Canadian Small Business Women

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6 mistakes entrepreneurs make when seeking out funding

Praveeni

Entrepreneurs often have many  “great” ideas and rely on funding in the form of a business loan or investors to bring their dreams to light.  Pitching your business and asking for funding can be an intimidating and grueling process. However if successful the payoffs can be huge. Unfortunately many entrepreneurs aren’t successful in securing the funding they require. Here’s a look at 6 mistakes entrepreneurs make when seeking out funding:

  1. Over-valuing their firm or product
    Ok you’ve got an idea- that’s great, but how much is it worth? If it’s your idea it’s probably priceless to you but how much is your business really worth? People tend to over-value their business in hopes of securing a greater investment but that very often fails. Take an objective stance when valuing your business – look at how much you’ve done in sales, your costs and how much revenue you’re really brining in. Remember sales do not denote firm value. Don’t forget to factor in your production, operational and carrying costs.
  1. Presentation & pitch is too long
    Your elevator pitch and investor presentation should be short and informative. Keep your presentation under 10 slides and make your slides concise with 3-5 points per slide. Your elevator pitch should be about a minute long at most. If you can’t summarize your business in under a minute you may need to spend more time understanding your business. No one wants to be stuck listening to a 20 slide presentation.
  1. No concept of market size
    Whenever you offer a product or service you must be aware of how large or small its market is. Whether it’s a nice or mass market item, every product/service has a market. It’s up to you as an entrepreneur to research your market and determine who your target audience is and how much of a market share you would like to capture. Remember 100% market share isn’t always a viable or profitable goal. Be realistic in your market share goals and understand the size of your market.
  1. No professional business plan

A well written, factually correct business plan can garner you the funding you               require. It’s important not to skimp on your business plan. Don’t rush it, take time     to understand the risks, opportunities and profitability of your idea. Make sure you     comprehend your product and what it will take to bring your idea to market.  Many     people overlook the financial aspect of a business plan. Projections can be                     intimidating so seek out professional help if you require it, never assume always ask.

  1. Inability to explain what problem their product solves
    Ok so you’ve got an idea – great! How can it help me? What problem will it solve? Many times entrepreneurs are unable to explain exactly how their product is useful to consumers. This can be off-putting to investors as they think – if a person can’t even explain their own product then how can they sell it? You must fully understand your product or service and how it benefits consumers. Be prepared to answer questions about your own product and your competitor’s offerings as well. The more informed you are the better.
  1. No flexibility
    When asking for funding you need to be flexible. Remember you’re asking someone else to put their trust and money in you and your business. You may not always get the offer you prefer and in some cases may have to counter offer as well. It’s good to be prepared with at least 3 different counter offers when pitching to investors. You should also be open to different kinds of offers. This doesn’t mean give away your whole company for free but listen to what they have to say and run the numbers before you decide to accept, counter or decline. Most importantly be realistic – have a realistic valuation and seek out the appropriate amount for the share you’re offering.

 

Praveeni Perera is the CEO and co-founder of Professional Edge Consulting a corporate training company based in Ottawa offering training and coaching services to clients around the world.  She can be reached via Website, Twitter, Facebook or her Blog.

Business Research Demystified…New vs. Existing Business. What You Need To Do (Part 2)

yvonne

New Business Start-up Research

Using an analogy from the bible; when God was giving the children of Israel the land of Canaan, he asked Moses to send out men to spy out the land… whether the people who dwelt in it were strong or weak, whether the land was good or bad, rich or poor etc.

Same principle applies to when you have a great business idea, you need to research; research yourself, research your potential business partner, research the market you plan on entering, research who the players, and research the types of finances available. By researching yourself, you are able to establish whether or not you have the skills and experience required to start and run your own business successfully and the gaps you need to fill. By researching your potential partner(s), you determine what skills and experience they bring to the table, how it complements you bring, and most importantly whether you are able to work together in the short and long term.

Your Market (Industry) research is one of the most important and not to be compromised research that needs to be done. Omitting to carry out this research, even if it is minimal to start with, could lead to challenges in your business. During your research, you have the potential to discover anything, you could find the intended market is on a decline or that the potential for growth is phenomenal. By undertaking this research you are able to determine market growth potential, trends, receptiveness of the market, who the key players are such as vendors and competitors, and potential partnership opportunities.

Existing Business Research

For existing businesses, the focus is usually on growing the business an d increasing profits; better serving the needs of customers; being ahead or keeping pace with competitors; keeping abreast of the evolving economic and environmental factors; and taking advantage of emerging trends and technologies. To do this successfully starts with research, and continues with keeping abreast with the news. Research would include; competitor analysis, customer surveys, market trends, employee surveys etc.

Market trends and well as keep abreast of what your competitors are doing can be vital information that enables you be relevant. Remember, if your target market is not buying from you, they are buying from someone else. With competitor analysis you are able to identify who your competitors are; their products/services, pricing, distribution etc. Armed with some of this information you are able to make better business decisions, fine-tune your competitive advantage, and strategically position your business succeed.

Customer surveys (and feedback) will enable you gather information about the needs and opinions of your customers. Customers’ needs are constantly changing, therefore we need to be keep up with these changes and trends in order develop products and/or services to be relevant and appeal to the needs of your target market.

In general, undertaking the required research may or may not be easy depending on you familiarity with the process, knack for finding information, experience etc. It can also be very time-consuming and complex depending on the type of business or research required. With the internet and social media, research and information has become more easily available, however, it is important that you have clear objectives on what you are looking to achieve so as not to get overwhelmed. If you are finding it difficult to undertake the research yourself or do not have the time, it is worthwhile outsourcing or delegating the process.

