Monthly Archives: June 2011

Why Start a Business during a Recession

Startup Strategy Recession Going Up from The Startup Garage

Why Start a Business during a Recession

An African proverb says The best time to plant a tree was 20 years ago. The next best time is now. The same is true about starting your own business. The good news is we are in a recession. If that sounds like an oxymoron, consider these 4 reasons to start your business during todays recession instead of waiting for better economic times.

1. The national unemployment rate is in double digits. For a lot of people, starting a new business is the perfect way to find employment for themselves. Also, it is relatively easy to find employees that have the appropriate skills and training. Employing people to work for your business can turn out to be relatively cheaper than in booming economy. Hiring now might get you employees that are determined to over perform in order to keep their jobs.

2. The economic recession will force you to figure out a way to innovate and do more with less. The resources that your startup business can afford to waste are very limited and you will have to employ a do it yourself strategy for a lot of action items on your list. For example instead of hiring a marketing agency you might develop an inexpensive social media strategy to promote your business, or instead of hiring a graphic design firm to design your logo, you could use another beneficial strategy and trade professional services. This can help you gain assets for your business without spending precious funds and helps you build a network.

3. There will be less competition as competitors are also struggling with finding capital sources. So that makes it a ideal time to buy property, equipment and all else needed to start your business as the demand for resources is lower.

4. Marketing is expensive and a capital pressured startup can hardly afford it. Novice entrepreneurs also tend to have problems with the quality of their initial product. Creating a massive marketing campaign for a product that has not passed the test of time can turn out to have a negative effect on your business. Controlling the volume of your production will give you the opportunity to dedicate time and effort to product development and soon enough you might turn with a loyal following instead with a pile of one time unhappy customers.

It might sound counterintuitive to start a business during a recession but in fact some of the most successful businesses today have launched during times of economic struggle. Among those are Dell, Microsoft, Hyatt, Burger King, Fed Ex and CNN. Those companies became successful by recognizing the tough times and filling the needs of the market as best as they can using the economic disadvantages into their advantage.

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“Ah-ha” Business Ventures

Venture Business Planning Idea From The Startup Garage

“Ah-ha” Business Ventures

With many recent success stories with businesses such as Facebook, YouTube, Groupon and Netflix, everyone thinks they can come up with that special million dollar idea. Here are a few people that actually came up with that idea that will make you say why didnt I think of that?

1. Making money wearing a t-shirt? Why didnt I think of that? Almost everyone at some point in their life has paid at least $15 to walk around toting some companys logo and design on their shirt. That doesnt make very much sense does it? The company receives profit and free advertising. I am sure this is what Jason Sandler was thinking when he started this company. He started this ingenious venture on January 1, 2009 when he charged his first customer $1 to wear their shirt. This continued every day that year incrementally increasing the price. The second day it was $2, third day $3 etc. until on December 31st he received $365. That year he made an astonishing $70,000, 2010 he made over $220,000 and this year he plans to make over $500,000. All that for just wearing a t-shirt and social networking it .

2. Switch Flops: One pair, two pair, three pair, four. These creative flip-flops invented by Lindsay Phillips allow you to interchange the straps (held together with simple Velcro), making a fashionable new sandal every day. This patented design was created by Phillips when she was only 16 years old for a high school project. The flip-flops first appeared in 2007 at a surf expo, and now the annual revenue of the company is $30 million .

3. Boogie Wipes: Snot your average wipe. This is the tagline for the $10 million tissue company that started just back in 2008. These tissues created by two mothers, Julie Pickens and Mindee Doney sell in stores like Target Wal-Mart and Walgreens all across the U.S. Boogie Wipes are hygienic wipes imbedded with saline to help clean up any baby or small childs nose .

These are just a few of the many million dollar ideas that people came up with recently and made large amounts of money from. This goes to show that not all million dollar ideas need to be sophisticated inventions or businesses. These people make it clear that anyone can come up with that ah-ha idea and make a living off of it.

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Choosing Investors Carefully

Selecting Investors Capital Raising from The Startup Garage

Choosing Investors Carefully

So often in the business of writing business plans we meet first time entrepreneurs that believe that getting their hands on some startup capital from an investor is all they need. In many cases, novice entrepreneurs have solely that short goal in mind launching and finally starting to turn the wheels. However, it is important to realize that investment money comes with some responsibilities. So, here are a few pieces of advice on why not to accept outside funding without careful deliberation on issues that come hand in hand with the much needed capital. After all, picking an investor for your business might turn out to be more permanent than marriage. Therefore, understanding of the matter is essential.

Bootstrapping VS Accepting Debt Investment Capital If your business bootstrapped to get started, there is a chance that you will make a profit for yourself closing on your first sale. On the opposite side, when you have accepted a loan to get started in the moment you make that first dollar, at least some of it will go towards your debt and you are still a long way from making money for yourself.

