For a small business to flourish and a small business owner to keep his or her sanity productivity is critical . It might be hard to see sometimes but simply making minor changes can improve the efficiency of your workflow ten fold. We’ve gathered several suggestions from around the web that you you can start using today to help get things done faster.
Have a List of Priorities – As an owner of a small business, you probably have a to-do list at hand. The question is, are the items on your list sorted out? Prioritizing means arranging your tasks according to urgency or importance. To sort out your priorities, rank your tasks according to:
Want to Do
Will Do Whenever Convenient
Break Projects into Smaller Goals – Some projects are too big to tackle at once, like writing that TPS report or launching a newsletter. Their size creates inertia. And you end up doing nothing. But if you can break each project into smaller goals, those subtasks become easier to swallow. For example, you might decide to:
Write page 1 of the TPS report by the end of today
Draft a bulleted outline of your newsletter by noon
This approach helps you overcome inertia, so you start getting things done.
Learn How to Delegate – Whether you are working with a virtual staff or in-house assistants, ease up some control over your obligations and let other people take care of them. This doesn’t mean avoiding the things you don’t like doing. Recognize which jobs other people are better at and let them handle those for you.
Keep Meetings Short – Before you decide to round up your team for a meeting, consider if the agenda can be sent or discussed through email. If not, keep meetings as brief as possible. If you’re meeting with an in-house staff, have the discussion while standing up. People will be more alert and the meeting will be more straightforward.
Don’t Multi-task – In the past years, people have glorified multitasking as though juggling different tasks at the same time is a badge of honor. The truth is, multitasking usually does more harm than good. Human brains aren’t wired to hastily switch from one chore to another. Less effective and more stressed out – that’s what multitasking can do to you.
Channel Your Inner Bill Belichik – The Patriots have had incredible success over the yuears and one key to that success is a focus on finding out what players do well and letting them focus on that and not 20 other things they aren’t good at or passionate about. Look at your current team and consider who does what well and apply that to delegating tasks. If you have a few employees that love the idea of writing for your blog and they have some time to devote each week to the task, then they would be the perfect people to delegate the task to. On the other hand, if they are not good writers, or are fully consumed with other revenue generating activities then they wouldn’t be right for the task.
Take care of yourself – Forgetting to take care of yourself is a common issue for entrepreneurs. It’s been shown that exercising in the morning can greatly improve your productivity. Exercise energizes rather than exhausts you, contrary to what the couch potatoes might tell you. Exercising also promotes good health (quick, alert the press!), and some studies have shown that exercise can improve your mood for up to 12 hours following your workout. Less stress, more efficiency–it’s worth setting that alarm 30 minutes earlier.
Keep Track of Great Content – There’s a lot of information out there concerning small businesses and ecommerce, and it can be difficult to keep track of it all. Here are three tools to make sure you never miss a thing.
Google Alerts: Get email notifications at whatever cadence you’d like any time Google finds new results on your industry, competition, related news and more.
Feedly: Organize all the blogs and publications you like to read via a simple (and pretty) RSS feed.
TweetDeck: This powerful tool lets you see what everyone on Twitter is saying about your industry, get involved in tweetchats (and perhaps run your own), follow experts in ecommerce and track your competitors.
Make sure that meetings are worth your time. – The truth is that most meetings never need more than 30 minutes to accomplish their missions. Many only need 15 minutes. Don’t be a calendar-default deadbeat. Next, you’ll tell me you kept your phone’s default ringtone, too. Your time is money. Make sure that the meetings that you and your employees go to are pertinent to the success of your business. Try to stay away from conferences that won’t directly benefit your organization, and do not schedule more meetings than are necessary with the same business partners–superfluous get-togethers hamper productivity.
The Two-Minute Rule – The general productivity consensus is that if a task takes less than two minutes to complete, you should finish it immediately. Whether that means responding to an email or confirming a doctor’s appointment, get those small (but often weighty-feeling) tasks done with, rather than let them collect and snowball.
