The Startup Curve

The startup curve, the idea that a business startup is not a single, always uplifting idea that makes all your dreams come true. It's a graphical description of the ups and downs of the process. Paul Graham defined the process for Silicon Valley tech startups with the following chart.

 This process with its tongue-in-cheek descriptions, shows the emotional process of the tech startup. This has nothing, directly, to do with profitability or viability, it has to do with the emotional roller coaster that entrepreneurs experience as they mold their idea and try to create a valuable, efficient, and profitable entity that can someday make them actual money or be sold to create actual money.


It's just one more thing to consider as we tweak our great ideas into the promised land.


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Recipe for Success: Make a Plan

Many small business models start with a great idea. Entrepreneurs typically get great ideas from one of two places. First, they have a light bulb go off in their heads one day, the classic “Ah Ha!” moment of inspiration. “Why didn’t I think of this before?” You know the moment; you’ve probably had them yourself. These kinds of moments gnaw at an entrepreneurs gut until they have to do something about it. It’s part of the crazy DNA of an entrepreneur. Second and most common, they work with a less than desirable situation for a long time wishing it could be better until one day they decide they will make it better themselves. You work away over the years in someone else’s company thinking “If this was my business, we’d do this differently.” Eventually, the pressure builds up inside until you have to start your own business or explode. For entrepreneurs, those seem like the only real options.

So you have a great idea, now what?

Start by making a plan. Put down on paper a description of your product or service and start defining your business model. In other words, identify your customers, your competitors, the size of your market, suppliers and partners, and your distribution methods. You’ll need to research the market in which you’ll operate to understand how business is typically done and what trends are driving the future. And it’s not that you can’t do things differently in your business. You can and should consider how to make doing business with your company easier than doing business with your competitors. However, if you’re going to reinvent the wheel, you need to understand how the market (i.e. your customers) will react to a different model. Just because your new way is better, doesn’t mean it will be accepted. People can get in a comfort zone and resist change. All these questions point to one activity that is critical for new businesses: research.

There’s just no way around doing your research. I write about doing research frequently. In the next post I’ll give a list of helpful research tools available for hopeful entrepreneurs.

For those who want to do it right, get my book Business Start-up 101: From Great Idea to Profit…Quick! It’s a how-to guide for entrepreneurs to take you from great idea, to getting yourself ready, proving your plan, and finally writing a business plan and getting funded. You can get it at my website www.BluePointStrategies.com or Amazon.

Start carrying the small stones

A Chinese Proverb says:


The man who removes a mountain begins by carrying away small stones.


Do you feel like doing your business planning and writing your business plan is like moving a mountain? Does the sheer size of the task cause you to shrink from the task? If so, you're not alone. I coach hopeful entrepreneurs in this situation frequently. They see the job as too big, so they just don't start. 


The answer is not to postpone the task yet again, but to start carrying away small stones. Start with a plan template. Of course, I recommend mine. You can get my new book, Business Plan Template, at Amazon or my website www.BusinessStartup101.com in either paperback or Kindle format. Use mine or get your own, but layout the project in terms of your template. For people who have trouble getting started, I recommend starting with the organization description section, because you'll know much of this information up-front without having to do any research. A large portion of this section can be completed quickly and you'll feel a sense of accomplishment and hopefully a new confidence that you really can create a business plan. 


Once the description part is completed, you have to start doing your research. There's no way around that, but at least you've made a dent in the mountain. For many, this getting started is all the push they really needed.




If you need help with your business plan, we can help. Contact me to see if we're right for you. 

PowerPoint, Not Just For Presentations Anymore

One of the fun parts of being a start-up coach and consultant is I get to review lots of business plans. As you would imagine, some are good and others not so much. There has been what I consider an alarming trend over the past few months though. Entrepreneurs are using PowerPoint to create a "business plan." 


Now clearly, you can't write a business plan in PP unless maybe it's for a lemonade stand. Most people are clueless how to use PP to support a presentation, much less use it for a business plan. Don't get me started on the insane presentations people make using PP. Who in their right mind would try to write a business plan using presentation software? I know, it's nuts, but so-called entrepreneurs are doing it every day. 


If you need help writing a real business plan or developing a real presentation, drop me a line. I'm happy to help with either, but we won't be mixing them together.


www.BluePointStrategies.com

ShoestringVenture.com

Thanks to the guys at Shoestring Venture blog for featuring my first book,Business Start-up 101: From Great Idea to Profit...Quick!  Click on the logo below to go to their feature.

   

   

You can buy the book on Amazon by clicking on the link below.  It's available in paperback and Kindle format and comes with handy downloadable templates to help you get started right away.

