Start-Up Mistakes to Lookout For!

Let's face it, every entrepreneur's first start-up is a fish-out-of-water- experience; new territories usually are. One of the best ways to tackle the unfamiliarity of business ownership however is to learn from those who have gone before you. Most entrepreneurs have a laundry list of things they've had to do, and redo multiple times before getting things right. Fortunately, we've got our laundry list of mistakes you should avoid to make your startup success attainable.

A Saturated Market

One of the more challenging tasks of being an entrepreneur is knowing how to reason with yourself and be honest in those responses. This is particularly true at the conception stage of your startup. You come up with an idea for your business, you believe in it, and you start investing time, energy, and resources to make your vision materialize. Finally, when you launch, you realize that the market is too saturated and your attempt to transcend your peers failed. Just like that, your business dissolves. Unfortunately, this is a common mistake.

When you have an idea for a startup, it is imperative to implement a market research component that facilitates your place in the designated industry. If you haven't invented something it is more than likely the case that your business idea already exists. Know who your competitors are, how the market is performing, and whether it makes sense to invest in a business idea that has seen one too many launches.

Launching too quickly or too slowly

 

Having a new business can be exciting and that excitement can persuade you to place your product or service in the hands of consumers as fast as possible. Prematurely launching your business can kill it. There is nothing quite like introducing an ill-prepared product to a consumer. On the other hand, it is equally detrimental if you have a successful product and you are unable to keep up with the demand for it. Take some time and nurture your idea to control for foreseeable outcomes like these.

It is also possible to launch too slowly. Some startups require a large amount of preparation time. Research, testing, and funding are among the primary factors that can delay a launch. However, if you are taking too long to make your business accessible, perhaps it has no place in the market. Otherwise, you're hurting your business if you withhold something that is on demand and is necessary to your consumers. They may stop waiting. If you are slow to launch, there should be substantial reason.

Poor Investment Strategy

Every business wants to grow, but that growth is heavily predicated on how money is managed. Your business should be your investment manager's priority. Monitor the monetary flow and forecast of your startup to effectively regulate where you can make more money and where you should pull back a bit. Further, investments should yield growth and this should not be interpreted as investing solely in the interest of shareholders. Investments should also be made in favour of consumers; they make the business. “If you invest in your users, your investors will benefit regardless”.

No Target Audience

It's unfortunate that some startups fail due to the lack of a clear and definitive consumer. Knowing who you are selling your product to is instrumental in startup success. A designated target audience helps drive marketing and promotion strategies, product development, and sale projection. When you have a target audience you are aware of exactly where to find your market and how to control it and be competitive. On the other hand, failure to determine a specific group to which to market your product can result in financial loss and over-investment.

A Divided Team

Lastly, if your team does not share your vision, you are doing a disservice to your business. Hire like-minded people who share your values, but differ in creativity and skill; this will diversify and enhance your business potential.

Starting a business can be intimidating, but minimizing your mistakes can make the ride a little less bumpy and a little more successful. 

Five Business and Economic Trends To Watch In 2016

Challenges and changes will be the hallmarks of 2016, but this year will also present great opportunities to far-sighted, innovative individuals and organizations.

1.  Economic headwinds intensify

Canada has been hit hard by the continued fall in the price of oil and other commodities, on which our economy depends heavily for investment and revenue. Not surprisingly, the province of Alberta has suffered disproportionately, with tens of thousands of jobs lost; the provincial government has also seen its tax and royalty revenues drop, inducing a large fiscal deficit. A lower loonie is the inevitable consequence of a fall in foreign investment to Canada’s extractive industries.

Of course, the global economy is highly integrated, and difficulties in one nation are usually indicative of broader trends. The weakening of commodities owes largely to a slowdown in the Chinese economy, due in part to persistent soft demand for Chinese manufactures in the most lucrative consumer markets: the U.S., the European Union, and Japan. China has managed to sustain a relatively high growth rate since the 2008 Great Recession with the help of public expenditures and private credit. But this tactic seems to be nearing the end of its rope, and investors are nervous about the implications—hence the volatile stock market.