Sign in on Sunday (Just for a Minute) – Sunday is a day for relaxing, but if you’re often overwhelmed come Monday morning, logging in briefly Sunday evening may help you alleviate some of that Monday mania. You don’t need to make calls or even answer emails–simply assess what your Monday game plan will be, and you’ll sleep a little more soundly.
Don’t Underestimate the Importance of Sleep – Humans need at least 8 hours of sleep each night. Science has shown that lack of sleep not only makes people more irritable and less focused, it can even lead to scary diseases like Alzheimer’s in the future. If employees are boasting that they get only 4 hours of sleep at night, make them stop. Sleep-deprived employees are proven to be unproductive and inefficient. Employees who are tired in the mornings due to lack of sleep will find it difficult to concentrate on important tasks. They will also find it difficult to cooperate and play well with others during the day. Some might even fall into so-called microsleep modes in the middle of the work. In a nutshell, sleep deprivation will kill the productivity levels at work. Therefore, encourage employees to get enough sleep at night. Managers and owners should definitely follow by example.
Automate Your Recurring Tasks – Fortunately, most businesses who like to ensure productivity has a simple way of countering this. To counter the chances of forgetting a task, a major productivity hack that every small business owner should know involves creating repeating task reminders through work management tools. By having a tool to constantly remind you of these recurring tasks, you don’t have to miss the important tasks that are necessary to a well-functioning business operation.
Feynman stumbled upon a formula for learning that ensured he understood something better than everyone else.
It’s called the Feynman Technique and it will help you learn anything deeper, and faster. The topic, subject, or concept you want to learn doesn’t matter. Pick anything. The Feynman Technique works for everything. Best of all, it’s incredibly simple to implement.
The catch: It’s ridiculously humbling.
Not only is this a wonderful method of learning, but it’s also a window into a different way of thinking. Let me explain:
There are three steps to the Feynman Technique.
STEP 1: TEACH IT TO A CHILD
Take out a blank sheet of paper and write the subject you want to learn at the top. Write out what you know about the subject as if you were teaching it to a child. Not your smart adult friend but rather an eight-year-old who has just enough vocabulary and attention span to understand basic concepts and relationships.
A lot of people tend to use complicated vocabulary and jargon to mask when they don’t understand something. The problem is we only fool ourselves because we don’t know that we don’t understand. In addition, using jargon conceals our misunderstanding from those around us.
When you write out an idea from start to finish in simple language that a child can understand (tip: use only the most common words), you force yourself to understand the concept at a deeper level and simplify relationships and connections between ideas. If you struggle, you have a clear understanding of where you have some gaps. That tension is good—it heralds an opportunity to learn.
STEP 2: REVIEW
In step one, you will inevitably encounter gaps in your knowledge where you’re forgetting something important, are not able to explain it, or simply have trouble connecting an important concept.
This is invaluable feedback because you’ve discovered the edge of your knowledge. Competence is knowingthe limit of your abilities, and you’ve just identified one!
This is where the learning starts. Now you know where you got stuck, go back to the source material and re-learn it until you can explain it in basic terms.
Identifying the boundaries of your understanding also limits the mistakes you’re liable to make and increases your chance of success when applying knowledge.
STEP 3: ORGANIZE AND SIMPLIFY
Now you have a set of hand-crafted notes. Review them to make sure you didn’t mistakenly borrow any of the jargon from the source material. Organize them into a simple story that flows.
Read them out loud. If the explanation isn’t simple or sounds confusing that’s a good indication that your understanding in that area still needs some work.
NewGate Capital Partners is dedicated to improving your business.
Many entrepreneurs think of themselves as successful if they have formed an LLC, established their company in an office space, and possibly even reached $300,000 in monthly revenue. These are certainly great milestones in their own right, but the business is almost surely not operating at its full potential. Entrepreneurs often find themselves simply going through the daily motions to make the business work, but too much focus on the present and too little consideration for the future will keep almost any business owner from driving his or her business to become something special. At NewGate Capital Partners, we offer expertise in seeing the future of your business. Through complete analysis of your current situation followed by implementation of proven strategies, NewGate can improve the way your business operates as well as the way you look at your business.