   

Shoestring Venture

I'm pleased to report that they guys at Shoestring Venture blog will be featuring my first book, Business Start-up 101: From Great Idea to Profit...Quick! on October 27th at 1:00 PM Central Time.  Here's the link:  http://shoestringventure.com/2011/10/27/creating-startup-success/  The link will not be active until Thursday.  Feel free to visit their site by clicking on the Shoestring Venture logo below.

   

  

I appreciate the publicity and encourage you to buy my book if you haven't already done so.  You can buy it through my book website atwww.BusinessStartup101.com, use the link below or go directly to Amazon.  It's available in soft cover for $19.95 or Kindle for $9.95.  The book comes with free downloadable templates for MSWord and Excel.

Survival Cash

We’re talking about some of the key questions entrepreneurs should ask before deciding to start a business.  In the last post, I discussed figuring out how much cash do you have to invest in your new business?  In this post, I want to discuss how much cash you need to survive while you’re starting your business.

  

It many cases, it can take a year, two years or more to get your business stabilized and paying you a regular and adequate salary.  Can you survive for a year, two years or more without a salary?  Maybe you have a spouse that can fully support the financial needs of the family while you start the business.  If so, you’re very lucky.  If not, how much money do you need to have in reserve to live on for one year?  You should plan to have a reserve fund available that will support your personal financial needs for at least one year.  After you work on your financial projections, you might decide to lengthen that period based on what you expect for your business. 

    

Prepare a family budget, determine your cash needs and figure out how you’ll survive for the next year or two if you don’t bring home a salary.  Remember, entrepreneurship is not for sissies!

What are your business start-up goals?

Why do you want to start a business?  Many people want to start a business for all the wrong reasons.  See the previous posts on that topic.  Let’s change the topic slightly.  What do you hope to accomplish in starting a business.  In other words, what are your business start-up goals?

  

Are you starting a business just so you can get money for stuff?  Extra income for:  cars, boats, houses, travel, hobbies?  What about college education for your kids, medical expenses or retirement?  These are all good goals, but will your new business actually allow you to get there?  And what about time frames?  Over what period of time do you expect to reach these goals?  Does starting a business REALLY help you achieve your goals?

  

Spend some time thinking about your goals.  Why do you want to start a business?  What do you hope to get out of it?  Many would-be entrepreneurs thought that by starting a business they wouldn’t have to work for the ‘man’ any longer.  What they found was they traded one ‘man’ for another.  The new boss is probably much harder to work for and requires significantly longer hours and a much higher quality of work than the old ‘man’ required.

  

Think about your motivation for wanting to start a business.  Discuss your thoughts with your spouse and family.  Make sure that everyone is on the same page and that page isn’t a fairy tale.  Talk with a business coach or mentor to get a reality check on your plans and goals.  If you do the proper planning up front, the end result may be exactly what you wanted.  But a lack of planning may put you worse off than when you started.

Why do you want to start a business?

Starting a new business is a scary and risky proposition.  Starting a new business can be extremely time consuming and may require participation from your family or your absence from family events.  Starting a business may require you to use your life’s savings or borrow money from the bank for which you’ll be personally responsible.  So why do you want to do this?

  

For some people, it’s just a no brainer.  They HAVE to start their own business.  They’ve been working for ‘the man’ for too long or are just tired of seeing a business run into the ground.  For others, they have an idea that just needs to get out.  If not them, who?

  

For still others, they want to start a business out of necessity.  That is, they don’t have a job and have no good prospects for finding one anytime soon.  They see starting a business as a necessary evil.

  

If you plan to make your fortune in a few months and start living the good life, think again.  Most new business owners make little or no income for the first few years in business.  In fact, many times, your employees will make more than you until your business is well established and financially stable.  You need to clearly understand your motivation for starting a business and then decide if starting a business will help you achieve your goals.  

Selling into a non-market

Do you understand who your customers are and what they want?  I think many small businesses don’t really understand this.  They think more about their product and how to sell something that they want to produce, rather than what the market wants to buy.  

  

Hugh MacLeod, author/blogger/artist one of my favorite entrepreneurs (gapingvoid.com) calls these businesses the Middle Seat Guys.  He likens businesses that sell stuff that their customers don’t want to airlines who sell middle seats.  Hardly any airline passenger wants the middle seat.  In fact, with rare exception, if you were given a choice between the aisle, middle or window seat, the middle seat will go unclaimed every time.  Hugh wonders why the airlines still offer a middle seat when they know their customers don’t want them. 

   

The ideal situation for a small business person is to find a niche within their market segment to operate.  Look at the market and the competition and figure out what the customer wants.  What are the trends in the market that aren’t being addressed?  The way we do business in almost every market is changing.  What areas of business do your competition or market leaders fail to adequately serve?

  

Yeah, this is hard.  But if you can find a niche where there is actual demand and there aren’t 100 other companies in the market already trying to serve, then maybe you’ve found a place for your company.

