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Today digital technologies are essential parts of successful businesses, it is not more digital technology as the side kick in the business world, it’s now digital technology as the core, the heart of the business.
What exactly is Digital Disruption?
Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.
It shows how much the digital world has changed the business side of things.
We found this internal slide from IBM from a presentation about entrepreneurship, the slide mentions some examples of how digital disruption has already happened and will continue happening changing the way business interact with customers and each other.
• Most popular media owner creates no content (Facebook)
• Worlds largest taxi company owns no taxis (Uber)
• Largest accommodation provider owns no real estate (airbnb)
• Largest phone companies own no telco infrastructure (Skype, WeChat)
• Worlds most valuable retailer has no inventory (Alibaba)
• Fastest growing banks have no actual money (SocietyOne)
• Worlds largest movie house owns no cinemas (NetFlix)
• Largest software vendors don’t write the apps (Apple & Google)
So tell us what do you think about digital disruption?
Check out this video
Digital Disruption: Unleashing the Next Wave of Innovation
**Author: Steve Ivey** Edited by V Simon
So you want to be a Florida business owner, master of your own destiny?
Which came first – The Chicken or the Egg–
The age old question in the title might be worth thinking about. Should you do a start-up with an egg or should you buy some chickens? A silly analogy? Maybe not.
Many people dream of starting a venture and becoming a business owner in Florida. I’ve helped several hundred wannabe-entrepreneurs work through this process. Many come in with the egg in hand, delicate, carefully guarded and full of promise. Perhaps they’ve decorated the egg to make it look more attractive and more advanced than other eggs. Convinced that their egg is unique yet they really aren’t quite sure what it will be when it hatches. They rarely consider that it may not hatch at all. After a time of incubation where you’ve kept it warm and looked at it all hours of the night maybe even added a few more colors to it, it hatches.
You have a chick! They are furry, loud and ready to be fed. It was a chicken after all and you are very proud of this new creature, you probably give it a name even though you can’t tell whether it’s male or female (which is very difficult in young chicks). A few days later you realize that you’ll need another egg or have to buy another chicken to mate with yours or your precious egg, after lots of feed and care, will have provided you with 1-chicken dinner and be gone. Your great idea didn’t produce much and you really were never in business.
Of course, you are smarter than that so you had several eggs or a partner who also had an egg that was compatible with your egg, Hmm, more about that another time. The point or question is: did you save time or resources by starting with the egg versus buying some chickens? Both actions will get you to the same place of beocming a business owner in Florida. You thought the egg route would be simpler and cheaper, let’s explore that.
Business ownership: A Going Concern or Start from Scratch
Previously we were discussing, not whether to go into business, but the decision of which method made sense for you. A chicken or egg scenario, do you start from scratch with just an egg? An idea that has yet to hatch but holds great promise or do you purchase some chickens, a going concern that is producing revenue and , hopefully, income.
Under the egg method you must have time: Time to weather the delays of a startup, the lack of customers, employees, revenues and spendable income. In fact the reality is you will most likely go deeper in the debt hole having no personal income for many months if not years. Do you have that kind of staying power (reserves)? Investors, if you can find any, will not allow you to spend their money on your living cost. So for sake of analysis let’s examine which is better, the chicken or the egg.
Your egg has a cost obviously much less than buying a group of chickens, but it does not produce current income. Let’s say you have spent $50k on your egg (idea) so far. Even when it hatches you’ll have to build up your “coup” of chickens letting other eggs hatch not taking income while this process build. You now have another $200k sunk into your business and / or debt from living expenses.
At $250k you could have bought a chicken farm, a revenue producing enterprise. You’d have debt but also income. You’d be buying a proven business because you did your due diligence, and know the stream of revenue the business has been producing. You might have to spend a few dollars for sprucing up the business; perhaps a new marketing campaign but you have INCOME!
But my egg is a fantastic idea. Could be? I hope so. BUT 75% of all new businesses fail by or before year 3 and 85% by year 5, Risky? You bet! Still want to be in business? Good. We’ll discuss alternative ways to make that happen while lowering the risk next.