NewGate is interested in helping you (1) formulate your growth and exit strategies, (2) attain your growth funding, and (3) implement and monitor your strategic growth plan. In order to accomplish these goals, NewGate will conduct in depth analyses to extract crucial information that will determine how to begin to build your strategic growth plan. A clear definition of the pain in the market as well as what your company offers as a unique solution are important results of analyses that focus on your company’s strengths, weaknesses, opportunities, and threats. Aspects of your business that will be considered are:
What stage is your business currently in? How much capital has already been invested in your company?
What do your monthly sales look like?
What makes your business scalable?
What are your goals for your business as well as for yourself?
How well does management work together? Are team member goals aligned?
Answers to these as well as other key questions will help the team at NewGate to begin developing a custom strategic growth plan for your business. However, while we will guide you through this process, it is crucial that you as the business owner become more involved than ever to assure a successful transformation of your company.
When growing a business, it is often necessary to invest in assets such as capital equipment in order to reach a certain level of increased operation. If you need to make a similar investment but do not have the cash needed to do so, NewGate can help you attain the funding required to take your company to the next level. From performing routine tasks such as reforming the legal structure of your company in order to prepare it for raising a round of capital to developing complicated documents such as white papers and business plans, NewGate’s team of seasoned entrepreneurs is dedicated to making your business attractive to investors. Once you are ready, we are able connect you to our network of angels, venture capitalists, and other investors who can provide you with the funding you need.
With the foundation strategies laid out, NewGate will be ready to help you implement and monitor your growth plan so that your business is always heading in the right direction. Whether we are providing advisory board services or doing due diligence in preparation for a merger or acquisition, NewGate has the expertise to see your company through to the exit. The proper exit strategy is an important facet of any company’s business plan, and such strategies differ from business to business. The team at NewGate embodies the multi-dimensional experience necessary for positioning your company for the correct exit and/or preparing it for sale.
FreshSurety utilizes cutting edge wireless sensing technology to reduce waste and improve fresh produce quality throughout the supply chain. We report the location, environment, and shelf life of individual fresh food cases for a few cents per case. As a result, our technology predicts the true quality of the product that conventional quality control methods miss to assure higher quality and better retail margins.
Change is inevitable. I imagine some of this will not turn out quite as planned, but it’s interesting to think about, just the same. In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.Within just a few years, their business model disappeared and they went bankrupt.
What happened to Kodak will happen in a lot of industries in the next 10 years – and most people won’t see it coming. Did you think in 1998 that 3 years later you would never take pictures on film again?
Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s law. So as with all exponential technologies, it was a disappointment for a long time, before it became way superior and got mainstream in only a few short years. It will now happen with Artificial Intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs. Welcome to the 4th Industrial Revolution. Welcome to the Exponential Age.
Software will disrupt most traditional industries in the next 5-10 years.
Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world. Airbnb is now the biggest hotel company in the world, although they don’t own any properties.
Artificial Intelligence:Computers become exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected.
In the US, young lawyers already don’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% less lawyers in the future, only specialists will remain.
Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses.
Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans.
Autonomous cars:In 2018 the first self-driving cars will appear for the public. Around 2020, the complete industry will start to be disrupted. You don’t want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving. Our kids will never get a driver’s license and will never own a car.
It will change the cities, because we will need 90-95% less cars for that. We can transform former parking spaces into parks. 1.2 million people die each year in car accidents worldwide. We now have one accident every 60,000 mi (100,000 km), with autonomous driving that will drop to one accident in 6 million mi (10 million km). That will save a million lives each year.
Most car companies will probably become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels. Many engineers from Volkswagen and Audi; are completely terrified of Tesla.
Insurance companieswill have massive trouble because without accidents, the insurance will become 100x cheaper. Their car insurance business model will disappear.
Real estate will change. Because if you can work while you commute, people will move further away to live in a more beautiful neighborhood.
Electric cars will become mainstream about 2020. Cities will be less noisy because all new cars will run on electricity. Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can now see the burgeoning impact.
