Monthly Archives: June 2014

Is a Business Plan Necessary?

Is a business plan necessary? From The Startup Garage

Is a Business Plan Necessary?

Welcome to video Fridays from The Start Up Garage


A place where Tyler Jensen, The Startup Garage’s founder, answers questions directly from our viewers.

Key Take Aways From Video:

1. When starting a business you will almost always want a business plan.

2. Even if you do not need investors or a business partner, a business plan will help you answer critical questions.

3. Investors want and require documentation.

Complete Transcript below:

Question:

I’ve read that you really don’t need a business plan. Is this true?

Well, my short answer is no — it’s not true.

If you’re starting a company, there are a couple of main reasons why you’re almost always going to need a business plan.

The first one is that even if you don’t actually need the document of a business plan for an investor or business partner, going through that process of answering all the questions that a business plan will require you to answer is so critical early on. If you don’t do it early on it’s going to cost you a lot of time and money later on.

The second reason is that if you are raising money from anyone other than a close friend or family member, almost any serious investor is going to require that you have gone through the process of writing a business plan and they’re going to want to see that document.

Remember, “the worst business plan is one you never bother to write.”

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

Need To Raise Capital For Your Startup? Ask A Celebrity

Need to raise capital ? Ask a Celebrity from The Startup Garage

Need To Raise Capital For Your Startup? Ask A Celebrity

There’s a new breed of angel investors, taking over the tech-funding spotlight, Hollywood celebrities, or rather tech-ebrities.

Tech ventures are exciting, popular and trendy, making investing in startups a must have for the rich and famous.

The roster of celebrity tech investors include:
Justin Bieber, Lady Gaga, Bono, Ashton Kutcher, Leonardo DiCaprio, Kim Kardashian, Justin Timberlake, Will Ferrell, Dr. Dre, Kayne West, Mc Hammer, Jay-Z, Will Smith, Jessica Alba amongst others.

Collaborations between Hollywood and Silicon Valley, aren’t entirely new.
They’ve been have been around since the dot.com boom in 1997.

It was then that the “godfather” of the movement, William Shatner, partnered with Priceline.com to become the official spokesperson for the discount travel website. Rather than accepting money for his role in the company, Shatner decided to take stock equity.

Celebrities took heed when 10 years later, Shatner cashed out his Priceline equity, to a resounding $600 million.

Suddenly, being a spokesperson and/or investing funds into underground technology startups, become the fast track to creating long term wealth to those celebrities, willing to take the risk.

“Like everyone else, celebrities are now hyperaware of just how many billions of dollars an early stake in, say, Facebook, could be worth down the road.”said Alan Hock, a partner at the law firm Moritt Hock & Hamroff who specializes in endorsement contracts for entertainers.

According to Rolling Stone Magazine Bono, the lead singer from U2, did exactly that.
His private equity firm Elevation Partners, invested 90 million for a 1.5% stake in Facebook.
When Facebook went public in 2013 and sold for $100 billion, he walked away with crisp $1.5 billion. It’s been rumored that Bono made more money investing in Facebook than he has with U2.

However, unlike traditional Angel Investors , world class musicians, artists, actors, and athletes aren’t always investing simply for a big payoff. Afterall, their jobs are not fueled on acquisitions and exit strategies.

It’s fair to say, we’re referring to individuals that have built their careers out of emotional creativity, passion, and determination. Present a viable business plan, while pulling at their heart strings, and you might just find your business funded.

Avid tech investor Aston Kutcher told TechCrunch founder Michael Arrington
“I really think that, technology probably has the greatest potential to accelerate happiness. Everybody sort of looks at investing and, you know, for me, if I don’t make any money, but what we deliver people — love and happiness and connectivity and friendship and health and whatever it is that we can deliver that ultimately leads to people’s happiness — I’m fine losing my money, if that’s the case.”

Bono shared a similar perspective on MSNBC:
“I got interested in technology because I’m an artist, I’m interested in the forces that shape the world, politics, religion, the stuff we’ve been talking about today. Technology is huge. I wanted to learn about it. People say it’s odd, ‘you’re a musician, why are you doing all this.’ But I think it’s odd if artists aren’t more interested in the world around them.”
 
Whether you’re in favor of the tech bubble reaching Hollywood or not, there’s no denying world of investment capital continues to expand.

There has never been a time in our history, that funding sources are have so readily available. Whether from Mc Hammer’s pockets or from various crowdfunding platforms, raising investment capital is more accessible than ever.

