Monthly Archives: August 2013

Top 10 Riskiest Industries

Risky Industries Business Planning from The Startup Garage

Top 10 Riskiest Industries

Every business in every industry assumes a certain level of risk.  Furthermore, every business’ fate depends on several internal and external factors and the operators ability to manage their risk and adapt to the future.  In any industry, the companies that succeed are those that can identify trends – be them positive or negative – and those that can adjust appropriately to benefit from these trends.

The Riskiest Industries

Although there are clearly many successful business in each of the industries listed below, the factors contributing their high risk are expected to keep the industry in decline over the next five years.  The risk scores referenced are on a scale of one to nine, where one represents the lowest risk and nine represents the highest risk (figures provided by IbisWorld).

Top 10 Riskiest Industries from The Startup Garage

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

Mobile is Transforming Consumer Retail Behavior

Mobile Retail Development Trends from The Startup Garage

Mobile is Transforming Consumer Retail Behavior

Multi-Device Retail Preference

Multi-device usage is quickly becoming the norm in consumer behavior.  Consumers will research a product on their phone or iPad, test the product in a brick-and-mortar store, and go home to purchase the product online from their laptop computer.  While this shift to multi-device usage can make it difficult for marketers to reach their consumers, it does come with added benefits.  This behavior evolution enables brands to engage their audience multiple times across devices with the same marketing campaign, thus increasing brand awareness, recall and ROI.

The Move to Mobile

Consumers are turning to their mobile platforms now more than ever for research and purchasing retail items.  The consumer market has experienced a rapid increase of in-store mobile usage.  Furthermore, thanks to mobile, consumers have changed the way they engage with brands.  Thanks to a research study conducted by JiWire, we’ve discovered the following shifts in consumer retail behavior:

  • 42% of consumers prefer to research retail-related shopping on their smartphones and tablets over other devices, while 45% prefer purchasing in-store.
  • Consumer engagement with retail ads increases 42% within a two mile radius of the store’s location compared to ads inside the store.
  • Of all the commercial venues where people use their mobile devices, retail venues are #1, representing 31% of all mobile usage.
  • Smartphones replace laptops as the device connecting to public WiFi for the first time in history.

 

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

Submitting a Request for Proposal to a Web Developer

Website Development RFP from The Startup Garage

Submitting a Request for Proposal to a Web Developer

If you decide to outsource your website/mobile development to a third-party service provider you will want to put together a Request for Proposal (RFP) with your CTO before approaching potential vendors.  An RFP is a document that provides the information that a developer would need in order to provide you with a proposal for the cost, timeline and details of your development project.  An RFP will typically include your basic contact information, project information, system requirements, e-commerce, mobile, development stages, desired platforms, user types, requirements, and basic wire-framing.

How to: Developing a Good RFP

Before getting started, it is important to understand the concept of Minimum Viable Product.  Entrepreneurs usually have grand visions for the ultimate web/mobile project they are committed to launching.  After discovering costs and time it takes to develop these sights, most entrepreneurs realize that the best strategy is to launch a BETA site with only the absolute critical features.  This provides many benefits including

  • Reducing initial costs
  • Allows for user/market testing to avoid the costly/timely mistakes in development of unneeded/undesired features.

Step 1: Basic Information

Begin your RFP with your basic identity and contact information:

  1. Name
  2. Email
  3. Business name
  4. Business address
  5. Phone number
  6. Whether you are a startup or existing company
  7. Whether you have an existing website/mobile app.

Step 2: Project Overview Information

  1. List your project goals (i.e. branding, drive user engagement, generate sales, generate leads, etc).
  2. List the specific services that you are approaching the vendor for (i.e. web development, mobile development, branding,etc).  Be very specific.
  3. List your budget (a range is fine).
  4. List your desired timeline (start date, end date, if the date is vital for launch).
  5. List your intended audience for the system.

