Monthly Archives: February 2013

Understanding the Types of Social Media

Understanding the Types of Social Media from The Startup Garage

Understanding the Types of Social Media

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Social media is a great way to build awareness about your company as these sites allow community members to share their experiences with you and other members of the community.  A customer’s good experience with your products or services can lead to positive feedback and word-of-mouth buzz.  This feedback and word-of-mouth content spreads across social networks leaving an effect on your company’s image and your customers perception of your company. An explanation of the various types of social media sites is provided below.

Social Networking – Social networking sites allow community members to upload photos and videos, add comments, create and join groups, create events, post bulletins, etc. Facebook is the largest social networking site in the world followed by LinkedIn.

Social News Sites – Social news sites allow members to share news stories, blogs, videos, articles, and photos. The community can then vote up or down for the submitted piece and can also add comments. The more votes a submitted piece gets the more likely it is to appear on the front page of the site. Digg is a very popular social news site, and it can drive lots of traffic to a website in a short time if the piece appears on the front page of Digg.

Social Sharing – Social sharing sites tend to share materials mainly in two forms: videos and photos. Community members can upload videos on YouTube or pictures on Flickr, for example. Uploaded photos or videos of your company, product or service can lead potential customers to your website.

Social Bookmarking – Social bookmarking sites allow you to bookmark and share your favorite websites with an entire community. Delicious, Magnolia, and Diigo are online communities that have a lot of opinion leaders who want to find great sites and share with their friends.

Microblogging – Microblogging is a very abbreviated blog consisting of short messages often sent from smart phones and laptops. Your messages are sent to people interested in seeing your posts. Users can post comment on your microblog and forward it. Twitter started all the rage for microblog, and it is by far the most popular platform for public instant interacting.

Unlike traditional marketing, in which people passively receive information, social media turns the table around and lets users create and/or interact with the content. A customers post about their personal experience with your company, product or service is far more valuable than any advertising slogans. Be sure to provide your customers with social media outlets to share their positive experiences with your company, product or service.

Whether you have a question about social media or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What is Revenue Financing?

What is Revenue Financing? From the Startup Garage

What is Revenue Financing?

Business Revenue Financing, also known as Revenue-Based Funding (RBF), is a means of securing funding by giving investors a percentage of total future revenue based on previous (and projected) sales revenue figures. Often described as a hybrid of the traditional equity funding model, it provides the entrepreneur a funding source based on the performance of the company without having to actually sell equity, and at the same time provides the investor the opportunity to benefit directly from company growth without buying equity in the company. Also different from the standard debt model, the entrepreneur also only pays on realized income revenue, so the payments are variable and tied to the company sales numbers. If the company has zero revenue in one month, no money is owed to the investor for that month. RBF is considered a relatively new form of funding and is continuing to gain in popularity.

RBF is good for companies that are selling product but lack assets to secure bank loans. It is also an attractive option for companies with variable revenue and financing needs, as the payments will increase or decrease according to revenue streams, allowing them to vary with your needs. Companies like restaurants, manufacturing, or brick-and-morter-heavy start-ups may not be as good a fit for this type of financing. This type of funding is typically found through angel investors or firms that specialize in RBF.

Advantages for investors are the high upside potential without the need for exit to realize return. On the entrepreneurial side, there is no required company evaluation or management guarantees with the contract, and the owner retains full control and ownership of the company. The terms for revenue-based financing are based on previous revenue numbers as well as forecasting. They typically include a set percentage of revenues which is paid out for the life of the company of until an agreed upon overall ceiling cap is reached.

Whether you have a question about Revenue Financing or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Better Business 101 – Record and Report

Better Business 101 – Record and Report from The Startup Garage

Better Business 101 – Record and Report

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Setting goals and milestones for a small business owner can be the difference between no results, average results and extreme success. Recording and reporting on your attempts to reach a goal and your achievements is absolutely essential. Often business owners feel like counting and measuring campaigns is never urgent or even that it is a waste of time. But the old saying comes to mind: “You can’t manage what you don’t measure.” For those that are rightfully convinced that setting goals and recording and reporting on their progress is beneficial here are some tips on measuring the main variables involved in business growth and development.