All in all, 2016 is likely to be another year of economic uncertainty, and recession is a distinct possibility for many industrialized countries, China included.

2.  Millennials move up; Gen-Zers enter the workforce

It’s hard to believe that fears over “Y2K” came and went more than 16 years ago, yet here we are. In 2016 and in the years to follow, we will witness a major demographic shift in the workforce: Baby-boomers will continue to retire or cut back on their hours; Millennials will scale the professional ladder into positions of greater authority and prominence; and members of Generation Z—also called Post-Millenials or iGens, born in the era of boy bands and Spice Girls—will increasingly fill entry-level posts.

The visibility of this shift toward youth in business and politics will grow, as will its influence on consumer-market dynamics. Businesses that cater effectively to the preferences of the under-35 cohort by embracing mobile technology, values like social justice and environmental sustainability, and somewhat non-traditional work environments, will prosper.

3.  Departures from “business as usual”

Infused with youthful vigour and an innovative mindset, many organizations are adopting new ways of working.

Some workplaces have introduced elements of fun and relaxation into their office environments—like ping pong tables, recreation areas, and even dedicated spaces for taking naps. Others offer flexible work schedules, including unlimited vacation, conditional on employees completing all of their assigned tasks within a set timeframe. And last year, CEO Dan Price of Gravity Payments made headlines when he announced a minimum annual salary of $70,000 for workers at his business, and cut his own compensation by 90 percent.

With more young, socially conscientious individuals in the workforce and greater diversity in the executive suites, the trend away from traditional corporate structures and workplace dynamics will continue.

4.  Growth of the “gig economy”, and friction with the old order

The phrase “gig economy” is largely a misnomer, since a lot of “gigs” are really short-term employment stints, often in the service sector. For example, a customer who commissions a driver through a ride-sharing service is effectively hiring both the motorist and the company to provide transportation. But because of the informality of “gigs”, the temporary employer typically needn’t pay a minimum wage, or cover expenses like health insurance, workers’ compensation, payroll taxes, or job training. As a result, “gig” workers’ labour costs can undersell those of their counterparts in established industries by a wide margin.

In many major cities, taxi companies and drivers are lobbying municipal governments to either nullify certain regulations on the taxi industry to enable taxis to “compete” with ride sharing, or outlaw ride sharing altogether. Either way, the consequences for customers could be significant. Last year, the California Labor Commission ruled that an Uber driver was an employee rather than a contractor, and thus was entitled to claim certain out-of-pocket expenses. If this ruling encompassed all such drivers, ride sharing could lose a big chunk of its cost-competitive edge.

The inherent conflict between traditional work and “gigs” is far from settled.

5.  Opportunities in mobile services

Mobile technology has both greatly improved and become ubiquitous over the past decade, and accordingly, a healthy bottom line awaits companies that ride this wave successfully. A mobile-friendly web presence is more important than ever before, and businesses should strongly consider developing their own apps to facilitate access for customers with smartphones and tablets.

On Equity Crowdfunding

In the environment of tight credit that characterizes the global economy’s tepid recovery from the Great Recession, many entrepreneurs are turning to unconventional sources of startup financing. Equity crowdfunding, mediated through registered online funding portals, is one of the available alternatives.

In order to ascertain whether EC would be right for you, there is some basic information you need to know.

 

What is equity crowdfunding, and how does it differ from standard crowdfunding?

Unlike standard crowdfunding, EC involves more than simply donating money to a cause in exchange for rewards, perks, or goodwill—instead, equity crowdfunders acquire an ownership stake in the company-to-be.

EC differs from traditional equity financing in its potential to attract numerous prospective investors offering modest quantities of capital. Conventional equity financing, by contrast, often involves a small number of deep-pocketed investors capable of advancing large sums.

Advantages

•   Democratization (sort of): EC can foster investment opportunities for people of comparatively modest means. However, the rules governing EC (including accredited-investors-only restrictions) vary by jurisdiction, along with the required documentation. The situation is fluid, as governments learn more about a relatively novel investment tool and modify their regulatory frameworks accordingly. It’s a good idea for businesses and entrepreneurs uninitiated in EC to seek legal counsel, so as to ensure compliance with local securities regulations.

