Improve Your Entrepreneurial Skills

Entrepreneurs have certain unique qualities of vision, creativity, and risk taking that are well suited to starting a business venture, but often have no patience with the seemingly monotonous, day-to-day grind of operating a business. The passion and enthusiasm in starting something new dissipates with time, and is replaced with a whole range of concerns that involve seemingly boring financial controls, organizational structures, sales and marketing strategies, and employee problems and issues. This requires a major adjustment, which is not always in line with the entrepreneur’s temperament and desire for ever new challenges.

While they can hire others to fill in the gaps in their experience and knowledge, they should not become totally dependent. The peripatetic movement from one venture to another, without ensuring the survivability of each, quickly stretches financial resources. Turning into an effective manager can be just as exciting as starting a new business. Contributing to the strategies that affect growth in the company’s market share, revenues, and profits can be personally stimulating.

There are certain key behavior patterns that an entrepreneur must master right from the start, which will serve them well in any new undertaking. Some are based on common sense, others require a deeper knowledge of good business practices, which can be acquired online (MOOCs) or in formal educational centers. It is all about constantly improving their business related game, so that every new venture will be built on a stronger foundation. It is useful to play by some well established principles.

Business is not poker You certainly don’t want to go all in on a venture as you would in Texas Holdem. This is particularly dangerous when the gambled stakes do not only belong to you but are shared with other family members or friends. No business is completely safe and certain, as the low survivability rate of small business attests to. The impulse to put everything on the line is never a good approach. Use your entrepreneurial skills to raise money from third parties, so that both successes and failures will be shared. Conveying passion and enthusiasm for a business is usually an intrinsic part of the entrepreneur’s makeup and can be put to good use in raising seed money or expansion funding.

Protect your intellectual property (IP) Many businesses are started with breakthrough technology developed by the founder. The cost of seeking patent protection, and trademarks may be high for a start-up. But then procrastination sets in until it is too late. Unprotected IP is quickly lapped up in today’s global inter- connectivity, and internet hacking. Being first in the market place certainly helps but without protection the competition will quickly copy and adjust their own products to keep you from realizing the fruits of your innovations. Include IP protection as a prime item in the initial financing.

Raise your game Just as in  sports, you tend to raise your game by playing with superior players. They have mastered certain techniques and strategies that you can observe and copy. To find these advanced players, it is beneficial to join business clubs and associations where you can meet celebrity business people. Search for them in the community, or participate in presentations by guest business speakers. This is a proven source of inspiration and new knowledge that can then be applied in your own business. The internet is another repository of useful business articles and blogs presented by experienced and battle-tested writers.

Keep track of your successes Repeating what has proven to be successful in one business context is often transferable to another. It is good practice to review and record in detail why, and how success occurred in a given situation. Breaking this down into a step-by-step process is like building an algorithm, which can then be applied somewhere else. It may be necessary to tweak the formula slightly but it provides a useful head start.

Check in with your customers Never shut yourself off from having some direct contact with your customers. Leaving it exclusively to the sales and marketing people may leave you out of the loop on customer issues and problems. This is one area of the business where barriers to communication should be removed, and where the entrepreneur must always stay informed. Nobody in the organization has the same keen interest in the success of the business, which starts with customer satisfaction.

Question all fixed costs Many of the greatest companies were started in basements and garages by intrepid individuals with ground breaking ideas. But when these ideas take on wings and become marketed, the initial low fixed costs can quickly escalate and eat up profits. Every overhead item must be carefully scrutinized and justified through a cost/benefit evaluation process. This holds true for all businesses. It is particularly important for any new business venture because of its financial fragility. Salaries are one of the biggest cost items.

Obtain Business Financing Through OPM

 

 

 

Not knowing how to obtain financing for your business can be a huge hindrance to growth. You may see, what in your mind, is a great opportunity to create wealth for yourself and others. It could be some real estate deal in your own or some foreign country; or you have one of those “eureka” moments for a product or service that provides exciting possibilities. Unfortunately you have absolutely no money to carry this through to reality. This is where knowing how to organize an OPM can get you the initial funding needed to launch your project.