  1. Regularly record selected data
  2. Regularly report
  3. Regularly consider tactics and tune in your strategy to improve on your results

Good news is that nowadays recording and reporting online data has become as easy as child’s play and is one click away with the help of Google Analytics. Setting up this type of record and report is in the reach of any small business and is, for the most part, free. If you as a business owner are not able to read or understand the vast amount of data that www.googleanalytics.com offers, recruit people that can to your support team – business consultant, website designer, marketing specialist, etc. Collect the data and follow up on it, improve on increasing and converting traffic, understand where your customer is coming from and what seems to be of value to him/her and improve on it. Next month repeat the process of recording, reporting and improving. Set some meaningful goals and try to reach them.

Meanwhile, combine this information with data that you can record and report on your own. Figure out what variables are important for your business development and growth. For example, when reporting on marketing consider the following metrics:

  • Number of Suspects (Website Visits / Direct Mail Letters Sent)
  • Conversion Rate 1 (Suspects converted to Leads)
  • Number of Leads (Inquiries)
  • Conversion Rate 2 (Leads to Opportunities)
  • Number of Opportunities
  • Marketing Investment (Expenses)
  • Acquisition Cost 1 (per Lead)
  • Acquisition Cost 2 (per Opportunity)
  • Acquisition Cost 3 (per Customer)
  • Marketing ROI %
  • Lead Source

Then, set up a spread sheet (or use fulfillment software or even a piece of paper) and track the data for this month, for the quarter, for the year. Consider if your business is on the right track by measuring how far below or above you are in reaching your target goals. Brainstorm with your employees or with your support team on how to improve, implement new tactics and set up new strategies.

Then, record and report again. Your efforts are likely to soon pay off and you will find that you’ve acquired a sense of achievement in addition to business growth and development.
Lastly, if you have yet to launch your business and you are still in the business planning and business plan writing stages, be sure to state your goals and objectives and begin to develop methods for how you will track your goals. Getting started on the right foot will make a big difference.
 

Whether you have a question about ___ or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Trademarks, Copyrights, and Patents

Trademarks, Copyrights, and Patents from The Startup Garage

Trademarks, Copyrights, and Patents

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When starting a business, one thing to think about is security. Not just the security of your business in general, but security of your ideas and what you have created. This is where things such as trademarks, copyrights, and patents come in to play. These are ways to assure that your business is safe from plagiarism and knockoffs. Trademarks are used to protect things such as business logos, names or anything that is put on your product to distinguish it from other products. A copyright protects things that are written such as any literature, books, music, or visual and performing art. A patent is the protective right against anything that is a physical invention.

Most startup companies will want to trademark their businesses to ensure that no other company has or uses the same name or logo. Trademarking can be done simply online at the United States patent and trademarking website www.uspto.gov. An attorney is usually not required for trademarking, but it may help things go a lot smoother. The average cost for trademarking is between $200 and $500.

 

Theoretically, a completed work is copyrighted, but sometimes it is important to file a copyright to avoid infringement. If your new startup company needs a copyright, whether it is for a book, or significant document, it can be easily done online as well. First you must visit www.copyright.com, and then choose the type of work you are copyrighting, and fill out the application. It is that simple, and it will only cost $35 online or $50 if you would like to file the physical papers by sending them through the mail.

Patents are the most important protection devices for inventions. A patent will ensure that your invention can not be copied by anyone else to make profit. This is why the patent process is a little bit longer and more difficult. First, you must ensure that your product has not already been invented. You can find this information by looking at www.uspto.gov. Now you must decide which category your invention falls under; utility, design or plant. A utility patent is for an invention of a machine or article of manufacture. A design patent is for an invention of a new and original design of an article of manufacture. A plant patent is exactly what it sounds like, a patent for an original plant that was created and reproduced.