•   Breadth of investment pool: Not only can EC enable entrepreneurs and business owners to benefit from a broader pool of potential investors than might otherwise be available; the relationship is a two-way street. As EC expands and develops, small- and medium-scale investors will also have the opportunity to dedicate a portion of their savings to a vast array of endeavours that might otherwise have received little exposure.

•   You set the fundraising commitment. When businesses attempt to raise early funds through venture capital firms, they receive whatever those organizations are prepared to give—usually a small sum, unless you already run a thriving business with a steady revenue stream. EC, by contrast, offers entrepreneurs relative freedom to establish and adjust their own targets.

•   Your funders have a vested interest in the success of your startup. After all, the more profitable your venture, the more lucrative the returns for them. If you encourage equity funders to promote your business idea on social media and within their friend circle, they will likely be keen to oblige.

Drawbacks

•   Legal complexities: As noted above, the rules governing EC vary by jurisdiction. A lot of entrepreneurs just starting out in the business world may not be familiar with financial disclosure rules, licensing, comprehensive business plans, and other requirements, and will need to undertake a lot of advance research and due diligence.

•   Small- and medium-scale investors may lack business and investment experience. Sometimes it helps to be able to defer to the advice of an experienced angel investor, venture capitalist, or business professional, especially when it comes to dealing with adversity and managing the expectations of your funders. In particular, new investors may not fully appreciate the risks associated with online and startup investments.

•   Some of your funders may be people you’ve never met. Obviously, this entails issues of trust and fraud prevention, and there is a risk that disgruntled investors may try to litigate against you in an effort to recoup a portion of their losses if your business doesn’t pan out. This is another reason why seeking legal advice is a good idea.

To equity crowdfund, or not to equity crowdfund?

EC may not be suitable for startups that lack a strong social media following, or that don’t offer a product or service that is marketable and compelling. For example, many of your Facebook friends may be interested in funding a bicycle store or a pet daycare; relatively few will be keen to support a more esoteric or specialized venture, like a business that designs refrigerator door hinges.

If you’re still interested in EC, I recommend this article in the Globe and Mail, by SeedsUp.ca founder Sandi Gilbert, as a basic guide to help you get started.

Equity crowdfunding portals, and useful links:

SeedsUp.ca—one of the first EC portals in Canada.

ncfacanada.org/equity-crowdfunding—a page devoted to EC, from the National Crowdfunding Association of Canada.

CloudFund.ca—another Canadian EC portal, in development at the time of this writing.

Alixe Cormick is a securities and small-business lawyer with expertise in Canadian EC regulations. She has penned an informative blog post on the subject, available here.

The Employee-centric vs. Client-centric Debate

The early days of any new business venture represent an enormous challenge and transitioning from business plan to profitability involves a number of important steps and a great deal of investment. Laying the proper foundation for your business is essential to securing the long-term future for your company so having an insight into where you are going to focus your early investment will help shape what eventually defines your business. There are two major schools of thought here: the employee-centric approach and the client-centric approach. Both have their merits and which works for your business will come down to an analysis of which approach is most likely to make your company stronger in the long run based on the resources and capital that you have available.

Employee-centric Approach

Greatest investment: Capital

Best Marketing Feature: Cutting Edge

Clientele: High End

The idea behind the employee-centric approach is to create an environment where the people you hire have the best tools at their disposal so that they enjoy coming to work. The concept is that if the employee is happy they will be better able to service clients who will be happy in turn. In order to provide your employees with such an environment usually requires investing a lot of capital up front. This is the one drawback to this approach as, by having a high startup cost, you have immediately positioned your company to operate at a certain price point depending on the market for your service or product. You have reduced your potential pool of clients down to those that can afford to pay for your service or product, and you are now trusting that you will be able to market your company in such a way that attracts a high end clientele.