Once your research is completed, you are now in a better position to know if and how to proceed; you have better understanding of the market you operate within and able to respond to the needs of the market; you know what your customers want; you are in a position to develop your competitive advantage; and armed with the knowledge to make better decisions and planning on the strategic development of your business.

While some businesses may have started out successfully without any research, a time comes when they have to pause and research to maintain their strategic advantage or they become irrelevant.

Get a free eBook to get started on your goals: http://eepurl.com/xeDrf

Yvonne is a Change Consultant, Coach and Speaker who is passionate about working with Individuals, Entrepreneurs and Organisations to implement change, drive results and achieve their goals.   She can be reached at:   www.facebook.com/oliveblueinc, www.twitter.com/oliveblueinc, www.oliveblue.com

Business Plan Demystified… How to write your Businesss Plan once and for all.

yr

If I had to say in a few words what a business plan is, it would be “The blueprint for a successful business”.

Before a builder sets about building a house, he needs a set of architectural plans (blueprint), which guides and instructs him in the build. Without this, sooner or later he will most likely to run into problems such as; incorrect dimensions, unstable foundation to support the structure of the building, and delays. In other words, complete chaos!

The same thing goes for someone who starts a business without a business plan, this could lead to; insufficient understanding of the service/product market, insufficient funds to start and run the business, a lack of customers to sustain the business, and much more. These are issues that could been managed much better if adequately prepared with a tool such as a business plan.

Essentially a business plan is the detailed plan for your business that should be written to;

  • Enable plan the start and growth of the business.
  • Provide ongoing guidance and a benchmark that measures your efforts and keeps you on track to achieve set objectives.
  • Raise finances from external sources.
  • And attract successful partnerships and alliances.

Your business plan should be well thought through and contain pertinent information to enable you successfully kick-start and grow your  business. When approaching external sources for the purpose of raising money, your business plan is your written sales pitch. It should show a good return on investment, show there is a market for the product or service, and inspire confidence in the lender that you capable of successfully manage the business.

When it comes to the question of who should write the business plan? You, your business partner or team should be part of the business plan writing process, as you essentially have more knowledge about the vision for the business. Also, through the process of writing the business plan you will learn the what, why, where, when and how of the business and market.

Some people find it difficult to set out their ideas on paper; hence the availability of business coaches and consultants who can work with YOU in writing an effective plan, as they usually have more knowledge and experience in with Business Plans.

The length of a business plan will vary depending on its purpose. Take for instance, if the business plan is for the intention of raising funds to finance the business, and the more money you need to raise, the more comprehensive your business plan should be to show a detailed plan, analysis and strategy to convince the potential financiers of the viability of the business. And the less money you need to raise or no money at all the shorter the length containing only foundational items. The average business plan will include all the sections mentioned below.

Prior to writing your business plan, take a stab at developing your business idea, and then do some preliminary research of your market (product/service and target audience). The output of this effort feed in heavily into writing your business plan.

Your business plan should include the following sections:

Executive Summary – This is typically included when writing a formal business plan for external audiences to review. It should be written last to summarise the entire business plan. It provides an overview of each section of the plan and contains key information at glance.

Management – States who will be managing the business, their related experience management responsibility. Include qualifications and experience, and where there is a skill or experience gap, mention how this will be filled.

Purpose or Background of Business – This is typically included when writing a formal business plan for external audiences to review For a new business, this section includes business purpose; is it going to be a profit or not-for-profit venture, why has it been set up, what need is it going to meet etc. If it is an existing business the section should be titled ‘Background’, and provide information on when it start trading and a brief summary of performance to date.

Business Objectives – These are the objectives of the business, what it will be working towards achieving. The objectives can be grouped into short, medium and long term. Always endeavour to apply the SMART rule; Specific, Measurable, Achievable, Realistic and Time-framed

Product/Service – Describe the products or services that will be offered in more detail. What is the USP (Unique Selling Point/Proposition)? Mention any patents or trademarks that exist or have been applied for. Also mention complementary products that could be offered.

Market – The past, present and future of the market you plan on entering or that you are already operating within. This section should contain a SWOT analysis (Strength, Weaknesses, Opportunities & Threats). As well as how the business will fit into the present or future market, and what the major drivers for its success in the market.

Competitor Analysis – This describes who your competitors are, both direct and indirect. What they offer and how you plan on competing against them or even working with them.

Marketing Plan – Having worked out your marketing strategy, this will describe your plan to market your business. It will include the 4Ps; Pricing, Promotion, Product/Packaging and Place (distribution). It includes your social media strategy.

Operational Plan – Where you will be operating from, machinery/equipment required (will it be bought or leased), staffing requirements and logistics.

Financial Analysis – Very important section for you or external reviewers. It should contain; financial model, cash flow forecast and profit & loss forecast. Assumptions that have been made in reaching figures and even the risks that could affect figures. This ensures and demonstrates that you have thoroughly worked out your figures and are prepared for any eventualities.

Above is a bird’s eye view of what your business plan should contain. Depending on the type of business and the purpose for which of the business plan is being written, the content and structure will differ.

Don’t write your business plan for only the sake of raising finances or other reason, and end up not utilising it for its main purpose; implementing and managing a successful business. Your business plan is to ensure you build a solid foundation for your business that is able to withstand threats, grows, is profitable and most importantly, is fulfilling.

For a free Business Plan Template

Yvonne loves and enjoys working with working with Individuals, Entrepreneurs, and Organisations to achieve desired results. She is a results driven High Performance Consultant & Coach, and straight shooting Speaker whose first objective is her client’s success.  She can be reached at:  www.facebook.com/oliveblueinc, www.twitter.com/oliveblueinc