Next you must fill out the correct application at Uspto.gov. In most cases an attorney is highly recommended. This is important to make sure that your patent is filed and protected correctly. Patents are not cheap so it is important to make sure that everything is done correctly and uniformly. A patent runs anywhere from $1,500 to $15,000 depending on the type.

A business is important to protect, and so are your ideas and inventions. The use of trademarks, copyrights, and patents is imperative to providing the protection needed against infringement, plagiarism, and stealing.

Whether you have a question about Trademarks, Copyrights, and Patents or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Top 5 Benefits of Creating Financial Projections

Top 5 Benefits of Creating Financial Projections from The Startup Garage

Top 5 Benefits of Creating Financial Projections

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An old Woody Allen joke resonates with financial modelers and forecasters: “If you want to make God laugh, tell him your future plans.” We all know that financials projections are based on assumptions that likely never come true.  Yet, putting together the financial information for your startup might be one of the most important and eye opening experiences before the launch date. Sales projections for an existing business are derived based on past sales figures and reports as well as statistics regarding other known pertinent internal and external factors. Yet when projecting for a startup, all previous sales history is non-existent and therefore, there are some arbitrary fundamental assumptions that need to be made. Almost every experienced entrepreneur will tell you that financial projections are absolutely necessary for any launch process. Below are 5 of the major benefits that novice entrepreneurs will enjoy simply by spending time projecting hypothetical financial projections for their business plan.

  1. You will be able to show potential stakeholders that you have a levelheaded grip of reality and your expectations are practical. Possible creditors or investors are most certainly looking for realistic financial expectations in your business plan.  Creating financials that are not too optimistic or too pessimistic will earn the respect of potential investors and give them confidence in what you are presenting.
  2. You will be able to price goods and services more accurately and competitively. Lining up costs with revenues will provide you with an idea of your Break Even Point. This knowledge will be essential when it comes down to setting up an appropriate price to charge. If you charge too little you will make an inadequate profit, or if you charge too much you will end up alienating and losing customers.
  3. You will be able to trim costs strategically. Once you have categorized your projected expenses you will see emerging spending habits associated with your business. Noticing excessive spending before it has occurred will force you to create innovative money saving strategies to create value with less capital. Paying attention to areas that you are overspending can improve your bottom line. For example, if you anticipate spending money on outsourcing, you might notice that this expense could be eliminated by adding the duties to some of your employees. If you considered business lunches, those might have to be transformed into coffee meetings instead. In other words, consider if each expense category is sufficiently helping your business to generate income. Depending on your answer, you may need to take preventative actions.
  4. You will be able to pace your growth more effectively. At the startup point you will not have any idea of when you might need to hire more employees, find suppliers on a bigger scale or extend your services to other markets. In reality, you will consider expansion when sales and profits are growing consistently for a several month period. At startup you need to be prepared for that possible expansion and be able to recognize and respond to it accordingly.  Creating a cash flow statement will allow you to consider corresponding income to expenses and will not leave your business grasping for cash during a crucial point of early development.
  5. You might be able to reduce taxes. Often startup businesses don’t know how to take advantage of controlling their tax spending. If your projections predict that you will be making profits by the end of the year that means that you will be paying taxes. So, if you plan on spending for a company vehicle, the best time would be exactly before the end of the tax year, so you can take advantage of the tax deductions. Businesses that are sloppy about predicting their expenses are willing to miss dollar saving tax opportunities. Financial projections and following up on actual bookkeeping will help you decrease the tax spending of your business.

Lastly but probably most importantly your financial projections are a way for your business to set goals and to try to reach them. Your employees are all working towards a clearly outlined financial goal and reaching it will only provide satisfaction for all involved.
 

Whether you have a question about Financial Projections or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Managing Stress as an Entrepreneur

Managing Stress as an Entrepreneur from The Startup Garage

Managing Stress as an Entrepreneur

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If you are trying to launch or run a startup business, chances are you have run into major amounts of stress.  You are not alone, stress is a part of every entrepreneur’s life and there is no way around it; every entrepreneur will run into problems and turbulent times in their daily business life.  The question is not how to avoid stress but rather how to manage it in a way that will cause you to pay the least expensive price for your success.