Last year, more solar energy was installed worldwide than fossil. Energy companies are desperately trying to limit access to the grid to prevent competition from home solar installations, but that can’t last. Technology will take care of that strategy.
With cheap electricity comes cheap and abundant water. Desalination of salt water now only needs 2kWh per cubic meter (@ 0.25 cents). We don’t have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost.
Health:The Tricorder X price will be announced this year. There are companies who will build a medical device (called the “Tricorder” from Star Trek) that works with your phone, which takes your retina scan, your blood sample and you breath into it. It then analyses 54 biomarkers that will identify nearly any disease. It will be cheap, so in a few years everyone on this planet will have access to world class medical analysis, nearly for free. Goodbye, medical establishment.
3D printing:The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years. In the same time, it became 100 times faster. All major shoe companies have already started 3D printing shoes. Some spare airplane parts are already 3D printed in remote airports. The space station now has a printer that eliminates the need for the large amount of spare parts they used to have in the past. At the end of this year, new smart phones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home. In China, they already 3D printed and built a complete 6-storey office building. By 2027, 10% of everything that’s being produced will be 3D printed.
Business opportunities:If you think of a niche you want to go in, ask yourself: “in the future, do you think we will have that?” and if the answer is yes, how can you make that happen sooner? If it doesn’t work with your phone, forget the idea. And any idea designed for success in the 20th century is doomed to failure in the 21st century.
Work:70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enoughnewjobs in such a small time.
Agriculture:There will be a $100 agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all day on their fields.
Aeroponics will need much less water. The first Petri dish produced veal, is now available and will be cheaper than cow produced veal in 2018. Right now, 30% of all agricultural surfaces is used for cows. Imagine if we don’t need that space anymore. There are several startups who will bring insect protein to the market shortly. It contains more protein than meat. It will be labeled as “alternative protein source” (because most people still reject the idea of eating insects).
There is an app called “moodies” which can already tell in which mood you are in. By 2020 there will be apps that can tell by your facial expressions, if you are lying. Imagine a political debate where it’s being displayed when they are telling the truth and when they are not.
Bitcoin may even become the default reserve currency. Of the world.
Longevity:Right now, the average life span increases by 3 months per year. Four years ago, the life span used to be 79 years, now it’s 80 years. The increase itself is increasing and by 2036, there will be more than one year increase per year. So we all might live for a long long time, probably way more than 100.
Education:The cheapest smart phones are already at $10 in Africa and Asia. By 2020, 70% of all humans will own a smart phone. That means, everyone has the same access to world class education. Every child can use Khan academy for everything a child learns at school in First World countries. We have already released our software in Indonesia and will release it in Arabic, Suaheli and Chinese this Summer, because I see an enormous potential. We will give the English app for free, so that children in Africa can become fluent in English within half a year. Boom!
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
A good pitch deck is tough to come by. It’s important to understand that it’s really a tool meant to support your pitch, not supplant it. This means keeping the amount of words on your slides to a minimum and relying much more heavily on images and your own words to communicate. The last thing you want is your audience reading through paragraphs of text and ignoring every word you say.
I figured I would lay out a standard formula for putting together a deck. While there’s certainly more information that can be added, this should cover the basics.
Let’s get started…
1) Logo Page — The first slide is basically your intro slide. Take your logo and put it on top of a background that will set the design theme for the rest of the deck. You might also want to add a tag-line/mission statement underneath it if you’ve got one.
If you don’t have a logo, I would suggest you look into getting one as soon as possible. It helps to establish your brand and gives an investor the comforting impression that this is more than someone with an idea. With tools like 99designs and dribbble, it’s easier than ever to find freelance designers, who can help put one together for you fairly inexpensively. They can probably also help design a nice looking deck for you.
Use this slide to briefly introduce yourself and the name of your company, then get it moving.
2) Business Overview — Briefly explain what it is that you do — also known as your elevator speech. Your elevator speech needs a little more description than a mission statement, but should be no longer than three sentences. It’d be good to include whether you provide a product or service, the major problem(s) that you solve and for whom.