OPM stands for Other People’s Money. If you truly feel passionate about your project and have done your homework on competitive offerings, market acceptance, preliminary survey of consumers and potential customers it becomes a matter of persuading those with money to get involved. At this stage of development the established avenues of funding such as banks and other financial institutions cannot be targeted because they are not risk takers and need existential proof of success in the short and long term. Many budding entrepreneurs are prevented from going further, as the money obstacle seems insurmountable to them.

This is the time to build what is referred to as an investment deck – or a platform from which you can solicit funds from private individuals or non-establishment investors. A deck consists of a detailed business plan, which clearly states the goals and objectives of the business, defines the market in terms of product/service, price, place and promotion, analyzes the competitive landscape, defines the uniqueness, benefits, and features of the new business, describes the strengths, weaknesses, opportunities and threats, and places this all in a financial context.

The latter requires help from an accountant so that realistic projections of revenues, costs and profits can be made that will withstand careful scrutiny. A three year projection that includes a profit and loss statement and balance sheet is a prerequisite. This is not only necessary for the potential investors but also provide a guideline for the founders.

Once the investment deck is in place it now becomes a matter of targeting investor groups who may be persuaded to join you in developing and bringing your ideas to market. This involves a carefully honed presentation strategy, which effectively uses the information in the investment deck to solicit funding. Passion, commitment, enthusiasm supported by cold statistics are needed to win people over to your cause.

Fortunately banks are not the sole source of initial funding for a business – Many of the world renown companies started as basement or garage operations that were launched through the help of ordinary individuals or organizations that provide platforms to raise funds. There are many sources of this type of assistance, each will require a slightly different approach:

Friends and relatives – These people know you and hopefully trust you. You will want to minimize the risks to any one person by soliciting money from many individuals in this group. The proposal may involve shares or loans, depending on the individual’s preference. Keep in mind that when accepting funding from this group you are risking treasured relationships that may be jeopardized if the business fails.

To minimize this, make sure that they are investing discretionary money that they can afford to lose if things go sour. No business is foolproof, and the best laid plans can be upset by shifts in the marketplace that are not foreseen at the outset. Being up front on possible risks reduces the consequences of negative outcomes.

The Indie approach – This uses the very successful online crowd funding platforms of which Indiegogo is one of the most prominent players. They have helped raise over a billion dollars in funding for start-ups in various business categories around the world. To launch a crowd funding campaign requires some preparation and initial funds but they are very reasonable, and can be organized on a shoestring budget.

One of the requirements is to create a video, which extols your product or services in a persuasive manner. The duration in which the solicitation takes place is limited and requires the full cooperation of the soliciting entity. The advantage of this form of funding is that you can reach a broad audience around the world, while at the same time making a special appeal to those people that personally know you. This applies not only to relatives and friends but also to the virtual friends on social media. Having a strong presence on such business platforms as Linkedin provides access to those that may themselves have been involved in the business launch process, and will thus be more receptive to the campaign.

Angel investors – are individuals who have set a personal mission for themselves to aid and incubate new business ideas and concepts. They have a more sophisticated approach in choosing where and how they place their money on risky ventures, but they are definitely open to new ideas. Usually, there is more interest in high tech proposals than other ventures, but this does not exclude the possibility of a sound business plan in established commercial or industrial sectors. Angel investors are usually involved in local business associations such as the chamber of commerce, and this is a good place to tap into this funding resource. A classified ad in a local newspaper can often ferret out this type of investor as they are always seeking new business opportunities.

Immigrant investors – Many countries offer a fast track to citizenship to foreigners who are capable of investing in new businesses. There is a minimum investment required, which is usually in the $500,000 + range. A good business plan, or/and a past record of success in business, or as an executive in a company related to the products and services in the proposal, is helpful. In most cases it is necessary to show that the new venture will provide additional jobs in the community where the investment is made. The commerce and industry development department in most countries would be a good place to look for these type of investors. Direct advertisement in South Asian classified ads is another avenue that can be followed.

Investment clubs – In most locations there will be some sort of formal or informal investment club, where people seek peer advice and group market analysis to make investments in stocks and bonds. Members of these clubs are usually less risk averse and therefore are more likely to welcome a presentation by a local entrepreneur with a good idea and plan. To locate these opportunity seekers ask around the neighborhood, or better still join the local chapter of the chamber of commerce where you will have a better opportunity of meeting them. Many are themselves involved in some business and understand the difficulties in acquiring seed or growth capital.

