Tuesday, February 26, 2019

how to start a business

how to start a business


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

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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

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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.

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 Start a Waste Management Business? - Entrepreneur

Posted: 15 Feb 2019 12:00 AM PST

Today, insistent entrepreneurs are opting-in the industry and help create a positive outcome in the society

4 min read

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

On a daily basis, tons of waste is generated in the country. The disposed waste is a conglomerated form of organic as well as non-organic waste. Segregating recyclable waste from the lot is an intimidating task for a layman. However, now emerging waste management companies are removing and recycling the disposed of garbage effortlessly. Utilizing scores of waste and transforming it into a usable product is a good deed as well as a business. Similar to the growing waste, the revenue in the waste management industry is also surging. Owing to which, insistent entrepreneurs are opting-in the industry and help create a positive outcome in society.

In essence, the waste management industry has a large number of opportunities for growth. Thus, aspiring entrepreneurs should plan a waste management business in the offing. Like other businesses, the waste management business also has its own cruxes. Comprehending these underpinnings is imperative for the entrepreneur so as to build a fortified structure.

1.    Select A Field In The Waste Management Industry

Before initiating a business, you should pick out a niche wherein you want to specialize. The waste management business is basically vast and comprises small as well as large businesses. Thus, picking the niche can be trickery for you. To ease the problem, you should reflect on various elements such as budget, individual potential and scope of the business. Each and every niche in the industry requires different means and modes for the waste-recycling process. The different types of waste management businesses are as follows:

•    Toxic waste disposal business

•    Medical waste disposal business (inclusive of recycling needles, soiled clothing, chemicals, medical gadgets and so on.)

•    Electronic waste disposal business (inclusive of using CDs, computer parts and mobile phones)

•    Nuclear waste management business

•    Construction waste management business

•    Green waste management business

•    Industrial waste management business

•    Chemical waste management business

Apart from these waste management business, there are various other categories as well. When you research deeper into the industry, you will come across waste management businesses.

2.    The Monetary Investment Required In Establishing The Business  

For initiating the waste management business, there are tons of things to plan out, execute and actualize. Some of the imperatives are location, employees, transportation vehicles, equipment, business insurance and business promotion.

3.    Conduct Market Research

Before stepping into the market, you should have a vague idea of how the market is going, how potential competitors are and what the pricing is. Compile this information and then, contrast it with your costs, in turn, you will get an approximate idea of revenue that you would be earning. If the competition in a particular niche is too tough, then consider diverting the course and establish the business in another field. Closely observe different kinds of business and correspondingly, focus on a specific business.

Following this, you should ascertain if the market is big enough for your sustenance. For that, examine local junk disposal business and converse with entrepreneurs who are running the business in different cities. The local entrepreneurs refrain to share information of the business owing to the fear of getting more competitors. In addition, ascertain the places from where you would be garnering the waste that is, landfill, scrap dealers and junk hauliers.

4.    Create A Business Outline

Forming a business plan is an imperative strand of every endeavour. In the outline, express the intent of starting the business, what your market will be, why your business is distinct and what the business functionalities are. After this, decide the pricing model, business strategy, costs of establishing the business and lastly, how to raise funds for the business.      

The above-mentioned procedure is an elaborated step-by-step guide. Follow these steps to kick-start the waste management business.   

This article was originally published by Jaspreet Kaur.

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