Step 3: Project Description and System Requirements

  1. Start by providing a brief description of the gran vision of the entire system.
  2. Provide an overview of the functionality that is absolutely critical for your BETA system or minimum viable product.
  3. Describe the different types of users (i.e. public users, members, administrators) and describe the types of members (i.e. consumers and merchants).
  4. Bread down the different sets of modules for each user type.  A module is defined as a set of features in one section of the system.
  5. Break down the features for each user type.

Step 4: eCommerce

This section is only relevant if you intend on charging for products/services online.

  1. List the product or services that you intent to sell.
  2. List how you intent to categorize the products and services.
  3. Provide the name of your merchant account of payment gateway if you have one.

Step 5: Mobile

This section is only relevant if you intend on launching a mobile app or mobile version of your site.

The mobile landscape is constantly changing and there are several available options for the production of mobile apps and mobile sites across the various native sites (iOS, Android, Blackberry, and Windows Phone).

Step 6: Miscellaneous

Provide any additional information that may be helpful such as:

  • Your ideas for marketing the website/app.
  • Additional documentation such as a business plan, wire-framing, etc.
  • Plans to integrate with any third party technology.

Step 7: Wire-Frame

Many people choose to leave this step to the web development company.  However, we have found that more visual learners can use wire-framing as a tool to help clarify requirements in the RFP and the overall vision.  There are many wire-framing software tools to make this process relatively easy.

A wire-frame for a website or mobile app is like a blueprint for a house – you don’t get the colors or textures.  Only plan layout of the website; this wire-frame online include very basic information.  See the image below for a sample.

Submitting an RFP from The Startup Garage

 

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

A Tech Company without a CTO is like a Bakery without a Chef

Chief Technology Officer from The Startup Garage

A Tech Company without a CTO is like a Bakery without a Chef

Every Tech Startup Needs a Chief Technical Officer

Many entrepreneurs of successful tech-based companies do not come from tech backgrounds.  However, the biggest mistake that a non-tech entrepreneur launching a tech business is to neglect bringing on a tech savvy co-founder on the management team.  This is like a bakery or restaurant launching without a chef.

 

In order to be a successful tech startup, the team must consist of a Chief Technical Officer (CTO) level member to help with the technology plan.  This is generally achieved in one of the following ways:

  • CTO Level Co-Founder (Equity)
  • CTO Level Board Member or dedicated Adviser (Free or Equity)
  • CTO Employee (Salary)
  • CTO Part Time Consultant (Paid hourly or by project)
  • Web Development Firm hired to do “Conceptualization Phase” – This usually includes thorough wire-framing (Paid per project)

Why is a CTO so Important?

Many entrepreneurs think they can bypass this team member by simply going to a web development firm and asking for a free proposal.  For simple projects lead by people comfortable with web and mobile tech this may work.  Generally, this strategy falls short.  Especially when the entrepreneur begins to seek capital from sophisticated investors.

Your web/mobile idea needs to be transformed into a working product/service.  A CTO is needed to develop a technology plan to make this happen.  Furthermore, your CTO will be able to hire a development team that can build out your idea in appropriate phases.  This team can be in-house, outsourced within the U.S. or outsourced internationally.  This is one of the decisions that you and your CTO will need to make up front in order to put your technology plan together.  This will allow you to estimate costs and timeline.

If you decide to outsource your development you will want to put together a good RFP with your CTO before approaching potential web development vendors. See the RFP Workbook below. If you plan on hiring a web firm you will just need to interview and get quotes from them for the conceptualization phase. If you plan on doing it inhouse your CTO and the founders should be able to put together system requirements, technical specs and system architecture for you and then build wireframes and MVP if applicable.

What’s in a Technology Plan Anyway?