You will benefit from being able to provide your clients with the very latest technology in whatever you are offering, and reminding them through advertising and marketing campaigns that your company is on the cutting edge of the industry is essential to making your company viable. Investing big in your company through an employee-centric approach means going big the whole way. The investment is bigger so operating costs will be higher and, in order to turn some kind of profit, you will likely be asking your clients to pay more for your product or service than some of your competitors. By making such a demand of your clients, it is imperative that you consistently deliver the goods because the moment a client realizes that they can get the same quality product or service for cheaper, it’s their right to jump ship.

Client-centric Approach

Greatest Investment: Time

Best Marketing Feature: Value

Clientele: Anyone

In contrast to the employee-centric approach there is the client-centric approach which places a greater emphasis on customer relations and attempting do a lot with very little. Ever heard of someone building their business from the ground up? Well, that’s the idea here. In the client-centric approach there is a minimal amount invested in capital and, instead, a great amount of time invested in an effort to provide the client with what they are looking for and keeping them happy. Every customer is precious as they represent the lifeblood of the company and one dissatisfied customer could be the ruin of your business. A poor night’s sleep is justifiable if it gets the project delivered on time and on budget.

Although expectations might have to be tempered with limited resources available, the advantage here is that because your costs are lower you are able to attract clients who might be looking for the best rate in the market. This, in turn, easily becomes the strategy behind how to market your company to prospective clients. By offering the most competitive rates you attract clients with smaller budgets, but you can in turn offer your service or product to a wealthier clientele by being able to offer them value, thereby effectively opening your business to a wider pool of prospective clients.

Are Tradeshows Worth the Investment?

It's a safe bet that no matter what type of industry you're in there will be at least one tradeshow that will be applicable for your business. The question then becomes do you attend as a "visitor" or a "vendor"?

Obviously, being a visitor will be less costly and still give you the opportunity to network but it might not be a productive as being a vendor with a booth. Would that kind of investment be worth the effort? Here are some tips to help you focus on determining if your tradeshow sales efforts will provide a viable return on your investment.

The first step is to factor in all of your costs and expenses. These would include:

Floor space costs: What will you be charged by the organizers for booth space?

Exhibit costs: If this is your first time at a trade show you'll be building a booth from scratch. How much that will cost depends on the size and design elements.

Labour costs: When you bring your booth to the tradeshow there may be union workers standing by to assemble it or you may require your own staff for set up/take down.

Marketing: You need to advertise in trade magazines and the tradeshow catalog to let visitors know where your booth will be, as well as having marketing collateral at your booth.

Giveaways: What will you give away at your booth? Every visitor should leave with something that has your company logo, web address and contact info.

Booth hosts: Will you and your employees be manning the booth or will you have to hire local hosts? Or both?

Travel and entertaining: It's going to cost you something to get to the tradeshow, plus added costs for accommodations and food. You'll also want to include money for entertaining: drinks and meals for potential clients.

Contingency: On top of all those costs add another 15% to 25% to your budget as a contingency line item in case of extra expenses, which there will always be!

Set Your Goals

Now that you know what your hard costs are, what are your goals for the trade show? Do you need to land a certain amount of new clients? Are you setting up pre-orders for products? If this is a consumer show and you'll be selling your product directly out of your booth, then you should have targets for each day. Whatever those numbers are, you have to be realistic. It might be hard to gauge if this is a new type of trade show, but if you're setting up a booth at something like Comic Con in San Diego then you know you're going to have a lot of foot traffic!

Once you have those goals set, make sure your booth staff is aware of those and check in every hour to make sure they're hitting those goals. If not, you might need to ramp up the promotions and get your staff out on the floor.

There are no guarantees with a tradeshow. However, if you've attended as a visitor in the past then you know what works and what doesn't. Put those principles to the test in your own campaign.

When to Act Without a Business Plan

Runners line up at the starting line of a race waiting for that starter pistol to go off. If they start too soon it throws all the runners off. Hesitate after the starter pistol is fired and you could lose the lead.

Now apply this analogy to making a business decision.

Are you waiting too long after the "starter pistol" goes off or did you start running before it was time? The most effective business boss is someone who is decisive and gets the ball rolling by acting quickly rather than waiting for everything to line up perfectly.

Being decisive is not about being reckless. All of your decisions should be well informed.

When is it a good time to act in starting your business?