The Financial Reality of Starting a Small Business

Chris joins Jim Blasingame on The Small Business Advocate radio show on July 5th.  they discuss the financial aspects of starting a small business and it's affects on the entrepreneurs personal financial situation.

Radio Show Link

Jim Blasingame & The Small Business Advocate show

Entrepreneurship is a Family Affair

Chris joins Jim Blasingame on The Small Business Advocate radio show on July 5th.  they discuss how starting a small business affects the entrepreneurs family.

Radio Show Link

Jim Blasingame & The Small Business Advocate show

More Top 10s for Huntsville

Huntsville ranked 7th among the top 15 regions in the latest Site Selection magazine survey of site selection consultants.  Huntsville is one of the smallest cities on the list, but is still recognized as an attractive location to locate a new business or expand an existing business.  The survey queried the site selection consultants on their pick for the top metro areas for investment.  The top 10 cities on the list were:

1. Dallas, TX

2. Atlanta, GA

3. Charlotte, NC

4. Houston, TX

5. Indianapolis, IN

6. St. Louis, MO

7. Huntsville, AL

8. Charleston, SC

9. Greenville-Spartanburg, SC

In addition, Alabama was ranked 10 in the top 10 states with best business climates as ranked by Site Selection magazine.  While Alabama was bested by other southern state like North Carolina, Tennessee, South Carolina, Georgia and Louisiana, landing in the top 10 is still a prized location.  Alabama ranks especially well in the aerospace, automotive, wood products and green energy industries. 

  

As an entrepreneur and one who works with and watches the entrepreneurial community, these rankings confirm the positive environment that residents of Huntsville recognize as business as usual in Alabama and especially in Huntsville.

Let the Tsunami Begin!

No, not the destructive wave of dark water that destroys everything in its path, but the wave of start-ups that will spring up all over the country bringing jobs and creating wealth.

  

With the change in political direction brought on by the mid-term elections, expect to see a change in attitude and expectations from business owners and potential entrepreneurs alike.  As I coach with business owners and speak with entrepreneurs, the thing I’ve been hearing over and over is their fear of the unknown and how they are waiting on the sideline for a more certain future before investing their cash.  In fact, I’ve heard more than a few times an even more dire fear from business owners about the direction of the economy and our tax structure based on the actions of our current congress.

  

The new Congress will not be seated until January, but the change in direction coming will give some certainty to business owners who have had none lately.  Business profits have been generally good but we haven’t seen the investment in new plant and equipment or expansion that typically follows because of that uncertainty.

  

While I’m a strong conservative, this site is not about politics.  It’s about helping entrepreneurs turn their dreams into profitable businesses.  The political climate has cleared a little and the future may seem a little brighter for business interests this morning.  The key for hopeful entrepreneurs is to continue to do your research and test your idea for viability.  Don’t think that just because the political environment has changed that you’ll automatically be successful.  It doesn’t work that way.  And a bad idea is still a bad idea even in a great economy.

Elevator Pitch

What's your elevator pitch?  Do you have an engaging appeal?

Most entrepreneurs have really lousy elevator pitches.  They drone on and on listing the services they offer without ever truly engaging the recipient.  What they fail to realize is IT'S NOT ABOUT YOU.  It's about your client and what's important to them.  If you are listing services and features, you'll put your potential customer or contact to sleep faster than reading the Windows program manual.

Every once in a while I'll hear a really good elevator pitch.  Think yours is good?  If you live in North Alabama, why not enter it in the BizTech Elevator Pitch Contest on November 19th.  You'll need to get your entry in by Today, so get to it.  You can download an entry form and get all the contest rules by going to www.biztech.org .

Don't feel like entering the contest or don't live in North Alabama?  Then let's hear them here.  Send me the link to you giving your elevator pitch on YouTube and I'll give you some feedback.  If it's a real winner, I'll post it here on my blog.

Let the pitches begin...

Rocket City Sitters - Madison, AL Startup of the Year!

         

My friends at Rocket City Sitters were honored by the Madison, Alabama Chamber of Commerce recently as the 2010 Start Up of the Year.  From L-R are Nick Weseman, Adrienne Stephens and Erica Weseman.  Congratulations on the award, you guys are doing a great job!

RCS provides short-terms childcare in the Huntsville-Madison county area.  they hire only trustworthy sitters who are certified to provide quality care for your kids.  They also work with organizations such as churches and businesses and events like a wedding or reunion.  No more need to stay home on a Friday night because you can't find a sitter.  Contact Rocket City Sitters today to schedule a sitter by phone at 256-272-1727.
 
Check out Rocket City Sitters on-line at www.RocketCitySitters.com .