While some level of stress can be a motivational factor, over-stressing can quickly get in the way of your entrepreneurial and business duties.  For example, your employees will quickly pick up on your elevated stress levels and will often mirror this behavioral style of their leader.  As a result, your business may suffer from unwanted obstacles that weaken communication, collaboration, customer satisfaction and overall efficiency.

Furthermore, stress can be as devastating to your personal life as it can be to your businesses.  Some of the most unpleasant causes of poorly managed stress involve sleep deprivation, weight gain, weakened immune system and unsatisfying interpersonal relationships, among other negative and unwanted effects.

As an entrepreneur you can minimize the negative effects of stress by managing it properly.  Here are a few proven stress management techniques.

Sleep – as the old saying says, sometimes you need to “sleep” on a problem in order to solve it.  For a lot of young entrepreneurs solving an issue is urgent enough that they fail to rest.  But sleep is a great opportunity to reset your mind and gives you the chance to tackle problems from a new perspective and with improved energy and determination.  So sometimes the best thing to do about a business problem is to do nothing in the next 7 to 8 hours.  In return, your rested brain is going to pay you back.

Stay Positive – inspirational speakers cannot say enough about the power of positive thinking.  In business it can be easier to see the world in negative terms, but this is not beneficial.  Part of the entrepreneurial spirit is the entitlement of staying positive, of seeing solutions instead of problems, of creating opportunities instead of finding excuses.

Laugh – Laughter is the ultimate stress buster.  It is true that not all problems can be solved through laughter but it is also true that so often new opportunities are created through laughter.

One way or another, stress will inevitably find you if you are running a business.  But, use these three simple rules to create a personal stress management strategy that will help you become better at problem solving, creative thinking and team collaborations in your business… and of course in all other aspects of your life.

 

Whether you have a question about Entrepreneurship or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Hiring an Independent Contractor or Employee

Hiring an Independent Contractor or Employee from The Startup Garage

Hiring an Independent Contractor or Employee

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It is important that you know the difference between hiring an independent contractor vs. an employee so that you can determine which is best for you and your business.  Before reviewing the pros and cons of each, start by gaining an understanding of the differences between the two:

Independent Contractor

  • Operates under a business name other than your own
  • Operates as an employee under that business name and therefore limits your ability to control the contractors tools, processes, hours, etc
  • Maintains a separate business checking accounts
  • Represents the contractor’s business name and advertises his/her services as such
  • Invoices for work completed
  • Likely has more than one client
  • Keeps separate business records

Employee

  • Performs duties and responsibilities as dictated by you and your company
  • Requires added responsibility such as training, support, health benefits, management, etc.
  • Works for only one employer, your business

With a brief understanding of the differences between independent contractors and employees, you can begin to think of the benefits that each present.

Independent Contractor

  • Often cheaper in terms of associated labor costs and overhead
  • No health benefits are required
  • Flexibility in regard to only hiring when works is demanded of your company, especially for businesses that are seasonal or experience fluctuating streams of business
  • Reduction in liability
  • More flexibility in regard to hiring and firing

Employee

  • Stronger sense of loyalty and dedication
  • Employees can perform a variety of roles
  • Improved work flow, especially for businesses that experience a steady stream of business

It is important that you take the proper legal steps when hiring an employee or independent contractor and ensure that you hire them under the correct legal classification in order to avoid costly legal consequences down the road.