This is also the slide where you will want to pause and give a demo of your product if you have one. This will establish a solid foundation with your audience, so that you can start to cover the actual business.
Entrepreneur and Angel Investor Jason Calacanis does a great deep dive on giving a proper demo on his podcast This Week In Startups here.
3) Management/Founding Team — Your management slide should list all of the company founders as well as anyone in the C-level that is integral to the operations of the business. Typically their picture, titles and 1-2 pertinent bullet points will do. Feel free to expand on each member verbally, but you don’t need full resumes on the actual deck. Be sure to highlight any background that applies to the industry you are targeting and whether or not you have started other businesses in the past. Most investors are going to focus on the quality of the team over everything else, so consider spending a little extra time on this slide.
In the First three slides, we discussed how to introduce yourself, your business and your team. Now let’s get into the real meat of the pitch.
Who are you selling to?
How are you selling your product or service?
What significant milestones have you hit so far?
4) Target Market – As a start-up, addressing market size can be a double-edged sword. If it’s too big, you’ll seem like a guppy in an ocean and probably sound a bit crazy. If it’s too small, the opportunity — and corresponding risk — doesn’t move the needle enough for most investors.
I think the best solution is to find a balance.
Start with describing the size and demographics of the smaller market that you’re targeting first. This shows investors that you’re aware of who your customers are and that you’re going to be hyper-focused in the early stages.
Then explain the much larger vision and total addressable market you plan to infiltrate once you’ve found success on a manageable scale. It becomes much easier (and believable) to expand into very large markets when you’re the A-player in a smaller one.
Before Facebook had a billion users, it was a social network for college students. Before that, it was built specifically for Harvard students. Focus is critical in the early stages.
5) Business Model – Your business model is going to vary heavily depending on what it is that you’re selling (hardware, software, both). The most important part of this discussion is demonstrating an adept stranglehold on the numbers — both what you need to charge to be profitable and what the market will bear based off of current competition, plus or minus your value proposition.
Knowing your general customer acquisition cost and their lifetime value also shows you have a firm understanding of your business and are able to set expectations of the capital requirements to get you to the finish line.
This is a good time in your pitch to discuss your distribution strategy, which is arguably more important for future growth. Your plan for distribution will determine how you get your product or service into the hands of consumers. Like your business model, this could very well change over time, but having a plan to grow the usage of your offering is critical when you’re a start-up as it can influence product design, marketing and where you invest your precious capital.
You can argue forever over the best plans for distribution and most profitable business models. The winning combination will usually be unique to your offering and the market you serve. Ultimately, none of it matters until you start to see traction.
6) Traction – This part of the pitch is either dreadful or the right-hook you need to land an investment.
What is traction (in the world of start-ups)? Hopefully, it’s a growing customer-base. But it could be non-paying users if your product is software, web-based or a mobile application. It might also include any significant strategic partnerships that you’ve forged.
What is traction not? Your mom and best friend think you’ve birthed the best creation since seat warmers and see no way that this can fail.
So go ahead and talk about the numbers. How many customers do you have? Are you seeing growth and at what rate? What’s the feedback you’re receiving from early adopters?
Very few ideas are so groundbreaking that they’re investable pre-traction. On the flip-side, it’s very tough to challenge proven success. So having traction is almost essential when raising capital. Costs to start-up a business and get it to the point of “Customer 1” have gotten so low that it’s tough to find a viable excuse for not having sales.
Luckily, if you have it, you have validation. The dog eats the dog food. You will also know a lot more about your market/customers, which allows you to invest in improving your offering to better fit their needs. Whether it scales or not is a different conversation and hinges much more heavily on your level of execution.
So far we’ve covered the first half of the pitch deck. You’ve introduced your team and the market you’re targeting as well how you plan to make money and where you are in the process of executing this plan.
You’ve established the base level understanding of your company with your audience by providing information. Now it’s time to be persuasive.