Choosing Franchise Ownership over Starting from Scratch
So if I scared you by telling you before that about the 85% failure rate, you are now being realistic about your chances. I also promised a way to get into being a Florida business owner that is less risky, ready?
I’m writing this to both newbies and serial entrepreneurs; consider a proven concept with a well-established franchise. Of course you already know all about that and have been receiving vast amounts of promotional material from various Franchise development departments. They want you to buy a NEW location. While their concept might be proven, locations seldom are. However, good Franchisors have good methods for picking locations. So what do I have to say that’s different?
I suggest you seek out existing franchises that are either underperforming or the owner (franchisee) just needs or wants to get out. Franchisors know about these folks but will not suggest this upfront as their fees are much less when a transfer is made. In fact at any one time at least 20% of a Franchise portfolio is in transition or the Franchisor is looking to move out a poorly performing location because the owner is just a bad manager or lazy thinking he or she didn’t have to work at the business. This can be the “chicken” way of getting into business as there are good records and you’ll know what you are getting into. Plus, it will have revenues day one! You will most likely get into this existing location around 30% less than if you had started it. Now that’s a better deal. We like to be creative in finding deals for folks.
For you serial business folks with deeper pockets, there are often groups of locations available for many of the same reasons above. You can buy the whole package or pick and choose for a slightly higher price. Either way you get a viable, ongoing group of locations priced based on their current performance not the excellent performance you will get out of them once you apply your smart management talents.
Are you considering selling your business? We can help you. Contact us here
Here are four areas where investing in startups and the private markets is superior to investing in Wall Street:
Investing in a Startup gives you unmatched access to the company and its affairs. You get to see minute details that you could only guess in a public company.
Legal Insider Information
According to Jason Cohen, “They say the only way to consistently make money on Wall Street is to have insider information. Unfortunately it’s not a joke, and although it’s illegal (and people sometimes go to jail for it ), those in the know will tell you it’s the norm.” Remember the Martha Stewart Case anyone? Investing in an startup gives you legal insider information on a level that could send you to jail on Wall Street.
Simply put, arbitraging is buying in one market and selling in another while taking advantage of price differences. For savvy investors, startups present opportunity to buy low and sell high when the company is either acquired by a bigger competitor or it goes public through an IPO – which is simply a process designed for early investors to cash in on their investment.
Present at Creation
A startup is a creative force. At best, it is an innovative engine designed to push the limits of current dogmas. Startups investors are the grease that keeps this creative engine moving and they get to be present at the inception of such creative endeavors. America runs on innovation, startups thrive on innovation and startup investors fund such an innovation.
This article is based on an article first published on 2011 by Joe Alvarez Jr.
Investor’s investment criteria in rough order of importance for all investors
Source – Harvard Business School Division of Research
Enthusiasm of entrepreneur
Trustworthiness of the Entrepreneur
Sales potential of the product
Expertise of the Entrepreneur
Investors liked entrepreneur upon meeting
Perceived financial reward
Growth potential of the market
Quality of the Product
Track record of the entrepreneur
Angel groups expose entrepreneurs to a wide set of potential investors. At NewGate Capital Partners, our structured process facilitates a relatively quick and efficient investment decision. We provide insight through ongoing coaching and mentoring from seasoned entrepreneurs and executives.
For more info check out this guide Angel Investing 101
Want to know more? visit us at http://www.newgatecapitalpartners.com/capital-angels/entrepreneurs/
For the Complete list look below:
Previously we were discussing, not whether to go into business, but the decision of which method made sense for you. A chicken or egg scenario. Do you start from scratch with just an egg? An idea that has yet to hatch but holds great promise or do you purchase some chickens, a going concern that is producing revenue and , hopefully, income.
Under the egg method you must have time. Time to weather the delays of a startup; the lack of customers, employees, revenues and spendable income. In fact the reality is you will most likely go deeper in the debt hole having no personal income for many months if not years. Do you have that kind of staying power (reserves)? Investors, if you can find any, will not allow you to spend their money on your living cost. So for sake of analysis let’s examine which is better, the chicken or the egg.