Renting Space

Every business needs a work space even if you're just starting out working from home. When your business takes off and you're ready to expand you'll need more space. If you are investing in a franchise business than location is key. You need to put together a list of requirements to make your business a success.

How many parking spaces will you need for staff and customers? Is foot traffic important to your business? Do you foresee expanding in the near future? How much space can you effectively use? What is your budget for renting space?

Once you have definitive answers and you find a space don't waste time; sign the lease.

It might need some cosmetic improvements or better air conditioning but if a majority of your requirements are meant secure the space before it gets away from you.

Hiring Staff

If you are interviewing for a staff position and have 12 applicants, interview all twelve applicants. Maybe the first person to come through your office is the one you'll ultimately hire but you deserve to hear from everyone.

Once you've completed all interviews, make that offer. Just because you've found the perfect match for your company doesn't mean some other business isn't interested in the same person. After all, if they are the best they will be in demand.

On the plus side, we're living in an age where instant communication can happen any time of the day or night through texts and e-mails. You should have all of those contact information for any applicant.

Marketing Campaigns

Your marketing strategy will be crucial to determining the success of your business. You should be presented with many options along with a clear understanding of the potential return on your investment. After you’re presented with the plans it's vital to put them into action ASAP.

You don't want to waste time mulling over plans when there are sales to be made and customers to attract. 

How Venture Capital Funds Work

It used to be a popular misconception that venture capital funds only invested in companies that had traction and have proven products. Obviously, that misconception has changed with the large number of risky investments in startups. With the considerable amount of resources and advice available on how to pitch to VC’s, there still is a lackof understanding on how the industry really works.

Innovation has been the key driver of competitiveness within an industry. However, to bring innovative ideas to life requires more than just talent to succeed. As innovative ideas are considered risky for traditional banks to invest in, many entrepreneurs turn to the venture capitalists to bring their ideas to reality.

Venture capital has become an important source of funds for innovative and risky startups that may have a potential for high returns. A venture capitalist invests in a potential company in the hopes that their investment could give them a higher rate of return for themselves in a shorter amount of time.

Due to the risky nature of the investment, the venture capitalist spreads their risk over multiple prospects. This way, they minimize the risk of losing their money in one company and make it back from the one startup that makes it big.

Some characteristics of a VC firm are:

Investing in risky ventures with potential for high returns: VCs usually invest in unproven and innovative ideas which traditional financial institutions avoid. For that investment, they expect a ROI that is higher than usual. In general, they look for a rate o return that is within the range of 25 to 40 percent.

Hands on experience of an industry: VCs have prior experience and contacts which gives them an expertise in better management of the funds deployed. Not only do venture capitalists provide funding, they also provide a network and expertise that can help their investment grow. They can provide technical, marketing and strategic support.

Raises funds from several sources: There is a misconception that venture capitalists are rich individuals who are partnered together to invest in companies. Many VCs are not necessarily rich and almost always manage the funds on behalf of others. They raise financing from institutions such as other investment funds, pension funds, endowment funds, in addition to other successful individuals.

Diversify their portfolio: As mentioned earlier, VCs reduce their risk by developing a portfolio of companies instead of investing their entire fund into one company.

Short-term exits: As high ROI is important for any VC, they always make an investment with an eye for the short-term future. They determine whether they can see a return from their investment within 3-7 years. Their exits can range from getting bought out by a larger company, or taking the company public or even selling it to a private equity fund. 

Advantages of Venture Capital Investments

As a entrepreneurs, you may want to consider funding that range from few hundred thousand to a few million. Normally, you require this funding to grow your company by hiring more employees or the ability to do research and development. When faced with these situations there are many advantages of using a VC. 

These include:

• Securing a larger amount of money than you could from a commercial lender or government lender, turning your shares into more money in a shorter time frame. VCs normally make a decision in investing much faster than traditional financial institutions.

• They share the financial risk in expanding your small business.

• You can get specific experience from different kinds of VC firms, such as those specializing in early stage (startups) businesses or late stage (fully developed) companies.

Some Cons of Venture Capital Funds

Even though a VC firm can review your business and identify a lot of value in your company, it can be a disadvantage to accept VC funding. Some cons are:

• Losing your majority equity share to investors who are not passionate about your company.