A technology plan can consist of:

  • Technical Specs/High Level System Architecture (Web/Mobile, etc)
  • Development Plan (Timelines/Costs/Budgets)
  • Product Development Team
  • Wireframes

 

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

Pricing Strategies Than Can Improve Sales

Pricing Strategy for Growth from The Startup Garage

Pricing Strategies Than Can Improve Sales

The Right Price Can Make a Big Difference

Using smart pricing strategies can make a big difference to your sales and help you succeed in a competitive marketplace.  Each product and service is unique and therefore what works for some companies may not work for others.  Nonetheless, the strategies outlined below may be a good solution for your business.

1. Give Your Customer Choices

By giving your customers choices, they feel in control of the purchasing process and are more likely to feel committed with their purchase.

2. Limit Your Choices

However, when you provide your customers with too many options, they can experience action paralysis, feeling demotivated to purchase or incapable of making a decision.  Provide enough options to allow your customer to make a decision about their purchase but not so many that you confuse them.

3. Utilize a Price Anchor

Price anchoring utilizes a human psychological tendency where people rely on the first piece of information offered when making decisions.  With that said, the best way to sell a $500 necklace is to sell it next  to a $1,500 necklace.  By placing a premium product or service next to your standard version, you can create a value or bargain comparison that will drive your customer to make the purchase.

4. Reduce the Pain Points

By making the sales process as simple, efficient, and quick as possible, you will find that your customers are more prone to purchase.  The less that is required of the customer to buy your product or service the better.

5. The Old #9 Classic

One of the oldest tricks in the book is ending the price of your product or service with a 9.  Rather than selling your necklace for $500, try $499.  While there is much anecdotal debate about the effectiveness of this strategy, several researchers conclude that this strategy is in fact effective.

6. Test Your Pricing at Different Levels

See how your total sales and profits change when you test your product and pricing mix.  When selling a premium and a standard product, try adding a third version.  See if sales go up if that third version is a notch below the standard.  And likewise, if that third product is a notch above the premium.

 

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

Angel Investment Trends in Q1 2013

Angel Investor Trends in 2013 from The Startup Garage

Angel Investment Trends in Q1 2013

Angel Investor Valuations Remain Strong

Angel investor median deal sizes increased as valuations remained strong in the first quarter of 2013.  The majority of deals went to healthcare, mobile and internet startups.  Highlights from angel investing in the last quarter include:

  • The median angel deal size for Q1 2013 reached $680K – up 5% since last quarter and 24% since the same quarter last year.
  • 81% of deals were completed in angel groups’ home states.
  • Median pre-money valuations for angel deals remain unchanged from 2012 at $2.5M, dispelling the great ‘bubble myth.’
  • Internet, healthcare and mobile dominated angel investment dollars, receiving over 72% of overall angel deal flow.
  • The most active angel groups in Q1 included Alliance of Angels (CA), Desert Angels (MA) and Golden Seeds (NY).

All data thanks to CB Insights.
 

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

Seed VC Funding in Silicon Valley On The Rise

Venture Capital Investment Trends from The Startup Garage

Seed VC Funding in Silicon Valley On The Rise

Seed VC Funding in Bay Area on Pace for Record Year

Seed funding in the San Francisco area appears to be on pace for another record year.  Seed deals in 2013 have seen a massive push towards the mobile sector with a contraction to the online sector.  Seed funding to both San Francisco and Silicon Valley reached over $192M across 242 deals in the first half of 2013 alone.  To put this in perspective, this is more than all of 2010 and nearly comparable to 2011 investment funding and deal levels.

Seed funding in the San Francisco area appears to be on pace for another record year. The Startup Garage

 

Funding By Sector

The Bay Area seed investment portfolio has seen a steady increase in internet seed deals since 2010.  Though, unless there is a large push in the back half of 2013, it looks like internet see deals will be less than 2012.

Seed funding in the San Francisco area appears to be on pace for another record year. The Startup Garage

On the other hand, mobile deals are already at 75% of the funding levels seen in all of 2012 and is poised for a steady growth trend.

 

Most Active Seed Investors in the Bay Area

The following chart depicts the largest investor groups in the Bay Area.

All data and graphs provided by CB Insights.

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