular speaker at Fortune 500 companies - outlines four laws to help you set and maintain good habits. That might sound relatively trivial, but it could potentially change your life and fortunes dramatically.

Clear's writing is clear, focused and practically minded; he offers not just theory, but the background, context and useful examples to outline his advice. There's also a lot of links to downloadable support material.

If you suspect that your career development is being held back by bad habits, whatever they may be, then this is a must-read that could unlock a whole new level of potential for your creative business.

Priced at £10.20 | Buy the book

3. Hyperfocus: How to Work Less and Achieve More, by Chris Bailey

If you want your creative business to be more successful, then your instinct may be telling you that you need to "work harder". If so, your instinct is almost certainly wrong. Business success is invariably about working smarter, not harder, and that's the basic premise of this book by Chris Bailey.

Better productivity is not about time management, he believes, but attention management. We need to master the art of what he calls "hyperfocus", which he contrasts with "scatter focus"; a state of distraction when our mind constantly wanders. Bailey offers plenty of information, examples and advice on how to achieve this in practice, and it all adds up to a compelling, potentially life-changing read for any small business owner.

Priced at £7.77 | Buy the book

4. She Means Business: Turn Your Ideas into Reality and Become a Wildly Successful Entrepreneur, by Carrie Green

There's never been a better time to build a business online and in this book, Carrie Green - founder of the Female Entrepreneur Association - shows you how.

Green started her first online business at the age of 20, and so she knows all about the challenges that face you, including the common mental struggles entrepreneurs face. Based on her personal, tried-and-tested experience, she offers valuable guidance and powerful exercises to help you get clear on your business vision, move past fears and doubt, create your brand and build a "tribe" of fans, subscribers and customers.

In short, this book will provide all the honesty, realism and practical tools you need to bring your creative business vision to life.

Priced at £5.49 | Buy the book

5. This is Marketing: You Can't Be Seen Until You Learn To See, by Seth Godin

Marketing guru Seth Godin is considered something of a publishing legend and for good reason; he has a knack of getting right to the nub of the matter, avoiding any need for jargon or lengthy explanation.

At the heart of this book is a radical idea: truly powerful marketing is grounded in empathy, generosity, and emotional labour. And businesses that use marketing to solve people's problems and make the world better, will ultimately be the successful ones.

This book teaches you to do just that. It walks you through how to identify your smallest viable audience; draw on the right signals to position your offering; build trust and permission; speak to the narratives your audience identifies with, and give people the tools to achieve their goals. A fascinating read, and a potential game-changer.

Priced at £9.34 | Buy the book

6. Entrepreneur Revolution: How to Develop your Entrepreneurial Mindset and Start a Business that Works, by Daniel Priestley

This book starts from the premise that we are living in revolutionary times; times with an impact as significant and far-reaching as the previous Industrial Revolution was to the Agricultural Age. And that's because small business can now have a global footprint, can be structured in low tax environments, move products anywhere in the world, and access unprecedented levels of support.

Author Daniel Priestley, who's built and sold businesses in Australia, Singapore, and the UK, proceeds to offer a masterclass in gaining an entrepreneurial mindset. This book explains how to change the way you think, the way you network, and the way you make a living. As a result, you'll be able to "quit working so hard, follow your dream, and make a fortune along the way".

Priced at £8.13 | Buy the book

7. Start Now. Get Perfect Later, by Rob Moore

One of the biggest problems many would-be entrepreneurs face is actually starting, and not becoming crippled by indecision and fear of failure. In this book, successful entrepreneur and bestselling author Rob Moore, explains that the quickest way to perfect is actually starting right now and improving as you go.

This book will show you how to launch your business or idea, begin the next phase of your career, and overcome self-doubt without prevarication. If you feel you can never launch a business until you're 100 per cent sure - but doubt you ever will be - this is a must-read for you.

Priced at £8.68 | Buy the book

8. Self Made: The definitive guide to business startup success, by Bianca Miller-Cole

Written by two young British entrepreneurs, runner-up of The Apprentice Bianca Miller and serial entrepreneur Byron Cole, this book is a comprehensive toolkit for anyone who wants to make a success of running their own business.

Featuring interviews with well-known entrepreneurs, entertainers and industry experts, the book covers every tier of the business development process, from start-up to exit, offering practical, implementable and global advice on the startup process. A great combination of straightforward jargon-free advice and enlightening anecdotes from real entrepreneurs.

Priced at £10.40 | Buy the book

9. Defining You: How to profile yourself and unlock your full potential, by Fiona Murden

Psychometric profiling is used widely in business to select job candidates at a high level, but have you ever wondered what a session would tell you about yourself? Here chartered psychologist Fiona Murden guides you through the process in private, to help you discover your strengths, understand what really drives you and learn which environments will help you to excel.

Our behaviour is at the core of what we do, and so this self-awareness toolkit aims to help you understand both your own and other's behaviour and to positively influence it. You may even start to sleep better, think more clearly and have good moods more often as a result.

Priced at £12.99 | Buy the book

10. Exactly What to Say: The Magic Words for Influence and Impact, by Phil M. Jones

Succeeding in business is often down to good communication, but despite our best intentions, we often say the wrong thing in the stress of the moment. Phil M. Jones has trained more than two million people across five continents and over 50 countries in the art of spoken communication. In this practically focused book, he delivers the tactics you need to get more of what you want.

Priced at £9.19 | Buy the book

Creative Boom is a participant in the Amazon EU Associates Programme, an affiliate advertising programme designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.co.uk.

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