• Possibility of surrendering managerial control to a VC firm

• Risking that a VC firm will take your company to a quick exit before it’s ready. 

• Losing competitive advantage in an industry by sharing privileged information about your business model to others.

Before choosing to work with venture capitalists, ensure that the pros outweigh the cons. The best position for a venture firm to be in is to have a substantial equity stake in a company. A VC earns their fees based on a percentage of the profits they create for their investors.

As the startup business owner you need to be realistic with your available equity stakes in terms of what you're willing to part with and the valuation of your company. It's important to find that balance and understand that first offers should not be generally accepted.  

Five Reasons to Avoid Crowdfunding

In the wake of tight credit markets in North America, crowdfunding or crowdsourcing, has quickly become a source of readily available financing to startups, charities or projects. This form of financing is extremely popular with the creative industry such as documentaries, artists and writers.

This new form of financing allows a person to get funding through small contributions from a large group of individuals through an online platform.  The entrepreneur makes an online pitch to a community, which then decides if they want to support the project by giving money towards it.

Raising funds for your small business by crowdfunding has its own set of dangers that can be harmful to your company’s success.  Here are the top five reasons to avoid crowdfunding as a financing option.

Crowdfunding is not meant for large projects.

If you need a million plus dollars to get your business up and running, crowdfunding is probably not the best source for you. Yes, there have been exceptions, but raising the large pool of capital works best with venture capitalists that you can focus on as opposed to the sometimes-scattered approach of crowdfunding. The other thing to consider is repayment. Imagine trying to keep 1,000 investors happy!

Crowdfunding is not sophisticated investing.

There is a kind of hip, underground vibe to crowdfunding. You could kick in a couple of hundred dollars towards an edgy independent film and feel like you’re part of the creative process. However, some professionals might not want to open up their business plans for such wide scrutiny.   

Crowdfunding could impact future investments in your company.

If you're tapping into crowdfunding as source of capital, you want to think about the longevity of your business. A single project can benefit from the financing, but if you've giving up shares in a company that might become extremely successful, those shares could tangle up future investment opportunities. See "The Social Network" for a perfect example of this dynamic playing out with billions at stake!

Crowdfunding has a limit on share values.

The cap with crowdfunding is $1 million. If you manage to raise more than that amount you'll be frozen out of crowdfunding for at least a year unless you want to become involved in security registration compliance. Suppose your company experiences rapid growth? You might be stuck if crowdfunding is your only cash flow source.

Crowdfunding is not a quick option.

If you need cash fast, crowdfunding is not the way to go. Once you place your proposal up on a site you essentially have to wait until it catches "fire." You'll also have to do a lot of your own promotion to drive people to your plan. This process can stretch on for weeks and months. Now consider being approved for a loan from a bank and having the funds by the end of the week. Which works better for your plans? 

Selling your business – what to do for an easy sale

Selling your business could be one of the most important and difficult decisions you will make in your business career. When things are going well – your business is making money, you’re enjoying yourself, and the future looks great -  you’re not thinking about preparing for your retirement. 

The earlier you start planning for your company’s sale, the better you’ll be able to take advantage of a higher valuation and a quick turnaround. Here are some good reasons why you should be prepared to sell:  

·         You may fall sick unexpectedly

·         Your life goals change along the way

·         Not having a successor to replace you as you retire

·         Business partnership issues and you want to sell your shares

       ·     Lifestyle change


When you are ready to sell your successful company, you should keep these three things in mind:

·         You must make a profit from your investment in the company

·         The sale of your equity should be converted into liquid assets such as cash

·         The amount you receive should meet your needs for your professional and personal life

What is the value of your business?

Determining the value of your business is like sales – what are your potential buyers willing to pay for a business like yours? With the help of a Chartered Accountant, you can run various accounting models to come up with a number using data that comes from the economic strength of your business, your industry, how much your competitors are worth, your sales revenue and profit margins.  All these must be taken into account. Remember, the buyer is not looking at purchasing the cheapest business they can find, they are looking for a company that can potentially make them more money in the future. So you need to prove to the buyers that your business will continue to grow in the industry you’re in.  