Are you the only people smart enough to take advantage of this massive opportunity? (Probably not)
Why you? What gives you a unique advantage that will allow you to win?
If you do win, what’s the upside? What can investor expect and over what period of time?
7) Competition – If there’s one section of the pitch that I see most often scantily clad, it’s the competition. It’s usually a combined result of heavy bias on the part of the entrepreneur and the lack of understanding what makes up “competition”.
There are folks that are doing nearly the exact same thing as you (direct competition) with a minor twist in business model (SaaS model vs. Freemium vs. Ads etc) or distribution model. Then there are companies/products that are replacements for a problem you solve (indirect competition).
If you have a mobile gaming company competing for the attention and discretionary income of people looking for an escape from boredom, then you are not only competing with Candy Crush, but Xbox and PlayStation as well.
While it’s not necessary to detail each and every one of them, you can make a much stronger case for why you will win if you understand the macro-trends (why people prefer mobile gaming to the alternatives) as well as the micro-trends (paid apps vs free with ads).
This section sets you up perfectly to explain why what you have is better than both types of competitors.
8) Competitive Advantage – Your competitive advantage is the secret sauce. It’s what makes you special. If you are the first to market with a given product, this could also be known as your future competition’s barrier to entry.
What do you have (or know) that no one else has (or knows)? If you are manufacturing some sort of hardware or you provide a service with a unique process, this could include patents or other various forms of intellectual property. It’s good to be clear when detailing the current status of your intellectual property and what it actually protects.
If you’re working on software, patents are much more rare and depending who you talk to, rather useless and a waste of precious funds. The code/algorithms/processes used in the software is intellectual property whether or not it’s actually patented, but software changes so fast that these assets only mean so much.
Often times your competitive advantage is your team, the knowledge of the space, assumptions about the market and plan for execution.
If you’re in an industry with minimal barriers to entry, your product or service can be easily copied and your assumptions of the market are in line with most others, you may want to reconsider what you’re doing getting into this in the first place.
However, if you do have some form of differentiation and you can represent a unique view of the world, you’re going to need to show a would-be investor the potential upside of jumping on the train.
9) Financial Projections – Projections are like throwing darts… blindfolded… left-handed (right-handed for you lefties). The point is it’s almost impossible for you to know what you are going to do in sales 5 years from now, even more so if you’ve yet to make sale #1.
A couple things to consider:
A) Projections past year 3 are worthless, so don’t waste your time. It’s hard enough to predict what you will do a month from now. Don’t waste your valuable time calculating what travel and entertainment will cost 5 years from now. Stick to years 1 through 3.
B) Focus on the Big 4 — Revenue, Cost of Goods Sold, Expenses and Profit. This will lead you to your projected gross and net margins, which will be a good financial indicator of the potential success of the business. While it’s helpful to break up expenses into separate line items for your own benefit, it isn’t necessary at this stage.
C) Assumptions are everything. This is the part of the projections that will be of most interest to the investor(s). What level of market penetration would it require to reach that revenue number? What are you assuming your conversion rate (link) is going to be? What affect does a lower conversion rate have on these projections? What sort of growth rate are you assuming and how does that compare to other companies in your space? etc. etc.
If you’re company has some historical financials, it makes this process a bit easier because you can extrapolate current trends and have more credible assumptions, however, the projections are still a guess.
The most difficult part of projections is the balance between being attractive and believable. Too low and it isn’t worth an investor’s risk; too high and you risk being laughed out of the room. Striking this balance is an art more than a science, which is why having strong assumptions is all the more powerful.
Ultimately, if you have a viable business concept in a large market with a team that can execute, an experienced investor may disregard the projections all together, but it’s a helpful and necessary exercise nonetheless.
Next, we’ll cover what you’re looking for as an investment, what you’ll do with the money and how to properly close out the presentation. Stay tuned.
About the Author: Brett Andrews is a Partner in NewGate Capital. Learn more about Brett here
Are you considering selling your business? We can help you. Contact us anytime at http://www.newgatecapitalpartners.com/business-brokerage/
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.
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.