No money doesn’t have to be a show stopper if you have a great idea and a solid investment deck.

Small Business Credit Repair

 

You apply for 30 day credit terms with a key supplier to ease your cash flow problems, and you get a negative response because they have checked your credit rating with one of the rating agencies like Equifax, and have found it deficient. Even the best businesses can arrive at a credit rating problem, because while sales can be good, cash collections may be stretched and leave the business with creditor payment gaps. Small businesses selling to large retail operations often find themselves in this unfriendly predicament. The big players may find it convenient to stretch their payments beyond even 120 days to safeguard their own cash flow requirements. Panicking will not solve anything, and credit repair can be achieved without resorting to outside specialists, who will normally charge high fees. There are a few basic strategies that can be readily initiated to stave off more serious problems:

Get a copy of the credit report – Find out precisely what the credit report contains. Check for any egregious entries that stand out in your analysis. Get help from your accountant to pick out financial discrepancies. Immediately advise the credit agency by e-mail or fax and provide all the supporting documents in an attachment. They may get back to you for more details but at least you are on record that you disagree with their data. Follow through on any requests for more information until the matter is resolved.

Keep your creditors in the loop – If there are no errors in the credit agency report, and you have problems paying your creditors on time, it is best to inform them at once, and try to negotiate a deal where payments can be stretched over a longer period of time. In most cases suppliers, and even banks, will make a deal that ensures an eventual collection of the debt owed. They realize that if they take the matter to court and win, they may still have to negotiate a protracted repayment scheme. Most would rather accomplish this without the added legal expenses involved in suing. But once you make a deal it is essential that you stick to your negotiated commitments.

Get it in writing – The agreement you negotiated must be made in writing so that there is a paper trail should any problems arise in the future. In most cases if you stick to your end of the bargain there will be no further repercussions.

Create a cash flow budgetEstablish a six to twelve week detailed cash flow budget that specifies all the revenues and expenditures on a weekly basis. This is best accomplished with a spread sheet that compares the budgeted figures to the actual. Correct any discrepancies between the two by carefully matching cash collected to expenditures. Pay the absolute essentials such as wages, salaries, utilities on time and stretch other payments where you can. Review all the fixed expenses and evaluate whether they are really needed. Initiating a Zero Budgeting approach to justify all expenses is a good way to trim costs. Above all, cut down on all extraneous expenses such as entertainment.

Cut down on credit card use – Minimize the use of your own and other company credit cards. Force yourself and your employees to set a monthly limit on credit card spending. Eliminating some employee cards will result in better accountability. Reduce the number of company cards in circulation by 50%, starting with the ones that carry the highest interest rates. Research the credit card offerings made by other banks and financial institutions to see where you can get better rates.

Get a debit card – while you are doing everything that you can to pay off the outstanding debt you can continue to build a positive credit rating by acquiring a debit card. This facilitates payments and prevents a further build up of credit. It forces a more calculated approach to cost controls. The debit card taps into your company’s cash reserves and prevents an accelerated debt overhang.

Sign up with a credit union– these financial cooperatives offer easier terms and better interest rates than banks. If you are shut out from the big bank credit pool this is a good path to a possible bridge loan while you get your cash flow under control. Remember that you can’s solve your problems by seeking more credit. Cash flow problems must be tackled by disciplined cost controls, cash flow budgets, revenue growth, and improved productivity.

Stick to a plan – You can transform your bad credit rating over time, if you are able to stick to a carefully planned budget, which will guide you for the short and long term. If you progressively rehabilitate your payment history it will make the desired positive impact on your credit score.

Avoid bankruptcy Better to repair your credit over time than to seek bankruptcy protection from creditors. This should be the very last resort, when everything else fails. Bankruptcy places a large stain on your personal credit rating, and will make it almost impossible to obtain any credit for a period of 7-10 years. The above DIY approach provides the basic guidelines that lead to improved cash flow controls, which can keep your business afloat and thrive in the long run.