Business Planning - What Not To Do: Part 4

Verify Viability.

The only thing worse than not doing any research is not verifying viability.  The tools available for entrepreneurs are many and can sometimes feel complex.  I meet many people developing their business plan and doing their market research without a clue of how to prepare a viability analysis.  I’ve got a very simple system called the Three Tools of Financial Viability^TM.  The tools are available to every business owner or prospective entrepreneur and are fairly simple to use.  The tools consist of an income statement projection, a cash flow report and a break-even analysis.  That’s it.  That’s really all you need to test for financial viability.

The income statement determines how much money you business will make and over what time period.  The cash flow report determines how much cash you’ll need to start and run the business according to your business model.  And the break-even analysis tells you how much business you’ll need to support the level of infrastructure you’re projecting.  Based on the level of business you can ask yourself it that actually makes sense?  In fact, you can use all three tools to determine if your model makes sense.

In the best case scenario, you’ll run the numbers through the Three Tools of Financial Viability^TM and determine if you like the results.  If not, tweak the business model so that you get a different outcome and run the numbers again.  Keep repeating the process until you like the results or determine that the model, at least in its present form, will not work.  If you like the outcome, you can start writing your business plan.

That’s really all there is to it.  Students who go through my business plan class almost always dread the discussion about income statements.  They think the process is way too complicated for non-accountants.  When I tell them that constructing an incomes statement is the easiest part of the whole class, they laugh, nervously.  Once we finish though, they all agree that they can do this too.

For more information about the business planning and start-up process, get my new book,Business Start-up 101, From Great Idea to Profit…Quick!  It’s coming out in September, but you can pre-order your copy now.

St. Joseph Job Networking Club

On August 17th I'll be speaking to the St. Joseph the Worker Job Networking Club.  They meet on Tuesdays from 12:30 - 2:00 at the John the Baptist Catholic Church, 1055 Hughes Road, Madison, AL.

I'll be talking about Understanding Entrepreneurship; what's involved in getting ready to be a business owner.  I'm not talking about business plans and bank loans.  I'm discussing getting yourself and your family ready for your self-employment.  We'll discuss family, personal finances, success thinking and action plans.

In addition, I'll let everyone know about the resources available for hopeful entrepreneurs at the Women's Business Center of North Alabama.  I'm a big supporter of the Women's Business Center since I'm on their board of directors and serve as a business coach.  In addition to the work I've been doing in Huntsville, I'm serving as the program manager for a USDA Rural Development grant to serve rural Morgan County.  We teamed up with the Rural Morgan County Industrial Development Board to bring coaching and training to rural Morgan County.

If you have any interest in learning about entrepreneurship, come join us.

Business Planning - What Not To Do: Part 3

Shortcut the research.

Does this really need explanation?  Okay, so it does.  I’ve found that ‘things that go without saying’ should always be said.

You probably know someone who tried to start a business without doing any or adequate research.  You remember them telling you about this fabulous business idea that they came up with and after researching the market, they’ve decided that nobody else has ever had the idea.  The only problem is that you know of at least two other companies who do this same idea and are doing it very well.  What was this person thinking?  They clearly didn’t do any research because the vaguest of internet searches would have turned up their competition.

On the other side of the coin, we’re not trying to solve the remaining six Millennium Prize math problems.  We’re talking about answering a couple of basic market research questions.  

1. Who is the competition and what are they do well and not so well.

2. Who is the customer and be able to describe them in demographic terms

3. What do your customers like and dislike about the product or industry and what do they really want?

4. S.W.O.T. Analysis for your company and the market.

That much research might take you a couple of days or a couple of months, depending on how much time you have to devote to the project and how complicated your market.

For more information about the business planning and start-up process, get my new book, Business Start-up 101, From Great Idea to Profit…Quick!  It’s coming out in September, but you can pre-order your copy now.

Business Planning - What Not To Do: Part 2

Just dive in.

Before diving in head first into water that may only be a few feet deep, take a step back and make a plan.  I’ve developed a process for this business planning activity that I think works very well.  It will save you time and help you define the probability of profit quickly.  You can then tweak your model until you like the outcome or dump the whole idea if it turns out not to be viable.  The process is this:

Market Analysis

  - Competition

  - Customer

  - SWOT

Marketing Plan

Viability Testing

Once you finish with your viability testing iterations, you can move on to identifying and determining some of the more mechanical processes of starting a business such as entity type, location, identification of partners (banks, insurance agents, accountant, attorney and of course consultant).  Only then should you start writing the plan.  If you do all the research and planning, writing the plan will be a snap.  The only question will be how much detail you include.

For more information about the business planning and start-up process, get my new book,Business Start-up 101, From Great Idea to Profit…Quick!  It’s coming out in September, but you can pre-order your copy here .