 

Whether you have a question about your Management Organization or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What to Consider When Starting a Company With Your Spouse

What to Consider When Starting a Company With Your Spouse from The Startup Garage

What to Consider When Starting a Company With Your Spouse

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Starting a business can be a risky endeavor (quitting your job, spending your savings, good potential for failure, and the list goes on).  Starting a business with your spouse can be even riskier when you consider your shared finances, your retirement funds, your relationship, your mental health and happiness.  Before you risk everything, ask yourself the following questions:

  1. Are you willing, able and ready to work together?  For any successful business, you must have a proper business plan.  Part of this plan should outline ownership, roles, responsibilities, etc.  Be sure that you and your spouse have a very clear understanding of each of these areas of the business.  The more that you can divide your roles and responsibilities in different areas of the business, the better you will be able to share power and minimize arguments.
  2. Can you mesh your personal and business lives seamlessly?  Be sure to draw boundaries so that you maintain some semblance of your romantic life.  Furthermore, make sure that you both have enough room to work so that when one is working with clients, or needs personal space or room to think strategically, there is not a conflict.  Lastly, make sure that you have developed an effective way of airing differences and resolving disputes.  You certainly will not see eye-to-eye on all aspects of the business.  The better system you have for managing these discrepancies, the more successful you will be at doing so and the happier you will be with one another.
  3. Are you clear with one another on what financial risks each is willing to take?  There is a good chance that you will not see eye-to-eye in terms of when it is time to call it quits.  By discussing your financial runway with one another and having a mutual understanding of when it is time to quit, you will save the headache and potential fallout down the road.
  4. Lastly, ask yourself, what comes first, the relationship or the business?  If and when times get tough, one of you may face the decision of having to lose the business to save the relationship.  Determine when enough is enough.

 

Even if you think you know your answers as well as your spouse’s answers to all of these questions, it is wise to sit down together and have an open discussion.  Whether you determine that you are on the same page and ready to push forward, or you find that you have too many differences and that it would be too risky to go into business together, this is a worthwhile practice that will help mitigate any potential risks associated with starting a business with your spouse.
 

Whether you have a question about Running a Business or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

The Structures of Social Enterprise

The Structures of Social Enterprise from The Startup Garage

The Structures of Social Enterprise

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We are beginning to see more and more companies begin to blend their traditional corporate structures with a more modern obligation to philanthropy and social awareness. Social Entrepreneurism is on the rise and suddenly profit isn’t the only driving force behind big business. Across the nation, various legislations have passed to establish new corporate structures that aid the social entrepreneur in improving environmental, educational, social, and economic conditions.

 

The Benefit Corporation

Legal state entities that mandate corporations focus on public benefits alongside their for-profit enterprise. Shifts mainstream thought away from maximizing shareholder value towards maximizing stakeholder value by placing an emphasis on social issues. Required annual reports provide transparency to the public and accountability toward the company. These reports are not required to be assessed by third-parties; however, this will change under California law in January 2012. (Read more about the difference between Benefit and B-Corporations in the blog below)

Available in: Maryland, Vermont, Virginia, New Jersey, Hawaii, California

The L3C

Formally known as a Low Profit Limited Liability Company, L3Cs are legal forms of business corporations that blend non-profit and for-profit investment efforts with a socially beneficial structure. With reduced regulations granted from the IRS, an L3C is classified organization that sets to attain social goals first, with profit second.

Available in: Vermont, Michigan, Wyoming, Utah, Illinois, North Carolina, Louisiana, Maine, Rhode Island

Flexible-Purpose Corporation

A Flexible-Purpose Corporation is a socially conscious enterprise that allows for extreme flexibility in their structure and processes. These corporations specify a “special purpose”, either with a social cause or charitable activity, in addition to their pursuit of seeking profit. While most business corporations focus mostly on maximizing shareholder value, the goal of Flexible-Purpose Corps is to have a structured legal organization where profit is pursued alongside social aims.

Available in: California

Main Differences:

  • Company profit is still an expressed purpose of a Flexible-Purpose and Benefit Corporation, with neither profit nor social issue outweighing the other. With an L3C, the public benefit comes first, profit second.
  • Flexible-Purpose and Benefit Corporations both produce annual reports on their purposes and objectives. Only in California, do Benefit Corporations require third-party assessment on the reports.
  • On a scale from a fully functioning Business Corporation to a Non-Profit, Flexible-Purpose Corps would tilt towards Business Corporations, while Benefit Corporations tilted towards Non-Profits. L3Cs would be the mark directly before a full Non-Profit.

 

Whether you have a question about Starting a Social Enterprise or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!