Are you prepared to #GetFunded?

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

What Do Investors Want in A Professional Business Plan?

What do investors want to see in a business plan? from The StartupGarage

What Do Investors Want in A Professional Business Plan?

Welcome to video Fridays from The Start Up Garage


A place where Tyler Jensen, The Startup Garage’s founder, answers questions directly from our viewers.

Key Take Aways From Video:

1. Investors want to see a clean, professional looking, honest, and reasonable assessment of the business.

2. Investor wantwell-sourced research sections, which include the market, industry, and competitive analysis.

3. Investors want an exceptional product description that explains all the features and benefits of the product or service you’re going to be selling.

4. Investors want a reasonable sales, marketing, and operational plan and budget.

5. Investors want 5-year financial projections.

Overall, investors are sophisticated and smart, this isn’t a traditional sales document.

Complete transcript below:

“What do investors want to see in a professional business plan?”

Great question Jen, overall investors really just want to see a clean, professional looking, honest, and reasonable assessment of the business. They want clear, well-sourced research sections. So this includes the market, industry, and competitive analysis. These really need to be cited with trusted sources, so add footnotes in there as well.

The next thing you want is a really good product description that explains why all the features and benefits of the product or service you’re going to be selling. Then they’re going to want a reasonable sales, marketing, and operational plan and budget — so you just need to be reasonable in these expectations of what you’re really going to be able to achieve in terms of growth.

And then they’re going to want to see a well thought out 5-year financial projections. These include balance sheet, cash flow, and profit/loss along with all the assumptions that go into making those up.

So overall investors are sophisticated and smart. So this isn’t a traditional sales document — you don’t want to make it too “salesy”. They want to see something that is just reasonable and honest — and I think you’re going to get a lot further with investors than something that is hyperbolic and exaggerated

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

How To Create a Revenue Model

How to Create a Revenue Model from The Startup Garage

How To Create a Revenue Model

The first step to building the Financial Projections for a startup company is to build out the revenue model.

The revenue model answers one of the most important questions about a new business: ‘how does it make money?’

The revenue model is important for several reasons:

1. It provides the top-line of the profit and loss statement (total revenue)

2. It also provides gross or operating revenue

3. It allows us to understand marketing, personnel, and operating budgets

4. It helps us to determine the valuation of the company and the potential returns an investor can expect on their investment.

There are several types of revenue models that businesses can choose from.

In this blog post, we’ll discuss some of the most common revenue models.

Before we can chose the best revenue model for the business, we need to understand the cost to produce our product or service (also known as the cost of goods sold or COGS) as well as the price of our product or service.

Determining the Cost of Goods Sold

COGS are the direct costs that relate to the production or purchase of the product or service.

Potential direct costs include:

– Cost to purchase the merchandise for resale

– Cost of raw materials

– Packaging costs

– Cost of inventory of finished products

COGS or direct costs can be thought of as the marginal cost or the added costs of producing one more unit of your product or service. This is opposed to the indirect costs that include labor salaries, equipment used in the manufacturing process, etc.

Determining the Price

When determining the price of your product or service there are several aspects that you need to consider:

– What are my competitors pricing their product or service at?

– What is my target market willing and able to pay?

– What do I need to price this at in order to turn a profit?

There is no right answer or formula for determining the price of your product but by taking the questions above into consideration you should be able to identify a reasonable price for your product or solution.

Determining the Revenue Growth Model

All revenue growth models are created using a growth driver.

A growth driver is a key assumption or set of assumptions that determine the number of units the company will sell.

Below are some of the most common revenue growth models and growth drivers:

1. Sales Growth Model
The sales growth model is the most basic revenue growth model as the growth driver is simply a percent increase on sales every month. For example, we will sell 10,000 units in year 1 growing 50% per year to 22,500 units by year 3.

2. Sales Rep / Distributor Model
The sales rep growth model is best used for companies with a salesforce that is responsible for wholesale or retail sales. There are two key growth drivers for this model: the total number of sales reps and the total number of sales per rep.

3. Website Traffic Model
The website traffic model is used for websites whose revenue is directly tied to the amount of traffic visiting the site. The key growth driver for this model is the rate at which traffic will grow overtime.

Additionally, depending on the type of website (e-commerce or software as a service) additional growth drivers will be important.