Investment Capital Comes at a Cost and it is not necessarily only the cost that you are expected to pay back in dollar amount. Often investors believe that they have the right to guide and advice your business as a way to manage their money. They might have their own idea of how to improve on the business, who should be in the managing team, and what business direction to take. If your angel investor knows nothing about your personal values, the building blocks of your own business, the daily choices and goals that are unique to you and your business it is likely that he/she will not be well equipped to take important decisions concerning the future of your business. The outside guidance might turn out to be more of conventional wisdom of an observer, could have no real connection to the realities of your business and could turn out to be destructive in the long run. If you believe in your vision and you want to execute it unaltered you might prefer not to rely on outside investment.

Investors as Your Business Coaches Most investors actually have experience in the industry that they invest in. As a first time entrepreneur most likely you dont. Your investor might in fact be a useful business coach that could guide you steadily around the pitfalls and could lead you toward the milestones. As they say Good judgment comes from experience but experience comes from bad judgment. So, it might be beneficial for you to consider learning from your investor.

In conclusion, neither the bootstrapping nor the raising capital strategy is fundamentally wrong or right. They both have pros and cons. Considering and weighing in on those can make all the difference for the future development of your business.

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A Business Plan is A Strategic Asset: 8 Advantages of Having a Business Plan

8 Advantages of Business Plan from The Startup Garage

A Business Plan is A Strategic Asset: 8 Advantages of Having a Business Plan

One of the most important things you can do before starting a business is create a business plan. Not only will a business plan be an advantage to your business structure, it can also be an informative tool that you can show to potential investors. A business plan does not solely focus on one aspect of a business; it goes in depth in many fields and helps you understand how your whole business fits together. Here are 8 advantages that a business plan will give your business:

1. Knowing Your Finances: Finances are obviously a very important part to any business. By using financial projects in a business plan it will assist in deciding how much startup capital a new business will need. Not only will financial projections show how much startup capital a business will need but they will also show revenues, costs and profits. This is an advantage to startup businesses so they will not run out of money in the beginning stages of starting the business.

2. Make your marketing goals: Marketing is imperative to every business. A business plan can reveal the best marketing strategies that will generate the largest return on investment. Knowing the most useful marketing strategies for a business will allow that business to create a marketing advantage over its competitors.

3. Standing out From the Competition: The competitive analysis in a business plan will explain what a business and its direct/indirect competitors do differently and it will give them the opportunity to take advantage of those differences.

4. SWOT your business: The SWOT analysis will sort out the strengths, weaknesses, opportunities and threats of a startup business. This will put into perspective how strong or weak a business is, and ways it can fortify and grow. Knowing these few things about a business will layout the reasons that the business will succeed or fail

5. Knowing what is driving change in your industry: Industry growth patterns will show if an industry is expanding or declining, or the trends that the industry is experiencing. This information will help a business decide whether or not to change business structure if their industry is declining. For example if Blockbuster understood and responded to the industry trend of subscription movie rentals through the mail 3 years ago, they may not have gone bankrupt.

6. Know who will make the business work: This section of the business plan is imperative to find out what experience and qualities that a business team needs to be successful. It is important to know how many employees will be necessary to first start your business. This will also help realize the amount of money that will be allocated to employee salaries.

7. Understand the Challenges to Launch: The barriers to entry for a startup business may be significant, like needing various licenses or technological barriers that a business may have. By knowing these barriers and figuring how to overcome them, it will be easier to get your business started.

8. Price your products right: The pricing strategy will let you know how much money you need to charge for your product or service to break even and eventually create revenue. A pricing strategy is an important advantage to your startup business because it will help ensure that you are not over charging or undercharging customers. The correct price strategy will ensure that a business is not losing money or potential customers.

These are just eight of many advantages that a business plan provides for a startup business. So if you are thinking of starting a business, one major competitive benefit and asset to your company is a business plan. This strategic analysis of your business will help strengthen many aspects of your business which will be beneficial now and in the future.

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Exit Strategy

Exit Strategy Business Planning from The Startup Garage

Exit Strategy

When preparing your business plan it is useful to include a section that will consider your future plans and milestones and your possible exit strategy. After all in your business plan you have shown how much time, energy and money were devoted to your business so it will be only appropriate if you show you have an idea how to collect the rewards from your hard work. If your business plan is written to answer the questions of possible investors, description of your exit choices shows that you have put time and research in the future and that you have a clear idea of how the company has grown and will continue to grow. A clear exit plan also shows how investors are going to realize possible financial rewards from financing in your business. If your business plan is written to be used only internally, then a clearly outlined exit strategy could be used as a tool to help you decide on major expenditure choices and re-evaluate them according to your plans for the future.

Furthermore, if there is more than one partner in your business, a clearly outlined exit strategy can reduce the friction that inevitably comes when there are unspoken exit assumptions. It is not necessarily true that all partners will have the same vision for the company future as for some personal values and business decisions might collide.