Work with a third-party business valuator whose objectivity can help smooth the sale for both yourself and your buyer.

Are your finances in shape?

You should already have your books kept in order while you’re running your business. When it comes to a sale, nothing is more important to a buyer than your accounting.  They will be asking questions such as:

·         Are you making money?

·         Are your profit margins healthy?

·         Does the company have any unmanageable debt?

New owners want to buy businesses that are healthy and thriving.  You'll also want to be sure that you've reduced your liabilities as much as possible, doing things such as settling any lawsuits and making sure all tax payments are up to date.

Gather a professional team

Selling a business is complicated.  With a complex transaction like this, you want to make sure that all your bases are covered.  By hiring a professional team to guide you in the sales process, they can provide you with the objective advice that you need to sell your business at the best value.  In recruiting a team, make sure that you choose consultants who have experience in your industry and your type of business, be it a small business or a large multi-national corporation.

Other than a corporate lawyer who can help you with the legalese and contracts, you should also take a look at hiring a good accountant. If your business has assets such as a manufacturing plant and warehouses, you can also recruit a corporate realtor who may have contacts in your industry.

Make sure that you take the time and effort to do it right the first time. By preparing carefully and using the best resources that you can hire, you are increasing the chances of selling your business at a great price.

Business Planning: An important step towards starting your business

As an entrepreneur, you juggle a lot of balls.

From managing employees, sales, financial and operations, it’s easy to get lost, trying to put out the daily fires. If you don’t take a step back and take a look around, you may have realized that your business is not what you had originally started.

This is the point when you realize you should have sat down and spent the time in creating a business plan. Not just something that you’ve jotted down in the back of an envelope, but a document that maps out your long term strategic plan for your business.

Creating a business plan is important as it not only provides you with a compass – guiding you in the right direction, but also reducing the stress and frustration in reacting to situations on a daily basis, because you know the path you are on. A business plan also allows you to:

• Be visionary –identify where you’re going and keep you on track towards your goals;

• Execute with confidence – you know what your tools and resources are going to be and can handle any potential surprises;

• Be fiscally strong – you’ve already laid the groundwork for your financial health, knowing your expenses and profit margins.

What’s a business plan?

A business plan is a document that outlines how you are going to achieve success in your business and a step by step process on how you’re going to get it done. However, you have to realize that the information that you put in your business plan depends on who your target audience is.

Here are the items you need to keep in mind when writing your business plan:

1. Know your audience

Tailor your plan to your readers’ requirements. If the plan is to raise funds, then you must indicate how your potential investor would make a return on their investment and how long it will take. However, if you are communicating your future plans for the company, then the goals of the plan are different. Always remember to tailor the material to your audience.

2. Identify your customers

Use the plan to delve deeply into outlining who your customers are. Why would they want to purchase from you. What are their pain points? How will you solve it for them? Understand the size of your potential market and how it will grow over the next 5 years. By answering these questions, you will uncover if your business is sustainable for the long-term.

3. Who are your competitors?

You also need to know the size of your competitive market - how will you differentiate yourself? What kind of challenges will you face when you go against them? It’s important to know your competitor’s strength and weaknesses so you can exploit them to your full advantage.

4. The design of your plan

If your plan is a document, make sure that your plan is easy to read, well organized and looks professional. If you are doing a PowerPoint presentation, make sure that your key points are clearly stated and easy to read.

5. What is the ROI?

Most business plans are written with the goal of raising financing. So, know your numbers! You should be aware of how much money you’ll need to raise, what your profit and operating margins are and how you’re going to make money. If you’re looking for funding from investors, then you need to communicate clearly the return of investment that they will get. How long will it take for them to make back their investment and more? What will make them confident that you will succeed in this business – so that they know they will not lose their money? They also would want to know if you are prepared for all contingencies and can protect their investment from failure.

Finally, a plan is not written in stone. Due to changing market conditions or new opportunities, you may have to react quickly and adapt. You should review your plan every quarter, just to see where you are against your milestones and address as necessary.