For example, for e-commerce sites, you’ll need to convert traffic to purchased items.
Similarly, for software as a service sites, you’ll need to project the free trial conversion rate, paid subscriber conversion rate, and churn rate.

4. Mobile App Download Model
The mobile app download model relies on two key growth drivers: customer acquisition spend and customer acquisition cost. The customer acquisition spend is basically the marketing budget allocated to acquiring new customers through advertisement.

The customer acquisition cost depicts how much it costs to acquire one new customer. If a company has a customer acquisition cost of $1 and they spend $1,000 per month of customer acquisition, they can expect 1,000 new users per month.

Mobile apps often have additional assumptions such as registration rate if the mobile app requires the user to register an account after downloading the app.

5. Online Advertisement Model
Many websites and apps generate revenue through advertisements. The key growth drivers for this model are the number of impressions (which is derived from the number of ads per page and the number of page views) as well as the CPM (cost per million page views).

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

Expert Communication Workshops Gets You ‘Shark Tank’ Ready

Communication Workshop from The Startup Garage

Expert Communication Workshops Gets You ‘Shark Tank’ Ready

The Startup Garage is pleased to be partner with Deborah Linggi, Principal of Linggi Communications.

With close to 20 years of experience working in senior-level, global communications roles for such industry leaders as Apple, HP, Illumina, Motorola and others, including startups, she provides invaluable communications counsel to The Startup Garage clients.

The Startup Garage provides the Pitch Deck and Linggi Communcations provides the language and optimal communciatoin methods.

Get your startup ready for the ‘Shark Tank’

Clear and effective communication is critical to building (and maintaining) positive brand perception, as well as achieving long-term financial success. Missing the mark in how you communicate limits your ability to:

Secure capital
Attract and retain customers
Create a high-performing workplace
Drive long-term growth and revenue

As an entrepreneur, you’ll be encountering many types of “sharks” as your business grows. Potential investors, existing or potential clients, partners and members of the media are just an example.

“Are YOU ‘Shark Tank’ Ready” is a hands-on, high energy workshop.

You’ll learn how to effectively communicate with any shark.

You’ll learn how to create targeted messaging and then deliver them in a clear, confident and professional manner, particularly under pressure.

Industry best practices and proven communication techniques used by seasoned executives working in the Fortune 500 will be shared.

Not only will you learn valuable concepts and ideas, you’ll walk away with completed messaging templates and tools which you can immediately incorporate into your business!

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

What Startups Got Funded In May?

Startups That Got Funded In May from The Startup Garage

What Startups Got Funded In May?

May Monthly Startup Wrap-up.

Find Out Who Got Funded and What Type Of Deals Are Attracting Investment here:

May 1st Bookbub the bargain bin for ebooks, secured $3.8 million in it’s first round of funding.

May 3rd Waggl the startup survey app inspired by honeybees,
secured $1 millionin funding.

May 5th Automattic which runs WordPress.com, became a billion-dollar company, thanks to a new $160 millionin funding.

May 5th PearSports which acts like a human personal trainer, secured $5 millionin a second round of funding.

May 6th Allclasses an education startup, closed a $1.5 million dollar round of funding.

May 6th Flux a top-secret spinout from Google X, landed $8 millionin venture funding.

May 12th Adform an Ad-Tech Startup , that creates rich media display ads, raised $5.5 million in funding.

May 13th Bitpay a Bitcoin startup, secured $30 million, to provide business solutions for merchants.

May 14th FanTV a startup set to revolutionize cable, tuned into $8.3 million in funding.

May 15th Uber the app that delivers you sophisticated car service, raised a new round of funding estimated at $350 million .

May 19th Autopilot a marketing Automation Company, grabbed $7 milllon in new funding.

May 20th Sumologic a log management app, pulled in $30 million in funding.

May 20th Centrify a cloudbased I.D. service raises $42 million in funding.

May 21st LiveOakVenturePartners an early stage lead investors, secureed $109 milion in investment funding.

May 27th AverInfomatics a health care billing system startup, secured $8.5 million.

May 28th MessageBus a custom email platform, raised $4 million in funding.

 

May was a momentous month for the 16 startups listed above.
Uber, ranked supreme, securing the top $ investment of $350 million bringing the company’s validation to an estimated $3.5 billion.

 

From Education Startups to Cable TV Startups, a common theme remains amongst those that secured investment, they all provide innovative solutions to modern day inconveniences.

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

To read more on all success stories referenced above click here.