There are a number of exit strategies but in general venture capitalist are interested just in couple of them IPO (Initial public offering) or the sale/acquisition of the company. Going public usually does not concern small businesses as your company has to be fairly large to be traded publicly. It is always nice to have created a company and/or a product so attractive that other companies will want to acquire your business. If going public or acquisition is part of your exit strategy have in mind that often those two options may force you to change the management team of your company and even you as the founder might be replaced. Consider this against the monetary rewards associated with either strategy and see how those relate to your personal foundations and expectations.

Novice entrepreneurs consider that their business will quickly allow them to pay back investors and eliminate their influence on the business. However, this is not a realistic option as it is likely that if your company has become quickly successful the investor will likely not have a good motivation to sell or will require a prohibitive amount of money in return for the shares.

Here are a few other exit strategies to be considered for small businesses owners.


Your business could be bought by individuals that are willing to pay you cash and will take all further control of your business.


Join forces with an excising company by combining resources and creating possibilities to produce for services and products that complement each other. This strategy in general will not bring you immediate cash and will limit your managing influence.


If your idea and concept could be sold to others to replicate that will serve you with both current cash and future potential for growth. This exit strategy concerns only the businesses that involve appropriate concepts and will be generating a lot of complicated legal issues in general.

Hand down

Some businesses are made to stay in the family and this could be the most appropriate exit strategy for your business. Consider that by choosing to leave the business for the next generation, you as the founder might be stirring up some family friction as well the fact that there will be no cash reward for you specifically. There are some considerable tax implications to be reviewed as well.

Partnership Buyout

If partners find it would be beneficial for one of them to leaves the business because of need or want, the other partner must buy out the shares that the partner has in the company. It the company was financed 50/50 by the partners, than the one partner must pay the other partner exactly half of the assets of the company unless other agreements have come about.

No Exit

Many companies may decide not to exit their business. Therefore there is no exit strategy needed, yet there should still be a future plan for your business in 5, 10 or even 20 years.

Developing an Exit strategy for your business shows that you have made careful, realistic and objective consideration of your business its future and can offer a pragmatic future rewards for all investors and shareholders.


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Re-branding Pros and Cons

Re-Branding Pros and Cons Marketing from The Startup Garage

Re-branding Pros and Cons

Long ago the word branding was used as a way to tell one person’s cattle from another’s. Today, the notion of branding has evolved and the word is used to explain the strategies used to make a product easily identifiable from the rest of the competing products on the market. Branding is the concept behind creating a unique identity for your business associated with the name, symbol, and design logo or even core values and mission statements of a company. Logically,re-branding is the process of change and is associated with the alterations and transformation of an already existing brand. The intention of rebranding is to create a new, more desirable brand in the eyes of customers.

Rebranding can often be a part of the startup process as companies learn more about the way their customers respond to their products. Many startups launch and soon they realize two things. First, the market demand is not what they originally anticipated and second, their service is not perceived by the customers in the way they originally desired. For many companies, re-branding is a chance to update their strategy and to take advantage of what they have learned about their customers. This iterative strategy is perfect for businesses that are in the initial stages of their development.

Also, re-branding is common for large companies that have had to change over time and the following can provide good examples of the re-branding process in action. Kentucky Fried Chicken decided to re-brand by changing their name to KFC and the look of their logo to reflect their change towards a healthier menu. Starbucks changed their logo on three different occasions in the recent years and has added some simple food items to their product line of coffee drinks in order to better serve their customer base.

There is a long list of companies that have deviated from their original brand ideas and have successfully rebranded their products and services. On the other side, there are companies that have unsuccessfully tried to re-brand. The clothing giant Gap recently made an attempt to change their brand logo with the hope to revive the popularity of the old brand and the change was received in a very negative way by customers. After a short lived and very expensive re-branding campaign, Gap was forced to return back to their old logo. This re-branding attempt will stand in marketing history as a good example of how a strong market research and a solid grasp on consumer image are essential when it comes down to marketing efforts. No matter how big or small your business is, it is important to pay close attention to how your customers respond to you and carefully consider the possiblePros and Cons of re-branding for your business.

PROS to Rebranding

  • Rebranding can communicate that your business is open to change in order to fit your customers needs better.
  • Change is refreshing. Re-branding can create excitement and anticipation about your improved product or business.
  • Your new brand might help your business appeal to a new audience. Also, a new brand will help you re-target your audience more efficiently the second time around if you are a startup and your initial targeting attempt has not yet met your goals.

CONS to Rebranding

  • Re-branding can get complicated, time consuming and expensive depending on the degree you are determined to change.
  • Loyal customers might perceive the changes in your business as a step backwards if they identified with the brand that you had previously.

If your business has come to the point to consider rebranding, it is important to reflect on both the pros and the cons of your choices. Make sure that when you are re-branding you have a clear objective for the new feel of the brand that you are trying to undertake. If you are committed to the business success, evaluating the effectiveness of your brand and making the choice to re-brand might give you a great pay off.

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