Your egg has a cost obviously much less than buying a group of chickens. But it does not produce current income. Let’s say you have spent $50k on your egg (idea) so far. Even when it hatches you’ll have to build up your “coup” of chickens letting other eggs hatch not taking income while this process build. You now have another $200k sunk into your business and / or debt from living expenses.
At $250k you could have bought a chicken farm, a revenue producing enterprise. You’d have debt but also income. You’d be buying a proven business because you did your due diligence and know the stream of revenue the business has been producing. You might have to spend a few dollars for sprucing up the business; perhaps a new marketing campaign but you have INCOME!
But my egg is a fantastic idea. Could be, I hope so. BUT 75% of all new businesses fail by or before year 3 and 85% by year 5. Risky? You bet! Still want to be in business? Good. We’ll discuss alternative ways to make that happen while lowering the risk next.
Million dollar myth: Sydney Angels co-founder Hamish Hawthorn says as little as $15,000 can get you access to an angel investment opportunity, and it’s not only grey-haired men that participate.
“MYTH: ANGEL INVESTMENT DOESN’T DELIVER RETURNS
Angel business investments are certainly a high-risk area. Half of all startups, even after good screening, due diligence and post-business investments help, will fail to return what was invested. But these losses can be more than compensated by the few that return 10-30x the initial investment. The key to making returns is to have a portfolio of enough investments to contain some of these big winners. Those who use a disciplined investment process to build portfolio can see extraordinary returns from the startup sector over time.
A large-scale study undertaken by the Kauffman Foundation and NESTA found that angel investors in the US and UK generated an average return of 2.5 times the amount invested in a mean time of four years from investment to exit, equating to a very healthy 26% internal rate of return. “
Excerpt taken from article: “We’re not all retired blokes, and 4 other angel investor myths busted” by Sydney Angels co-founder Hamish Hawthorn http://www.brw.com.au/p/entrepreneurs/hamish_busted_sydney_angels_retired_O6yEoclYtKcIHAJ0S1n56H
QUESTION: Which one of the reasons below does the Entrepreneur have the least amount of control over? Interesting…
- Timing 42%
- Team/Execution 32%
- Idea “Truth” Outlier 28%
- Business Model 24%
- Funding 14%
From: “Ted talk on the single biggest reason why start-ups succeed:”
Young, starry-eyed startup founder comes in to pitch investors for funding.
He clicks crisply through his deck. He describes his product (patent-pending, of course), its features, benefits, and how 1% market share is enough to place everyone in the company on the Forbes list of richest people in the world.
Then the team slide comes up on the screen and the entrepreneur puffs up his chest, clears his throat, and announces that (just so you know) the CTO (or some other C-Suite position) of the company is an ex-IBM executive (or an ex-HP executive, or any other big, public company).
He pauses and looks around the room proudly. Almost as if he was expecting a standing ovation.
Oh, by the way, the company has raised $20 million so far, burned more than 50% of that on overhead (logo design, focus groups, salaries, and such), and hopes to have a minimum viable product in 24 months. Just as soon as this round of funding is completed.
See any problem with this picture?
Several actually. Let’s address just one today.
If you haven’t taken your product and service to market, if you do not yet have product-market fit, hiring an ex-Google COO to impress potential investors will almost certainly spell doom for your startup.
One, your startup IS NOT a smaller version of a big, public company (HT Steve Blank). Your social media startup and Facebook are two totally different animals. One is a cute, needy kitten; the other is a full-grown lion. Your startup (the kitten) has different needs and needs a different set of competencies than a fully-functioning company.
Second, drawing from one above and quoting Ben Horowitz in his must-read book, “the job of a big company executive is very different from the job of a small company executive.”
To a big company executive (used to big budgets), that $2 million you plan to raise to take your product to market is just furniture allowance.
Former big company executives come with big company habits that could be deadly to your startup. Habits like sending everything to focus groups, analysis paralysis, bureaucracy, ego mania, and waiting for things to happen instead of making things happen (among others).
Bottom line: buyer beware.
Yes, you might need an Eric Schmidt or Sheryl Sandberg for “adult supervision” However, hire one with your eyes wide open and only when your startup has taken off and is approaching cruising altitude.